How to price a Heat Treatment?

[hramosf]

Good afternoon everybody,

Ive been lurking around for a week or so and finally decided to join. Ive found this forum to be very helpful and look forward to be more active, mostly with questions as I am barley starting in the heat treating industry.

Let me introduce myself. I am a 28 year old mechanical engineer who is the process of setting up a heat treating facility in northern Mexico. And I have to admit I am kind of new to this industry. I come from 5 years working in the Oil and Gas industry where I did mostly wellhead design but was also in charge at some point of all engineering related to all processes that took place in the plant. That included some heat treatment, but mostly stress relieving and normalizing and the furnace was not high tech at all. I left to start this heat treating facility with a partner back in my hometown given its recent industrial boom. There is a growing demand for aluminum heat treatments, mostly small parts, not more than 20" long, and they are mostly T6 with artificial aging (10-12 hrs).

While we are fairly advanced in developing the business model, choosing the furnaces based on the market and defining investment required we have encountered some difficulties. My main concern is with how to price or charge for our services.Given the length of the heat treatments that we will be mostly providing, I will have to have two shifts so then that becomes a extra cost. I am trying to figure out the best way to quote and charge for this services, is it by hour, kilo/pound, number of parts or batches? I´ve talked to and quotes parts in several heat treating facilities here in norther Mexico and have come across with several quoting models, some of them charged by batch for the first 250 kilos then my kilo, some of them by number of batches required.

I would love to hear how you guys charge for this services in other countries, what has worked for you and what has not.

I would really appreciate your help and thank you in advance.

Saludos!!

 

[redpicker]

Typically, heat treating prices are based on a per pound/kilogram basis. Obviously, different treatments carry different prices. Of course, these prices have to be related to labor costs, energy costs, capital investment, and administrative costs. If you are just starting out, you can see what other commercial operations charge for the same treatment and use that as a basis, but eventually you will have to make sure what you charge for your services covers your costs, plus whatever profit margin you expect.

rp

 

[TVP]

I agree with redpicker for the majority of heat treating requirements. I will make the note that many heat treaters will have a flat-rate charge for small orders (small in quantity and usually size as well) that is independent of mass. This basically amounts to a "set-up" charge, similar to what you would get from a machine shop, etc.