Wastage Factor and Profit Margin

[RCScott]

I was told once that one should count on a wastage factor of about 10%… Well, yesterday when I was working some business plan numbers I went to add that 10% but began to question my understanding of the number. So, here’s my question. If there is a 10% wastage factor (I’m not doubting, but that does sound a little high), it’s 10% of WHAT exactly?? Gross? Net? Add an additional 10% on top of the retail price of each job that comes through the shop to factor for OVERALL waste? Per job?

Also, can someone give me a general idea of the profit margin of powder coating? After one considers labor, overhead and materials, what kind of profit can one count on?? 50%… 40%… 30%…

Thanks – Scott

[Blademan]

The prob with trying to caculate a profit margin with Powder coating is that unless your do a specfic items like I do hatches, handles and screens your powder usage will differ over each part. Powder goes a lonnnnnnnnnnnng way .

[bzer1]

My guess would be that 10% is a bit high. However, when you're estimating a job if you're very careful not to leave anything out you won't have to worry about an few cents worth of powder. I would also consider the fact that 10% might include things like prep material like parts cleaners and Phosphate or similar treatment. Given that as a factorI might be tempted to say you might calculate that 10% in your overhead.

As far as profit margins are concerned, I can't help you there as I don't have enough info on your particular situation. Profit will fluctuate on each job. The margins on high volume jobs like say 100 pieces or more will be lower than on a single piece. In order to figure out something like that you really need to know your market and have your overhead figured out pretty closely.

[PowderVisions]

Each manufacturer can give you a product sheet. This sheet will tell you how much powder in mils to apply, the cure schedule, and the specific gravity of the powder. The equasion for determining powder coverage is:

Fixed (192.3) divided by the specific gravity = sq. ft coverage at 1 mil of powder thickness per pound of powder.

Example: 192.3 (fixed) divided by 1.5 specific gravity = 128.2 sq. ft.

This 128,2 sq. ft is at 100% transfer efficiency. You must consider that most manufacturers require you to put at least two to three mils of powder onto your substrate so then you would divide 192.3 / 2 or 3. Actual transfer effeciency is not 100% and you have to estimate your efficiency.

So if you put three mils of powder onto the part and it had a specific gravity of 1.5 and you had a transfer efficiency of 70%, you would cover 29.91 sq. ft for each pound of powder you sprayed. You can then multiply each pound by the cost per pound. If you sprayed 10 pounds of powder at a part and 5 pounds lands on the part, there is a 50% transfer effeciency.

Remember also that although you may pay less for one specific powder, if a different powder has a lower specific gravity, it will go farther than the cheaper powder. This happens regularly. You pay for what you get, and many times, the more expensive will goe much farther. It all depends upon the specific gravity and the person applying the powder....

Example:

Sample A = $5.25lb. With a specific gravity of 1.1
Sample A = 193.2/1.1 = 175.6 sq. ft per pound of powder.
50lbs x $5.25 = $262.50 x 175.6 = 46.095


Sample B = $4.75lb. With a specific gravity of 1.6
Sample B = 193.2/1.6 = 120.8 sq.ft per pound of powder.
50lbs x $4.75 = $237.50 x 120.8 = 28,690

It is very clear that even though sample A is higher priced, the coverage is much greater than sample B for less money. The best choice is A overwhemingly.

Hope this sheds some light.