Laser Engraving is NOT Worth It (If You Do This)
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- Опубліковано 6 вер 2024
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As in another comment, I feel that just looking at profit as being your wage isn't the way to be looking at things, but I can understand that it is a starting point and quite a few people aren't even doing that.
However, the other question is what all is figured into "not profit." What I mean is that you're likely considering your cost of the materials, packaging, stains and finishes, and so forth. I noticed you didn't count the actual laser time and that is something you do have to account for as a laser tube has a lifespan. There is also the costs of the laser, computer, software, and other equipment.
I often get comments from people that making something for them "doesn't cost me anything because I already have the equipment." Obviously, that isn't the way a business works. You cannot ignore all those overhead costs and just look at what it costs in materials and time to make something. The customer is not only paying for materials and time but also the equipment, the facility where the work is done, the training to do the work, etc, etc, etc...
At the very least, it would be helpful to others to at least discuss some of what you're figuring into "not profit" and possibly take a deeper look at whether you are covering all your costs there.
Yeah, at this point my profit calculations aren’t that sophisticated, so I’m not counting things like depreciation on the laser, but I certainly agree that doing so would be more accurate. As I learn more about pricing, and continue to improve our systems, maybe I’ll do another video into these topics in the future. Thanks for the comment, I’m really enjoying reading the tips and ideas from other laser people here.
I think hourly rate is a very limiting system. I would work more on profitability which is more scalable. This focuses on the product before how long something takes to make. I work normally on a 30% margin after costs and wages(time rate for anyone using the machine) then I I'll look at the final price and see if it's at or below market value. If it's above market value the project stops and never gets made because it's not worth the time. If it's below then it's a win and you can increase the margin to match. Cheers J
Nice - I like the way you explained this. And actually, I do also consider raw profit dollars because I know that I can improve our efficiency and I’ve done that fairly extensively for our most popular product.
But to your broader point, I think I also have some work to do around scalability. And honestly, I enjoy the operational aspects of this biz so that is kind of a fun project.
If your profit = wage then you are not pricing products like a business. You're pricing them like a job thus no ability to expand. your wage should be built into the product cost profit is what allows you to grow your business by getting new machines etc.
Yep - no disagreement here. Mine is a fairly new operation, so I’m mainly using these numbers to make decisions about which products to continue doing after some initial sales, and which ones to stop, change, or double down on.
I liked how he worked it out though. It was a simple but informative video. Sure, if one wanted to get very specific you could make sure that all of the overhead like electricity, workspace cost , tools, etc were in there... But this is a good place to get an idea of what you're making
Health insurance. Electricity. Internet. Rent based on your home office space.
I think this is a good video on figuring your wages into the equation, but as others have said there are a lot of small factors that people overlook. The $25/hr is great but you also have to factor in self employment taxes on that which can bring the overall wage down by a third. Good information to get people thinking more about how they price things!
Oh hey @vintauri - this feels like a celebrity sighting :)
I learned how to set my Xtool's framing power from you. Thanks for that.
And good point about self employment tax, but can you clarify how you get 1/3 from that? I'm no accountant, but as I understand it the self-employment tax is roughly 15% and I believe you can get roughly half of that back as a tax write-off. I could be missing something though, so feel free to correct me.
Considering hourly must include product cost. If the hourly rate is $25.00 per hour based upon time and price charged, and your hard costs, wood, laser equipment durability, number of cuts, electricity etc. are $12.50 your actual hourly rate is reduced to $12.50. Not including the time it takes to design, locate suppliers, obtain supplies etc. It is good to evaluate what your end hourly rate is to determine if it is worth it to you in the end. For example, if you can make 6 of these at the same time without increasing your time, you are now making $75.00 per hour. Just stating this because time is part of the factor as well as costs. Just something to think about.
Good points all around. I’m glad you posted this because I think it’ll be good for others to also think about these things. Cheers.
You can increase profit by not using such a huge carton for that item. You pay for volume in addition to weight so reducing volume can decrease shipping cost and put the difference on your profit.
In theory, you're right. However, it does depend on the price of the box. Sometimes paying a little more for shipping can actually save money if it allows you to use a more standard box size that you can buy cheaply in bulk.
Good info on trying to understand where cost gets added in the process from small steps, and where to include them in the full picture. Also please don't take this as a negative (more as constructive criticism), this looks like good content. However, the camera flips at cuts tend to be a bit distracting. I understand that it could be just trying to break from traditional cuts but man.... was I focused on trying to determine if you had multiple lasers more than listening.
Hi! I welcome constructive criticism, thanks for being nice about it. I do think that a video like this would be better with different filming positions/locations between some cuts, and maybe I’ll get to that point for some future videos. But the thing I like about the flip cuts is it makes the video a little more visually interesting IMO without me needing to have 2 cameras set up. I’ll probably still use this technique In future videos, but maybe I can reduce the distraction element by making the flips less frequent. I’ll do some tinkering. Cheers.
Studies show that humans tend to loose focus on speakers in as little as 7 seconds. So changing up the view like this can trick your brain into paying attention more. I can see how it can be distracting to some. I prefer this over dramatic cut scenes I’ve seen others do.
Excellent video. Totally new to this engraving milarki just getting the heads up before my engraver arrives. I'll go through all your videos thanks again 😊
How much $ do you get for those animal track signs.
Thanks for the video! This was really helpful!
I’ve recently started selling products and crunching the numbers help me get over the hump of “hobbiest” to “I need to pay myself for all my working hours”
Awesome- glad to hear it was helpful!
MORE ANIMAL TRACKS! (Or have I missed the link?)
Great video! I enjoyed it and got me thinking I may have these issues as well 😂 keep up the good work!
Awesome - so great to hear!
Did you factor in cost of running laser and replacement parts for any piece of equipment used during the process? Many over look this until something breaks and they can't afford a replacement.
No, I didn’t, but I though I think I’m going to add “laser time” as an expense in the future, and I suppose that could be considered a repair/depreciation fund. Let me know if you have a way of doing this that works well for you. I’d be glad to hear it.
@@asherdiy Yes all the time laser is running you can't leave it. Always amuses me how 3d printer peopl enever charge for this as if it's sprinkled by fairies!
Amusingly I started a video on our biggest error in 2020 on pricing, which covers what we now do. I need to get it finished and edited.
Don't over analize it! If you are making enough to pay the bills and yourself, you are making enough. Many people price themselves out of jobs thinking they are worth more than they really are!
If you made five animal tracks in one run, you would probably save 20 minutes per.
Yep, good point. I think the maximum I could fit in my laser bed is 3.
Lasers have a limited lifespan. I think it is important to charge for laser time to compensate for this. You can only run one laser job at a time so basically the laser is the business.
Yeah - I’ve considered this, and may start doing so. How do you charge for laser time? Happy to hear your tips.
The other thing you have to account for are mistakes and failures.
Yep - great point. I don't think I showed it in the video, but when I do "what if" analysis on the pricing for some of our products, I'll sometimes assume that one out of every 10 boards will break, or something along those lines. I probably need to make this a more standard metric though. Maybe just a % add for lost materials.
More animal tracks
Noted!