Quote Originally Posted by jab73180 View Post
well doug, there are some flaws in your plan. you didnt add the cost of any consumables like bits, stains, polys, sanding paper or anything like that. another thing is you set your max wear out on the cw at 250 hours. i think that is very under rated. you think that you will go through 2 cw's in the time its gonna take to wear out a table saw. now figuring you use your machine 20 hours a week, its only gonna last 12.5 weeks. people are gonna be knocking down your door to get that machine. ask digitalwoodshop AL how many hours on his machine.
I see no flaws in Doug's analysis. If you bother to talk to Al and read some of his past comments, you would realize that he has not put 600+ hours on a machine without repairs. At some point, parts will need replaced. Those parts cost money. They also cost time to diagnose the problem, wait for parts to arrive, and then time to install. Meanwhile your are not able to make products to sell, but you still have bills to pay. All big manufacturing companies have an opportunity cost figured in when their machines are down. I know GM would charge some of its suppliers $100,000/hr for parts delays that stopped production.

In no way is Doug's analysis complete. It is a good framework to get you thinking of ALL the expenses you have in building your items. This is where a business plan comes into play. You make an educated guess at your expenses and material use, at the end of each month, you compare your actual expenses and material use to those numbers you planned for, and then look to answer the question: "Why are these number different?" Maybe the machine had problems and ruined a few projects, maybe the electric bill was higher, maybe it is taking you longer to stain and finish an item than you estimated. After several months, you will get a good idea of your regular expenses, and will have better estimates for the future months. There still will be unforeseen things that happen, but they will be less of an issue because you have covered your planned expenses and have money left over as a cushion for those unplanned instances.

i just need to figure out that magic number to make it all work.
There is no "magic" numbers in business. If all of this hurts your head, maybe you should consider a 9-5 JOB. The guys that are successful know how much it requires to cover all their expenses including planned maintenance, machine/tool replacement, operating expenses etc. To stay competitive, you need to know this to price your items appropriately. If you can't sell an item to cover your costs and make a profit, you are just a slave (free labor) to your customer. That definitely doesn't make much sense to me.

You should find your local SBA (Small Business Administration) office and visit with them. They can help you with many of these questions are more. They are a great resource and best of all...FREE.

Rob