I retired two years ago as a toolmaker. I always thought it was funny how people would complain about paying $80/hr for precision work , but happily pay $130/ hr at the car dealers

You missed one important point. After all the analysis, estimating, angst, & finally making the quote hoping you didn't just screw up big time. If you get the job you need to keep track of everything you do & use to improve your future bids. Carry a small notepad & write down what time you start & finish each task. With Excel you can do time calculations to track how long each operation actually took. Write down all the bolts, washers, nuts, sandpaper, grinding points, loctite uses, etc. You only should need to do this for a short time, it doesn't take long to begin to understand & modify your bids to include all the hidden/forgotten costs.

Thumbs up from me John. I enjoyed every minute of it. It was great getting to learn a little more about yourself, and a plus was learning more about your company. I can say we do things a bit different, but I actually got a lot of helpful tips also. My shop never stepped into the modern age of email and technology untill just recently. But even then most of my work comes from repeat customers and word of mouth. I often quote jobs much like you shown, breaking down each op into its own segment, and adding labor to each one, then coming to a final cost plus materials. Most times I would add a little bit more for "padding", or time as you mentioned, on the phone, or having to run up the road to pick up supplies. These days I usually just look at the job and have to come up with a dollar figure instantly. unfortunately many customers don't understand it like we do. They hear a dollar figure and think its outrageous to pay that to do this "simple job". I always try and politely tell them they are not only paying me for my time, but also the thousands of dollars in machines invested to do there job, the materials, and also the power the machines use. Those types of customers are normally the ones who are building or fixing something for themselves and don't want to invest much money in there "project". Loyal customers often times have there own business to run and understand the economics involved, like the electric motor shop, or HVAC business. Those guys are used to and expect to pay for good machine work. I have a select few other individuals who also don't mind paying me my shop rate. They understand you have to...."Pay to Play"..that's how I try and put it. I wish we could hang out for a day together. I would love watching you machine on the Tormach, and at the same time i think it would be fun to show you around the old school job shop. I bet you would have loved watching the big Monarch turn with some of those big boy jobs I used to do on it. Again, enjoyed the video John. Hope I didn't ramble on too much. Don't be afraid to send me an email sometime, or hit me up on Google+. Best Regards, Adam

I graduated with a law degree & went into inventing & did mass manufacturing in China of my products. There is a provisional patent that doesn't cost more than 700$ to get done. There is also ways to defend your patent in a small claims court with minimal costs. I have sued an employee before for theft & won in small claims. I hope you never stop inventing & innovating!

Alot of people dont realize what it takes to quote a simple part start to finish well made video.

I am a young lady who has worked in assembly and all over the place in small machine shops for 7 years now and it's amazing to me how even some of the smartest owners still make some of the biggest mistakes when it comes to figuring out the 'true' cost of running a business. I've caught so many costly mistakes just from observation and lack of attention to work flow. The cost of poor planning and management puts a lot of stress on a team and even more costly when you're constantly replacing workers for those reasons. Thank you for the post!

Three suggestions on the spreadsheet. Add hand holding as a real number that can be adjusted if a second or third version of the part is made. Put in a fixed percentage of the total parts and labor to cover overhead (utilities, insurance, etc.). Have a column showing the actual cost so you can track how good your estimate was and how you can improve on the next one.

I'm so glad to have found this video. I am actually just a couple of months away from opening the doors of my own prototype shop. I will be keeping my full time position at work in the beginning because I have a family already and can't make the big jump quite yet. Thanks for being so transparent, you've answered many of my questions. This is such a learning process, thanks again!

The main rule - be honest with yourself and clients will feel that as well. Really like your thought and thanks for sharing them!

I really enjoyed this video. As a machinist and welder who has often thought about making the move to do what you are doing. This video really breaks it down in simple terms what you need to think about. Thanks for taking the time to do this, very much appreciated.

I just got to watch this now, in 2018. This is four years old but there's so much good stuff in this that anyone who owns a small business of any kind should watch this. Thanks for the great insight!

It's fun to watch these old videos in the future to see how much has changed.

Great vid John. Your honesty will help many. Business is different than a hobby and a person needs to be able to know the difference. I am a hobbyist and will do things for pennies/hour, but it's a hobby. In the end you need the passion, hobby or business, you won't make it without the passion.

I've been watching a lot of your videos. It's cool what you're doing for the videos for the public. My grandfathers were fabricators and I was, and still am, amazed at the work they did. If they didn't like something that was on a store shelf, they just made it. I've always had a mechanical mindset. I understand how things work, can reverse engineer, and I can design stuff in my head but I didn't know how to put it onto paper and into a computer. I got multiple brain injuries during deployments and when I started going to college after I got out of the military, I had a harder time learning. Several years later I'm back in college and also learning a lot of this stuff in my free time. Thanks again for posting all this. I'm looking at purchasing a 3D printer soon and building a CNC machine. I want to design and produce prototypes of people ideas for them and partner with someone with a marketing background to help people's dreams of seeing their invention brought to life come true.

Hi John, Quite younger, I used to transform my hobbies in to business, on top of having one full time job, yap...! 16 hours day's work. Wish I had someone telling me a little of what you just mentioned up there... Passion is only part of the achievement. In your kind of business what you're selling is: YOU, just that and all that, so, customer knows he can trust you... You'll have to always deserve that trust. If you want to keep that "flavor" it's going to be difficult to grow very big, you'll lose that flavor and will have to redirect your philosophy, but, as you evolve it's up to you to become what feels right for you... A big evolution from your first videos. Good luck, Pierre

Owned a short run and production shop for 40 years. Still have manual equipment in my garage and am about to order a Tormach to prototype some ideas I've had on the back burner for years. I enjoy your videos keep up the good work.

Well John You have definitely hit it out of the park with this video, meaning that not many people take this much effort to give this MUCH helpful information and to guide (sort of speak) in the pitfalls of hobby(Ing) and turning business to turn profit while maintaining the outlook and goals that make a person happy. Absolutely loved the video. Thanks.

You are right on the money. Thanks for sharing and inspiring. I have headed our small shop into new frontiers from watching.

I just wanted to say a huge thank you for all the videos, I found out about your channel yesterday and since then I've started to learn from you. I know you probably know this already but with these videos of yours you are making someone's life a lot easier and I really appreciate your work put into them! Respect!

Fantastic video John, thank you for being so honest. I really enjoyed it, and learned a lot about you, and how a business is run. Your care abut the customer, and the excitement about the job really comes through. Thank you once again for making your videos.

Great tips! This video actually pushed me back into 're-opening' my little basement shop. I work full time at a big aircraft part machine shop, but also had an itch run my own little business!

I've been manufacturing a product for a few years, and have been farming out all all the machine work, and just doing assembly. I was initially going to build my own CNC router and try and build it up beefy enough to do aluminum, but without already having some machines, I don't think it's feasible to build the brackets and such to make a robust machine that is capable of holding the tolerances I need to hold. Your videos have pretty much sold me on the Tormach as a starter machine (someday, a Haas, but it will be years). The Tormach is going to be a much larger initial outlay than I had hoped for, but I think it will be more cost-effective long term, and with what I've been paying to farm out the work, it should pay for itself in no time. Thanks for the great vids. I'm learning a ton. Can't wait to go back and watch a lot more of your stuff! You're a very sharp guy! Keep up the good work.

This video is great. I think so many people don't have a good concept of how job type work is quoted and completed. Many people don't have any idea how businesses are actually run. The concept of the worker making money and the capital asset that is the machine providing a return as well is hard to grasp sometimes. Also, they will sometimes see a markup on a product (in retail especially) because they don't realize how many things roll up into that markup.

I think the ideas in this video apply to just about any small business. Time is money and if you don't write something down it didn't happen. You can reduce so much wasted money based on these principles. Spot on when it comes to supply and demand too (and the rest of it). Thanks for this!

I developed a Microsoft database to organise our CNC workshop. It handles every aspect of our shop. It works from Quote to invoice. I'm now starting to embed Our ISO9001 Standard. Works well.

John, I can understand your hurdle of putting the video up, it would be for me as well. I think that you did a good job of sharing important information, and I agree with almost everything you mention, and it helps me to know my thoughts are the same as others in similar situations. I will probably watch this in the future as a reminder to not forget these important aspects. Brian

This is very inspiring for me. I have been playing around with metal, for fun, for 2 years now. I build a small desktop cnc mill last year and it has inspired me to try to learn more and grow and hopefully one day have my own engineering consulting/machine shop. I'm currently saving up so I can buy my first real Vertical CNC mill. I was formally trained as an engineer and I was hoping to do something just like you have done. Im really glad I found your channel!!!!! It is so helpful.

Two years later, is this still how you do it?

Great! I also had machin shop last time and suffered from how to estimate. And I made that and now I sell it. Please continue this video and hope you to be nice as usual.

Thanks John. You have no idea how much this helps.

Thank You for the knowledge and character traits which you discuss or the values system or approach to business which you have. You have integrity and candor in how you discuss your work and I really liked the fact that you were able to avoid doing things in such a way that you might cease to enjoy it. As a employee we do whatever will pay us yet it can become somewhat a challenge to avoid disliking the same parts and a big quantity. Remaining alert to checking variation to assure repeatability is a valuable trait and the nature of production work makes it necessary to remain focused. Thanks again.

DUDE! I LOVE IT! I don't talk on the phone either for the same reason. I can't juggle everything and multi task if I have to stop and talk on the phone... Even Mark Cuban says the same thing

You sir, are a down right legend. Good on you, totally rate your shop, your ethic and your videos. Such great videos!

Very helpful!!! Thanks for the insight. Welder and newly graduated Machinist working in a young job shop.

Man I have been following your video's since the apartment days you a great job the way you have grown up your business and experience I for one you hope you have a long and prosperous career thanks for taking the time to post these video's I have a couple things my better half a little tighter with the funds I did buy a RF31 mill drill & two lathes a 12X36 craftsman & 9X30 lathemaster along with a Targa surface grinder paid for most using mainly for Gunsmithing but would really like to learn cnc so thanks so much for taking time showing the programming video's you do your channel is great for beginners and experienced machinists well hey long enough message thanks again & keep up the great work Austin

Great video, thank you. I love that you're being honest about all of it, and you have a lot of really good points. I'm at the other end (customer/designer with only beginning experience in machined parts), and you're just the kind of business I love to work with! Keep up the great stuff, and all the best!

This video is perfect for me. This makes sense to because I got my machine to upgrade from making parts by hand to fabricating with ZERO experience so I still will NOT call my self a machinist lol. Thanks this is reassuring to hear.

Great Vid. It's funny how hard it is to find info on quoting practices. Thank you for sharing your thoughts. I follow a similar spreadsheet process except I set fixed hourly rates for machine time by op, bandsaw, deburring, CAD/CAM etc and then plug in the estimated time for each. Next I tweak an overall markup value to what the "market will bare". I'm still at the point where I do some very conservative CAM to do my time estimates. Not ideal but it keeps me from loosing money. The point of only speaking on the phone to paying customers is something may try to implement. I have wasted too much time trying to court jobs that never panned out especially because they were still in the "idea phase".

I love the fact you still reply to 3 year old video. Love your vids btw.

Thank you very much! The truth is thats the way businesses work, period !

Have watched a bunch of your videos tonight thinking that I'd like to move beyond laser cutting at my local makerspace. Good stuff on your channel so far... And thanks for the shoutout to CustomInk (long time Inker, here).

Hi John, I really enjoyed watching your video. As a job shop owner I do believe that you need to be honest with your quoting process. In other words really account for all the time and costs of the job. Then you can decide to go higher or lower on price. I also like the last part of your video where you discuss the intangible stuff like payment and time spent with customers. In addition, smaller shops face their own set of challenges especially when it comes to your labor force. For example: can you hand the job off or do you need to be the guy to run off that first part? Things like this must also be accounted for. Keep up the good work!

I don't post on youtube at all. However i just wanted to let you know that this like many other videos you have posted was a great video. People who run bigger production shops are watching. I am one of those guys. You have tons of great information here for everyone from people just starting out or those who have been doing it for a while. You nailed it about the ups printer. I ran out of labels one day and had to print the labels on computer paper what a mess that was. Again awesome video.

Thanks for nice insight on your business. I've always wanted to begin my own business and it's nice to hear these things from people that have actually gone that road. Reason I've never started going that road is that I have thought about going to it full time immediately and I have realized that amount of work doing that takes absolutely massive toll mentally to even prep everything to begin the business. Now bit older and with stable and quite innovating job I've been thinking to begin going quite similar way you have done. Going at it as an hobby, but making small business if that makes sense. I really have to applaud people that have bravery to go all in for business and succeed in it.

Thanks John. Couldn't agree with you more on a lot of things you said. Kudos for putting it all out there like you did.

Been following you since you were in the big city. Think maybe you started a bit before I did. Started with a Sherline mill, then a Sherline lathe. Haven't used the Sherline mill in a long time. It's just too small for the project I was doing. Went looking for something a bit bigger without spending a fortune. Ended up with an ancient CNC Bridgeport, which needed a total rehab. Took a couple of years. I've always had the idea but have never done it) of having a separate tool holder which contains a rubber rod, about the size of a pencil. Use it for the first cutting pass to prove that your Gcode actually works, and it clears the clamps. This might make it a bit easier for your other machinist to run the mill without breaking stuff.

Great video! Thanks for sharing, I'm in your shoes five years ago. Trying to learn mach3 and hsm works is mind boggling.

I can relate to many things u said. Im a working musician since 16yrs old ... Now im 36 and have been "full time" for 6 years now. Ive turned down jobs that i would have never turned down before because the hard reality is if you have to run the business part of yourself correctly it doesnt make sense to do work that doesnt make you money in the end. Especially once the honeymoon is over learning your craft and its time to pay the rent. Good vid you have that same slightly overwhelmed look that my buddy has who started a successful small AC repair business.

AH MAN GREAT VIDEO! SOME OF THE BEST INFO TO GIVE OUT AND NOT KEEP IT A SECRET!!

Freaking outstanding job on this video once again John! I was surprised but pleased to see all of the inside info that you shared. This was a true education for us newbies, and I thank you. I am waiting for you to get your Tormach 15L Slant-PRO CNC Lathe so I can place a 500 pc order and see all of this in action!

Hi John, I've watched several of your vids and I find all of them very interesting and informative. I really enjoyed this one though as, I am working at moving my company from producing only it's own products to manufacturing parts for other companies. We are on the small end of the machining spectrum as we have always specialized in machining very small parts, some as tiny as .020 with .008 dis holes. It's one thing to price parts for your own use but it certainly another to price them to be produced for someone else. All the best in the new digs. Just remember, metal working machines don't like sawdust at all. I once worked for a very large corporation that manufactured wood products and they leased a portion of one of their building to Detroit Diesel to make fuel injector nozzles. It caused havoc with their machines and cost both companies millions to sort it all out. All the Best of Success to you and your family, Paul

Thanks for sharing this info and how your passion started it all. The same thing happened to me, but in another field YEARS ago, and I did well at it. Like you (@ 10:36), I have NO experience in the machining field. Only because of my understanding of how things work, I solved some problems for a small business by purchasing and learning to use a very small lathe. I love it as a hobby! Since then, I've already had a few 'jobs'. It's not about the money. It's about making others happy with your work, and maybe one day you'll make a few dollars in the process. The world around us is amazing and if I could contribute in some small way, I'm happy, and that's the key... just being happy and the rest will come.... at least that's how I see it... :) Only once the business is established, can you ask for more....

Thank you for your time, it was very informational, I believe in what your convictions are and I do most of them. The phone thing that you talk about, I need to get better at. I hate diarrhea of the mouth, it kills time. I hope that 2017 will be a growth year for me. Again, thank you for your time. JBL

Big thanks for your channel. It's really helping me over here in the uk. Thanks very much. Your times very appreciated.

I have a really good excel file i use at work. From manual labor-wire burn-hand bending- press time- machining- outsourcing - cutters used - perishables the list is long just fill in the blanks .This generates per part as well as bottom line (and some machining theres a degree of difficulty % added). works pretty good.. nice vid

I love your videos, I was in the same boat as you. No idea what CAD even was, never used a CNC machine. Invested every spare minute into teaching myself CAD design for over 3 years and taught myself CAM and machining. I am now 100 percent self sufficient and do a lot of CAD work on the side for others from the simple to the complex. I was inspired by a guy that has a company called Tactical Keychains, I read his bio and was inspired to change directions. I later saw your videos, as well, and helped me push forward. Scary thing to do when I was 39 but what the hell. I am happy I did what I did. BTW, sorry I thought you wear eyeliner.

Great video John. It's very helpful for guys like me who also have a hobby we would like to see turn into a full-time gig. I have a feeling I'll be watching this video several more times :)

Thank you for the insights ! I hope you can still make time for your supporting family and friends. Good luck !

Thanks a LOT for sharing you experiences very prudently. This is a very relevant and candid of you that I am currently seeking. Thanks again for the efforts. All the Very Best for future.

My god . . . . you have a lovely thought on patents . . . I have had zero emissions zero reliance since 1992 . . . and no one's come close enough to copy my stuff . . . lots of smart electrical guys out there . . . they have not hit the nail . . . . all these years . . . . NASA included

Very well said, and all good points!... I have a number of hobbies that I don't really ever plan to grow into businesses, nevermind where I live I don't have the customer base that could ever make it profitable.. so I do some work for friends at decent rates, often they'll have services I need they can provide at good rates to me too

So, I'd like to call and talk about shoe size, and what kind of tires your vehicle has on it. Actually, I applaud your decision to talk to customers only. I've see people in my office talking for what seems like hours to somebody that is looking for information. I know they are hoping the call will turn into a sale, but it usually doesn't. Keep on making videos! We'll keep watching!

Great video buddy.. And it seems we work somewhat the same way. Also great to here someone else share the same feeling on phone calls in this business.., sometimes it's hard to tell someone it does not work, most times it seems we do not speak the same language and only with email and pictures / examples we can make our selfs clear. Keep up the great work, and all the best in the new shop.

I wish that excel file was still available just as a guide line. Maybe the website was changed around or it was taken down because of relevance in today’s market. Thanks for all you do. It’s really over the top.

you mentioned that some of your earliest videos are still available, and that they are a little embarrassing. to me that speaks volumes about genuinely helping beginners ; showing that no one starts out with perfection. and i bet you will find that the people you respect in this field will laugh to themselves when they see them, and think about some of the sad concoctions they made when starting out. and probably wish that they had videos of them. keep up the good work.

Thanks for putting it all out there, great video. I'm just getting started so this can be a big help in the future.

Appreciate you posting this John. I am happy mucking around for myself, but you never know in the future... and this is quite helpful. Tim

The bid for Hoover Dam was $48,890,955, a good example of a "non-round" number that implies significant thought went into the bid.

Hi, I do the quoting exactly like you do it. great thing to know that other people who are way more advanced than me do the things very similar.

Thunks allot to share your ideas with us

I agree with you, grow the business slowly, it is a lot safer and less stressful.

Awesome tips, I know this might be a late comment, but I loved them. Also the rest of your videos are awesome. I am from Europe, and people here are not as sharing as you guys across the Atlantic :) I am hoping to start my shop some day, and i am easing into the process currently. Thanks again, hope to see more great videos in the future

I share Abomb79's feedback to you 100%. I am retired and am contemplating starting up a small one man shop. Great info from you to put into my decision making process. Thank you so much for taking the time out of your busy to help me and I believe a lot of other folks. Fred

That was awesome, super informative and I really appreciate your sensibilities. Thanks for sharing.

Great stuff. Thank You for putting that into the video. We did cost analysis in college, and our Professor was brilliant, but during WWII he came up with the 80% rule. It's a log scale.... first time takes 100 hours, second takes 80 hours... FORTH item will take 64 hours, EIGHTH item is about 51 hours. I still use that today. Forgot his name (sorry), but I still remember your lectures. Thank You!

Great video. Love to see how other people in our line of business do things.

That's great video. While I enjoyed watching the whole video, I have to say I enjoyed hearing about your personal story more. Thanks for posting and taking the time to share your knowledge and experience with others.

Great video! Enjoyed your insites into how you quote jobs and deal with customers.

Great Integrity! And thanks for sharing your "inside info" !

Fantastic!!! Thank you for the section about communicating via voice. I have had the phone calls that drag on. I thought I was being rude by referring to text and email. One thing that I love about written words is that if the customer tries to go back on their word I have written words from them. But remember customers are always right! We also have the right to choose our customers.I do wall art in cnc plasma cutting form. I always email bmp to the customer as the final revision and tell them to draw any changes with bright green. 9 times out of 10 they respond and say it looks fantastic.... can you paint it.

Yeah they got me to. $300 for the home version of BobCad. I gave up and continued to use Cut3D. I purchased my First Sherline CNC in 2008. I also use Alibre CAD (now Geo Magic 2014) the pro version I paid a arm and leg for it with maintenance.

This video was incredibly helpful for me as I'm just starting out. Thanks for taking the time to make videos like these.

As a professional product designer I can say that the difficult customers is going to be the hardest part. it is even worse than hard drive crashes and video card failures and every calamity that hits your business. .

just starting out (just purchased a 9x49 vertical bridgeport clone)... thx for sharing your experience... really good advice... thankyou very much

Great job!! I am glad that you have shared what you have learned, especially with the quoting aspect. My brother and I run a small 3D printing business on the side, and we are slowly learning with quoting.... it's difficult. We have learned many things the hard way ;-)

hey john, first time here, inspired by how you run your shop. i have machine shop too, run it for 2 years, need to learn more about the machine and the business.

Very informative video, for someone trying to get into making guitars as a source of income through university, and beyond. The market for guitars is so established, and theres so many myths about construction methods, it's really difficult to come to an affordable and profitable price range.

Great video lots of really good info and things to think about.

I really appreciate this video. It's a LOT of good information.

Good tips it is same with any business. I dont see my self doing shop business but i am kinda like you when you started. I would like to design and prototype parts and machines and hopefully at due time integrate it with my real profession. I did that with electronics already. I do advertising work ( for shows and displays aka touchscreens and apps development but also lot for web) and would like to be able to expand my work being able to create fully custom products. From professional stand point this video as advice to newbies is great value. Not many people are sharing this kind of experience kudos to you!

Hi John, Thanks for another great video. I, like you, have used, and in my case, still use Bobcad/Cam. For me it is a great place(program) to start with. As you mentioned it is available cheap and for me it does the job. Certainly, using the CAD side it is a little long winded, but you can make the profiles you require for a low cost. On the CAM side, the post is, well lets say OK, but as you know, it requires a little editing, but do-able. I would love to own Solidworks, but for me, with low volume/workflow(a hobby for me), Solidworks is really expensive. Over here in OZ Solidworks is many thousands of dollars and also has a subscription fee attached each year. In my opinion, Bobcad has it's place, at the bottom(starting out) end of the market. I am sure there are other basic programs (like Bobcad) that are better, but it is the one that I went with, and as such am satisfied with it's performance. Can't wait for your next video, Thanks John.

I like your videos. You are humble and funny and nice and so objectiv, not pretending that you are the best in the world. I just haven't seen do you put a tooling in quote. Sometimes for example if you machine a steel, tools doesn't last all that long so it is important to put it in calculator, right?!

I love this man, thank you very much for sharing. Awesome and informative video. Wish you the best of luck and success with your business.

Thanks so much for making this video! Extremely informative

Fantastic video! You have excellent perspective and communicate it well.

Good video. Recommend you add something for scrap rate. Also recommend NRE be listed as such so then time the job is quote you don't apply those charges.

Outstanding well thought out video. Really enjoy your videos.

Loved it !!!! .i will have to watch this video again .....

I know this is an old video, but thanks, what a great video!!!!

Awesome, awesome video. Just good business sense.