Automated Transactions, Engineering Decisions 
3 Comments Costing is not Quoting
There has been much discussion on the web lately about quoting and costing software for stamping dies.
Costing is not quoting.
The calculated or estimated cost has no practical relation to the quoted price for two reasons.
First, the price that will win the work relies exclusively on what the customer is willing to pay. End of story.
The customer does not care that it will cost the die shop $500,000 USD to build if they are willing to pay only $400,000 USD for the job.
Even if your costing software is accurate to +/-0.005%, a cost of anything over $400,000 USD is a loser.
Second, most die shops have no real clue as to what their geniune costs are. At the quoting level, it is guesswork.
At the historical level, the data is usually poorly tracked, collected, and reconciled. The historical data should be the baseline for future work. Without this important data, all decisions moving forward are simply guesses.
Again, even if the historical data was valid and the costing method – software or otherwise – was accurate, the only thing that matters is quoting the maximum that the customer is willing to pay and work like the devil to reduce costs once the quote becomes an order.
Well, at least we can know in advance how much we will lose by “winning” the job. Or how much we have to engineer in necessary changes to get the job out of the red ink.
Yes, there is a big difference between quoting and costing. But both your good work with Speedraft and what little thing I am working on address a common need, that if we don’t know our costs we have no business quoting it.
It is to the detriment of the customer and ourselves that for the past few years the industry has created enough historically valid losing project quotes, that most people have no idea what things should cost.
Then we end up with large OEMs who stake an entire economy on whether or not they can bring product to the market, employing skilled personnel, reviving the economy on the dream that I will complete that die set for 7-10% less than last year. Forget that last year too many die shops were shuttered under bankruptcy.
It seems that also the customer here might end up paying for it in the long run, you get what you pay for…
It is a nice fit – your software on the front end and Speedraft on the back end of the procurement process.
As always, you make valid, compelling points.
Thanks for reading!
oh I nearly forgot to PLUG:
http://www.speedraft.com