Machine Shop Quoting + Cost Estimation in 5 Simple Charts [ Survey Results ]

1 month by cncdivi

Job Quoting and Cost Estimation are important functions in manufacturing that most shops have to deal with. Your ability to quote jobs accurately has a big impact on your profitability and on your ability to compete for work.

Recently, I came across an article that suggested that the best shops have a 70% average quote to book ratio, while the average shop has a 51% ratio.  That means 70% of the quotes from the Top Shops win the business while the average shop is quoting two jobs for every one it takes to the bank.  The Top Shops are doing a significantly better job on their quoting process.

This year, we surveyed 100 respondents to learn as much as possible about how they prepare quotes and what they like and dislike about the process.  We learned a lot, and I want to thank everyone for participating.

Job Costing Software Market Share

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The number one player by a wide margin is spreadsheets.  It’s followed closely by an “Eyeball Guestimate.”  If the latter sounds imprecise, it’s because it is.  It involves having an experienced machinist and job quoter generate a quote by looking at the part and making a few back of the envelope adjustments based on experience with prior similar parts.

Here are some of the other methods:

• CAM Machining Time:  With this method, you do all the CAM work, generate g-code, and use a simulator to tell how long the g-code will take.  It’s accurate, but the drawback is that it requires a huge amount of work on a job you might not even win.
• There were a number of folks using ERP software of various kinds including Shoptech E2, Redthorn, Factory Master, and Jobboss.
• Some use dedicated quoting software like QuoteCam, MES, or homegrown Custom Software.

Which Solutions are Shops Happy With?

This chart really floored me, because it basically says nobody is happy with any of the available solutions.  The two that didn’t have a massively negative response, Jobboss and Factory Master, had so few respondents its hard to believe the results hold for their entire installed base.

For comparison, we see figures in the 15-20% range for folks looking to switch their CAD or CAM software.  Evidently this market is ripe for some innovation.

What Are the Pain Points for Today’s Estimating Solutions?

Of course it’s natural to wonder why so many are unhappy with their Cost Estimation Solutions.  Here’s what the survey said:

Essentially, today’s solutions are too inaccurate and time consuming.  Plus, “Power Features” and much of the rest reflects solutions that don’t fully embrace the complexity of what modern machine shops do or that have immature or poorly written software.

What do Users Value in Today’s Estimating Solutions?

If you were going to sit down to improve an existing or write a new cost estimating solution, you’d want to be aware of what users value most and make sure you captured as much value for them as possible.

What we can see is that the ideal solution must be:

• Easy to Use and Fast.  CAMing out a job is accurate.  But it takes too much work to be viewed as Fast or Easy.
• Cheap.  Some of the software out there for Job Quoting is thousands of dollars.  Shops are clearly saying it’s not worth that much to them.  Given how skeptical they are about the accuracy and speed of even the fairly expensive solutions they responded about in the survey, shops may also lack confidence that spending a lot more money buys much.
• Materials and Markup:  Cost Estimation needs to be aware of materials and allow markup.
• Cutting Time Calculations:  Cost Estimation must provide realistic estimation of Cutting Time
• Integration:  Cost Estimation is not an island, they’d like a solution to tie back to ERP, Shipping, Travellers, Invoicing, and More.
• Cusom Reporting is important
• Customer Aware:  This basically means not treating all customers equally.  They want the quoting software to take the customer into account.
• Quantity Analysis and Non-Recurring Costs:  What’s the optimum lot size for my profitability?  Is it worth building a custom fixture for this job?  Any Shop makes a lot of these kinds of decisions and they want help from their Costing Solution.
• Sub-Contracting and working with multiple Vendors is a fact of life.  The Costing Solution has to be able to deal with it.

You can see that a lot factors into Cost Estimation.

How Many Job Costing Efforts Start with a CAD Model from the Customer?

This was another surprising result.  For at least 40% of the respondents, the cost must be estimated without any CAD Model.  They work from back of napkin drawings and descriptions by the customer of what needs to be made.

How Does G-Wizard Estimator Compare?

As you may know, CNCCookbook has a Job Cost Estimator under development and in Beta Test.  It’s called G-Wizard Estimator.

We believe it’s a fundamentally new approach to the problem, and one which will make users a lot happier than the existing crop of software has.  For starters, it’s built on the same powerful Feeds and Speeds engine we use in our G-Wizard Calculator.  Why would you do Cost Estimation with a different Feeds and Speeds engine than the one you’ll use to make the parts?  Or worse, why would you try it without feeds and speeds at all (yes, the majority of Estimators will require you to enter your Feeds and Speeds).  After all, a good cost estimation begins with accurately simulating the machining processes that will be used to make the part.

Here’s another unique feature of G-Wizard Estimator: it creates an Estimation Spreadsheet.  Yup, you heard right, Estimator creates a custom spreadsheet for you.  This gives you the ultimate customizability.  You can either take the sheet as is and use it to create proposals or integrate back to your other Shop Floor software, or you can modify the heck out of it to suit your shop’s special needs.

Let’s go back through the charts and see how G-Wizard Estimator stacks up to what you’ve told us in the survey is necessary.  We’ll start with what you’ve said you value most in your current solution:

I’ve put down a green bubble everywhere I think G-Wizard Estimator has the capability wired:

Ease of Use & Fast

If you’ve ever used G-Wizard Calculator, you’ll know we’ve got ease of use down pat.  Same with Estimator.  And we’ll keep on making it even better.

One of the areas I am most proud of in Estimator is that like G-Wizard Calculator, we’ve included special calculators to help you solve specific problems.  For example, there’s a fixture calculator that helps you decide whether it’s worth building a custom fixture for a particular bid.  And there’s also a Machine Hourly Cost calculator to make sure you’re billing your machines out at rates that will be profitable.

Easy to Customize

There are many variables built-in.  Plus, Estimator shares many core technologies of our product line so you can share Machine Profiles, Tool Cribs, and the like.  But the ultimate in customizability is that we output a spreadsheet that you can then dig into and customize to your heart’s content.

Cheap

You can pay many thousands of dollars for other Cost Estimation Software.  We’re not that way.  Expect very reasonable pricing along the lines of what we charge for our Calculator and Editor products today.

Accuracy

G-Wizard Calculator is the industry-leading feeds and speeds solution and Estimator uses exactly the same engine.  You couldn’t hope for better accuracy than that.

The list goes on, but you get the idea.  We understand what we’re doing when it comes to machining and we’ve taken a lot of time over Estimator.

What about the Pain Points?

We’ve taken careful aim at which problems we wanted to tackle in our first release.  Eliminating as many of the main pain points as possible for existing solutions was key.

I’ve talked about why we believe G-Wizard Estimator will be as accurate as possible.  We’ve streamlined the User Interface to make it fast and easy to use.  And, we’ve built the power features that support the complexities of real machine shop cost estimation.

See for Yourself

If you’re interested in a new Cost Estimation solution (and just about everyone who took the survey is), you should have a look at G-Wizard Estimator.  It is still in Beta Test, which means that not all features are completely working yet.  But there’s a lot there and the rest will come together quickly.

The even better news is that G-Wizard Estimator is completely free during the Beta Test.  The only requirement is that you have a working (via subscription or free trial) G-Wizard Calculator to try it out.  Make sure you’re set up for that, and then feel free to sign up and try G-Wizard Estimator:

[ Try G-Wizard Estimator ]

Best of all, this is the time when we’re ravenous for your feedback and in a position to do something about it before the product is finished.  When was the last time you got to help shape a key piece of software to your needs?

I hope to hear from you about G-Wizard Estimator soon!