## 3D Printing - Printing Cost Coefficient

This coefficient can be ignored sometimes based on your situation. Often, this is somewhat or fully related to the Material Cost Coefficient (m). In any case, we will still talk about it. There are 3-ish scenarios for this variable:

First scenario: How fast do you want to break even on your investment. For example, if your printer costs \$10,000, how fast do you want your money back?

Second scenario: How much do you value your printer’s time. In other words, if your printer is occupied for 15 hours and you can’t use it, what does that cost you?

Third scenario: How much value does your printer lose when you use it?

As a note, you can combine all these into a single variable as they are related to each other. However, we will consider each scenario in isolation

Scenario One

This one is fairly simple. If you got a printer worth \$10,000, you’d probably want to break even fairly quickly.

Assumptions:

1. Printer cost (a): \$10,000
2. Printers will work 5 days a week every week for the entire 24 hours
3. Payback period (b): 3 months (Amount of time you need to wait to get your investment back)
4. 25 working days a month

With the correct assumptions, this problem becomes trivial.

Cost per hour of usage: Printer cost / [25 working days per month * 3 months * 24 hours / 1 day (converting to hours)]

or, in general,

Cost per hour of usage: a (\$) / b (hours)

Notice that variable b must be converted into hours. The result of that little formula is: \$5.55 per hour. If you’ve been 3D printing for a while, you probably noticed that 3D prints can take over 24 hours to complete at times. So this coefficient makes your pricing model very very steep. I suggest not to include this in your pricing model, and instead use this as a guide for sales targets.

Scenario Two

This one is tricky and requires a really deep analysis of your company. Let’s recall this scenario and then re-define what it actually means. We assumed that while your printer is occupied, you are losing money and hence need to compensate for that. This is hard to quantify and will change drastically depending on the structure of your company and what you are trying to achieve. So, let’s flip this around and arrive at a more understandable variable.

I suggest that we think about your printer differently. Instead of thinking about how much it costs while the printer is occupied, we should think about what happens when it doesn’t work and is sitting idle. It is assumed that you have enough sales to keep your printers busy 24/7.

This variable becomes clearer instantly. If you are running a 24/7 print farm and one of your printers is down, you are losing money. Why? Well, we need to simplify this a bit before we continue the discussion. We are going to assume that each of your printers makes \$10 an hour when it is running on average. If one of your printers is not operating, this means you are losing \$10 an hour.

I will not offer a simple solution to this variable as a simple solution doesn’t exist. However, it is something to keep in mind for your business.

Scenario Three

Finally an easy problem! But not really… Any piece of equipment loses value over time, especially if a new version of your machine arrives at the market. Predicting the market is hard so we will talk about our 3D printers like people talk about cars.

We’ve heard this over and over again from someone: “once you drive your brand new car from the dealership. It instantly loses 50% of its value”. I don’t know how true that is, but this type of thing happens with 3D printers.

Now that we have a small introduction, let’s get down to it. Once you buy your printer, you can’t sell it for the same amount that you bought it from. Once your printer is used for a month it costs even less, and over time it loses more and more value due to its mileage.

“So? Who cares. My printer can work for years just as it did when I first bought it!”

Sure… it can. However, as a company you must decide on when you throw away/recycle/sell your machine. Any piece of machinery needs maintenance, and over time it will need more and more maintenance to the point where you need to babysit it just to work. Eventually, it is just easier and more cost effective to buy a new machine to replace the old one. This whole idea is called depreciation, in the accounting world. It can get intense so I won’t pretend to know what I am talking about and like the other two scenarios, it is up to you to read more about these things.