Do you use a shop rate?

In the US the use of "Shop Rates" has become very common especially amongst smaller machine shops. The shop rate is a good rule of thumb guide to establishing a price for a customer. However when you take a second look at how shop rates are calculated it very obvious that they are nothing more that that.....a rough guide!

Put simply a shop rate is nothing more than a broad average of fixed costs over recoverable hours and as such they are very inflexable and provide no means of analysis or adjustment. Flat shop rates bear no relationship to whats actually happening in a business at any one time and in fact have a tendency to "stagnate" when times are good and to be almost forgotten when work is scarce.

There can be no adjustment or feedback on a per part, per customer or per capacity basis. For example if you lose a job because your price was to high, where do you begin to look to find out why?

Another reason why shop rates are so pouplar is because its very quick and easy to work out and the alternative (doing it properly) can be time consuming and complicated. QuoteCAM solves this problem by allowing you to do it properly in the same time it took you to do it "wrongly" !

Using QuoteCAM each workcentre is costed seperately by answering just a few simple questions. Your overhead burden rate is also calculated in a few minutes and the combined effect is a accurate and flexible costing model that can be fine tuned for every quote you do. Doing things properly and discovering that the true cost of manufacture is higher than you thought does not necessarily mean that you automatically charge higher prices. thats up to you, but as a businessman you will have a clear and honest view of your costs and profits. Remember that profit is not profits if it has to be used to pay bills!

QuoteCAM will change the way you do business. You will notice the difference Immediately - and so will your competitors.