Thermal Spray Pricing Part2

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In a previous post, we discussed the issues of thermal spray pricing from the stand point of competitiveness. We discussed therein the dangers of pricing thermal spray jobs strictly from the point of view of what the competition charges and what the customer is willing to pay for a specific thermal spray coatings service. In then this post and the ones that follow this, however, we will discuss the thermal spray coatings pricing issues from a more detailed stand point; we will analyze the nuts and bolts of the pricing process for any specific thermal spray job at hand. More specifically, in the current treatise we will discuss only the thermal spray material costs issues for those areas that are grey and hazy.

There are certain steps in the thermal spray process that simply cannot be accurately costed out. For example, how do you determine accurately the cost of the degreasing and cleaning materials used per job. Or for that matter, if you are going to use thermal spray liquid masking or five feet of thermal spray masking tape, how do you accurately determine the cost of the materials used. Another key area is thermal spray grit blasting. What is the accurate cost of the grit used on a specific job? This is really very difficult to determine for standard companies that may be processing many small lot jobs through every day. Then again, is it really worth it to do all that becomes a puzzle whose answer can vary depending upon who you talk to. So certain material costs will have to get amortized over all the jobs that run through your thermal spray facility. So, such steps can use a blanket material cost. For example, if you have spent 5,000 dollars on cleaning and degreasing fluids and compounds and you have processed 2,000 jobs in a year, then from history you can allocate two dollars and fifty cents per job of cleaning and degreasing materials. The same is applicable in the case of masking tape or thermal spray grit blasting materials. Thus, if the total amount of money spent in thermal spray liquid masking and tapes and such was ten thousand dollars in a year in a facility that processed 2,000 jobs then each job needs to incur a cost of five dollars for masking materials.

Now there are some blatant exceptions to the rule. For example, amongst the jobs you process, there might be some that really take on a lot of masking materials and it is glaringly evident that the standard amortized materials costs cannot apply. Of course, in such cases, use what is more appropriate. The whole point is that if you are utilizing a small amount of material, you cannot simply ignore the associated costs.

A key issue when it comes to masking costs that is often overlooked by thermal spray job shops is the cost of hard tooling. Now, everything cannot be clubbed into the category of general shop tools or general shop supplies; because doing so will not enable implementing any cost saving or efficiency improvement strategies. If everything from shop cleaning supplies to hard tooling materials is categorized under one heading then how can you improve the bottom line by addressing specific targets? Hard tooling is not only job specific hard tooling but also things like shadow masks and turn table Y- tooling and such. One needs to find out the total expenditure per year and amortize it over the number of jobs handled through in a year to get somewhat of a cost that can be allocated to each job.

Thus, every single material that is used in the processing of thermal spray hardware has to be costed out for each job and each and every job needs to take on the burden of supporting these costs. We will analyze some more details of such situations in the coming posts. Remember, without knowing your costs, you cannot price anything accurately. You should always wish that your competitor does not have a clue about his costs, because that is the sure fire way he will miss out on thermal spray business success!