Machine shop services are somewhat unique, yet may seem to be so much the same. Most shops specialize in turning, milling, edm, waterjet, etc. Then there are the big shops – the “one stop for all your needs” type shops.

During my career, I was fortunate enough to work for both larger and some smaller shops. Usually, the management team would meet with perspective clients to discuss their individual needs. And one question that came up almost every time is “what is your shop rate?”. At the time, it seemed like a black and white question. Let’s face it, customers want the best bang for the buck – who can blame them?

Shop rate really isn’t as cut and dry as it may seem. If a shop has not upgraded equipment regularly, it would allow them to offer a lower shop rate. As for a shop that does keep up to date with the latest equipment and training, their shop rate may very well be higher. Equipment features today can easily surpass throughput of machines from 5 or 10 years ago. Less setups, less program times, and high productivity will be very evident.

It is not far-fetched to have older equipment, older techniques, more setup times contribute to 3 times the manufacturing times. Let’s assume a given widget in a modern facility with a shop rate of $100 per hour may cost $150 to manufacture. That same widget, put through a less modern shop, with older manufacturing techniques and practices, will most likely cost $200+ to produce.

The bottom line is this – Shop rates are not an accurate way to gage who can make your parts for less cost. Shop rate is irrelevant. Have your parts quoted, get to know the perspective shop, and partner up with them to help you get the most from your dollar. Ultimately, it really comes down to which shop will give you the best bang for the buck, regardless of shop rate.