Thursday, July 31, 2014

Guidelines for Calculating Machining Hourly Rate

We tout this fact all the time in our marketing ... at Kentech Inc. we are MACHINISTS ... we cut chips, we programmed, we ran shop floors for years ... then we became software engineers and designers and built software products we saw were lacking during those years. What we refer to as Real World Machine Shop Software. 

As a result, many of our clients come to us to take advantage of that experience ... especially those just starting out. Since quoting and estimating is one of the first tasks a new shop needs to get right ... we get asked quite a lot of questions about these areas. Our KipwareCYC® ( machining cycletime estimating software ) and KipwareQTE® ( cost estimating / quoting software ) titles are two of our most popular titles. One of the "hot" topics we encounter during online presentations of these titles is often concerning the cost to charge for a machining or a shop rate. So we thought it was a good time to add a blog post with some guidelines we feel are simple enough ... but important enough ... that can get you to an accurate figure.

Since many shops will utilize an hourly rate as a basis for charging for machining time, this post is dedicated to some helpful guidelines on how to calculate that machining hourly rate. Below are some points we consider important when calculating the hourly rate for a particular machine. The areas requiring calculations include :

Equipment – Cost Per Hour of Operation ... a common formula :
(machine purchase cost + expected lifetime maintenance cost) / expected hours of operating life.

Direct Labor Cost per Hour ... a common formula :
(total annual labor costs + taxes + benefits + paid time off) / (total annual hours worked – breaks and training time)

Overhead Cost Per Hour  :
Any costs not directly involved in machining a part is overhead. These include costs for administrative staff salary, equipment, furniture, building lease, maintenance and office supplies. Calculate the annual costs of these, then divide by total labor or machine hours for the year. This will be your overhead cost per hour

Once the above costs are calculated … you can use the formulas and guidelines below to arrive at either a
“general” shop hourly rate or an hourly rate based on a specific piece of equipment.

General Machine Shop Hourly Rate ... a common formula :
Average overall shop rate = (average machine cost per hour + labor and overhead cost per hour) x markup

Machine Specific Hourly Rate ... a common formula :
(specific machine(s) cost per hour + labor + overhead cost per hour) x markup

Somewhat simplified ... and usually a work in progress as factors may change. It is important to gather all the figures in the formulas above as best you can ... as accurate as you can ... and to keep tabs on any factors that may change along the way.

Kenney Skonieczny - President
Kentech Inc.

You can check our all our Real World Machine Shop Software at our website :

Monday, July 21, 2014

Programming with Kipware® Software - Press Parts to Tesla Parts

As we have stated many times ... we are extremely proud of the fact that thousands of machine shops around the world have found a productive, efficient, steady and reliable solution to their manufacturing needs through our Kipware® software. We love to hear about those real world situations where Kipware® software is making a difference.

Last week we had the privilege of working closely with two of our clients who were in the middle of those "gotta have it tomorrow" projects ... creating CNC programs for two very different machining projects.

Problem #1 - Creating Parts for a Tesla Automobile
Simultaneously while working on the issue below ... we also had a client contact us who was in the midst of a rush programming project .... programming a contour to machine a part that would eventually be used in the Tesla electric car. Although they had been using the conversational module of Kipware® conversational for years to program their "standard" parts ... this particular part required a no-traditional contour be programmed ... and required the use of the Kipware® SketchPad. Not having too much experience and in a rush to get their parts made ... we stepped in and up.

The Solution :
The client emailed a DXF file of the contour ... and using our Kipware® SketchPad we created the G code program to machine the parts. It was great to have the opportunity to utilize the software we created to create a real world G code program to machine a real world part. And the coolest part was that it was for Tesla car ... although Elon Musk's SpaceX is already a member of the Kipware® family with (40) seats of Kipware® in their Hawthorne California manufacturing facility.

Problem #2 - Small Part Programming
As mentioned ... while working on the project above ... we were also called into action to support another small manufacturer client who was working to create a one-off specialty item for their customers. They were creating their program using Kipware® conversational ... and found the machine doing some strange movements when executing the G code program. Unable to diagnose the issue ... it was something they never experienced before ... they submitted a Support Ticket through our Helpdesk and asked for our assistance. The problem was new to us as well ... and required we talk directly by phone to get more information and lend some deeper assistance. It turned out that the client was new to CNC programming ... had been using Kipware® conversational for quite a while and getting all their programming done with Kipware® quite nicely ... but were now experiencing a little more complex part and programming that was getting a bit more complex ... mainly dealing with cutter compensation. Long story short ... their machine had some specific requirements and the program being created by Kipware® using standard cutter comp programming was causing the generation of some errors by the control.

The Solution :
We worked with the client suggesting some alternative G code programming solutions ... explaining how to create the revised G code and why ... to try a few different scenarios to diagnose the issue. Once the issue was diagnosed and an alternative G code model created that worked ... in less than (2) hours we had revised Kipware® to include a new, user selectable alternative option for cutter compenstion output ... and had an UPGRADE installation ready and available for the user to download. It was great working hand-in-hand with the client ... both teaching and helping them program ... and creating some newer features for our Kipware® conversational based on their real world inputs.

As you can see from the scenarios above ... Kentech Inc. is more than committed to our software support ... we are committed to our clients. This is just a small sample, a couple of scenarios from one week in our business life. These types of scenarios are repeated quite often here ... and we're always happy to jump in and assist in any way possible. And it's especially rewarding as we get to go into the "real world" ... on the shop floor ... and help make some chips !!

Kenney Skonieczny - President
Kentech Inc.