COSTING PLASMA CUT PARTS

Q. I’m thinking of turning my plasma hobby into a business so I can make some money off the equipment sitting in my garage. I’m unsure what to charge for my work though. Do you have any suggestions?

A. There are a few different ways to determine a cost for the items you cut, but here’s the method I use.

The first thing I do is take the price I paid for the metal I’m going to use and divide it by the number of square inches in the sheet. If I buy a 4' x 8' sheet (the equivalent of 4,608 square inches) of 3/16" steel for $170, I divide $170 by 4,608 to come up with 0.037 or 3.7 cents. That is my purchase cost for one square inch of 3/16" steel. I include all my costs in this number. If I have to hop in my truck to pick up the steel, I’ll include travel time and vehicle expenses in the dollar amount.

Step two is to figure out how much profit I want to make. On most material I double the price to cover the cost of running my equipment. This brings me to 7.4 cents (3.4 cents x 2) per square inch.

Next, I use the “measure” function in my software to determine the linear inches of my cut part. If I highlight the part program and click “measure”, I get linear inches. I also measure the square inches of material used on the part, making sure I don’t cheat myself. If I have a round or odd shaped part, I create an imaginary rectangle around the part and use this for my calculation. As any leftover steel will often end up in a scrap bin, I need to be sure to cover my scrap costs. So, let’s say the rectangular square inches around the part comes to 120, and my linear inches cut comes to 90. I use the selling price of the particular sheet of steel to calculate the steel price and the cost per inch of cut. This works out very well since plasma consumables do not last as long on thicker plate and thicker plate has a higher price. Here’s what the calculations look like:

120 square inches x 7.4 cents = $8.88
90 linear inches of cut x 7.4 cents = $6.66

I then add those two dollar amounts ($8.88 + $6.66) to come up with a sales price for my part, which in this case is $15.54. Now obviously, I can adjust this number depending on the circumstances of a particular order. For instance, if a customer orders a lot of identical parts, there’s a good chance I can nest the parts more efficiently, saving on steel. My material handling costs will also be lower giving me room to lower what I charge for each part.

In my case, I find the above method works very well. My quotes are competitive against other cutting shops, and allow me to make a profit running my machine.

Jim Colt