F2023 GCM750 Week 09 The Business of 3D Print PDF

Lee Eldridge [email protected] GCM 750 THE BUSINESS OF 3D PRINT SESSION WILL BEGIN AT 3:10 PM COPYRIGHT NOTICE All original materials and contents © 2021 - 2023 Lee Eldridge. Supplemental (uncredited) images & illustrations © 2021 - 2023 Deposit Photos, Inc., Use...

Lee Eldridge [email protected] GCM 750 THE BUSINESS OF 3D PRINT SESSION WILL BEGIN AT 3:10 PM COPYRIGHT NOTICE All original materials and contents © 2021 - 2023 Lee Eldridge. Supplemental (uncredited) images & illustrations © 2021 - 2023 Deposit Photos, Inc., Used under license to Lee Eldridge. Students registered in this course can use the materials for the purposes of this course. No other use is permitted, and there can be no sale or transfer or use of the work for any other purpose without the explicit written permission of the copyright holder(s). GCM 750  3 v The Business of 3D Print Calculating Productivity, Costs and Pricing Material Labour (Set-up, Running, Post-Processing) Capital Investment Overhead Distribution of Digital Goods / Virtual Products Business Examples 3DPhacktory Selftraits Proto3000 Hypecolor Anubis 3D Ikea Calculating Productivity, Costs and Pricing  5 v Calculating Productivity, Costs and Pricing When estimating the costs for any custom manufacturing process, there are a variety of factors involved, including: Material Costs Labour Costs Capital Expenses & Machine Costs Overhead & Other expenses Some of these are fairly straight-forward to associate with a particular project or job. Others are more abstract and may require estimates & adjustment over time.  6 v Calculating Productivity, Costs and Pricing Estimating costs for a custom manufacturing facility is more challenging than setting prices for most traditional businesses. Because you do not have a set product, or service offering, and you are not typically reselling homogenous items you’ve purchased wholesale, your costs from project to project can vary greatly and are often determined by the specific needs of the client and project at the time. This can result in a more involved pricing-estimation process than is found in other business types.  7 v Calculating Productivity, Costs and Pricing Understanding you costs is critical to creating appropriate and competitive pricing. Many new businesses significantly underestimate their operational costs, which can cause serious long term problems both financially and for your customers. Even with a thorough understanding of your costs, your pricing may not always be the most cost efficient for every project – different devices and methods have different efficiencies, and unless you are using the same equipment and staff-salaries as your competitors there are a myriad of reasons why your price may be higher or lower than theirs.  8 v How Much Material? The more material needed to 3D print a part, the longer it takes to build it. That’s because the laser beam, printing head, or UV light source must traverse every square inch of every layer in order to fuse, deposit, or cure the material there. This is the opposite of subtractive manufacturing, where every cubic inch of material removed costs a few bucks in machining time. Parts optimized for 3D printing — due in part to their use of organic shapes — are by their very nature skimpier on material than their blocky machined equivalents. SOURCE: Industrial 3D Printing eBook, Chapter 6 Designing for 3D Printing  9 v How Much Time? Build speeds of industrial 3D printers range from a tiny fraction of an inch to an inch or two (Z height) per hour, depending on the size of the part, the resolution used, the material, and the type of printing technology. 3D printing is slower than machining processes. Offsetting this is the fact that 3D printing can [ often ] produce many parts simultaneously, even if those parts are different from one another. Often times an entire assembly or family of parts can be built in one job. Machines run unattended, reducing labor costs and maximizing output. 3D printing avoids the need for fixtures, which drive up initial part cost and increase lead-times. SOURCE: Industrial 3D Printing eBook, Chapter 6 Designing for 3D Printing  10 v How Much Time? This means 3D printing, though “slower” than traditional manufacturing processes, often gets the job done more quickly (and less expensively). The other good news is that 3D printing gets a bit faster every year. Attempts to minimize build times by using lower resolution or thicker layers can be like cutting off your nose to spite your face. Time saved during the print process often equates to reduced part quality, riskier builds, and additional time on the back end for post-processing. SOURCE: Industrial 3D Printing eBook, Chapter 6 Designing for 3D Printing  11 v Estimating Material Costs Material costs tend to be the most straight-forward component to estimate, since your slicing software provides a reasonably accurate estimate of materials used in a print. You can break down your material costs to a per-unit amount (such as “per gram”), and then multiply this amount by the units used by a print or project. Generally speaking you’ll want to add a bit of buffer here (or to the project as a whole) to accommodate waste / errors / spills etc., this amount will vary depending on your exact set up and they types of projects you are doing, but is generally +12% to +18% Electrical is sometimes included in the material cost if it is a fixed / consistent rate per unit of production.  12 v Estimating Material Costs For example: If 500g of Resin costs me $30*, my raw cost per gram is approximately $0.06 per gram ($30 / 500g). Adding +18% to that for waste / spoilage brings my cost to $0.07 per gram. If I find after operating for some time that my materials utilization rate is above 82%, I may adjust (reduce) my waste / spoilage surcharge amount down to accommodate. * Taxes may be added to this amount when you make your purchase, but generally speaking you “get back” anything you pay in sales tax when you make your final sale to the end client (assuming you are selling domestically). Sales tax on a material supplies purchase is added to your Input Tax Credit amount on your sales tax remission forms, and reduces the amount of HST/GST you need to remit to the government. Shipping costs and other charges do NOT function in the same way though and should be included in your “cost” value.  13 v Estimating Material Costs For some printing processes, there are additional material costs as well. Anything that is consumed at a measurable rate per-job should be included in material costs. For example: Resin SLA printers require an Isopropyl Alcohol bath for most basic resin prints. This liquid can be reused for several jobs, but eventually becomes saturated and can no longer dissolve any more liquid resin, at which point it must be replaced and disposed of appropriately. Components that need infrequent replacement or whose replacement does not directly depend on usage (such as replacement print heads) should generally be included in machine capital costs (see Machine Time on subsequent pages).  14 v Estimating Time Project time is also generally fairly straightforward to calculate, but comes in several different forms: Operator Labour – This is a catch-all for any file and machine set-up, maintenance and post processing required from a skilled operator to run the job. Remember that not all operators will have the same wage, nor will they all have the same level of efficiency – you need to average those factors here for accurate estimates of costs. Machine Time – This is the amount of time it takes to actually produce on the printer selected. An estimate of this is generally available via your slicing software, and like material costs should have a slight buffer amount added until you are confident that your slicer info is accurate.  15 v Estimating Time Administrative Time – This is often overlooked by new managers, but can become a significant value in a large organization and should not be left out. This could be the amount of time it takes to set up a new client in your accounting software, to generate price quotes / estimates, issue invoices and receipts and process payments. Depending on the size of your business, some or all of these tasks may be handled by the operators / technicians, or you may have dedicated administrative and customer support staff for these functions. Depending on how streamlined your operation is, this may be something you are able to charge a “flat rate” for (e.g. $25 per job), or may require some variation based on job complexity.  16 v Estimating Time – Labour (General) Remember that the hourly wage of an employee is not all of what an employer must pay. Health and dental benefits, EI and CPP contributions, WSIB and insurance premiums, RRSP Matching and other non-salary costs are “paid” indirectly on top of salary. A good rule of thumb for most average employees ($35K to $70K per year) is +30% of direct wages. Employees making more than that amount can have the percentage reduced, as there are “caps” (upper limits) to many of those listed costs – they do not all rise in tandem with wages past ~$60K. So a worker making $20 per hour would “cost” the company approximately $26 per hour, even though $6 of that is not being paid directly to the worker.  17 v Estimating Time – Operator Labour It is not reasonable to expect “100% output” from most employees. Just because an operator has 8 hours in their shift, does not mean that they will output exactly 8 hours of work. There are interruptions and disruptions in everyone's work day – some job related, like helping out a co-worker, attending a meeting or discussing a problem, others personal – like using the washroom or taking a quick break to clear their head. In a strict manufacturing environment, such as an assembly line, output may reach 85%+, but for most knowledge workers a more reasonable average is ~70% capacity – that is, for every 10 hours at a job, there is 7 hours of work completed. If work is “slow”, this downtime could be even higher.  18 v Estimating Time – Operator Labour For Example: If my operators make (on average) $25 per hour, and a project takes a total of 90 minutes of operator labour to set up, get running and complete / finish once printed, my minimum operator labour cost to add would be: 1.5 hours * $25 per hour * 1.3 / 0.7 = $69.64 in Operator Labour ($46.42 per hour) (of which the operator only earned $37.50 directly on their pay-cheque – just a little over half!)  19 v Estimating Time – Admin Labour Time spent by staff that is not directly related to the production of the job but is required to facilitate the job through the business is often lumped under “administrative labour”. Depending on the size and scope of your business, this might be as simple as a customer service rep at the front desk taking down the order details and charging the client for the project. It can also involved costs shared between multiple projects, such as chasing down unpaid invoices or other administrative work that doesn’t happen every time - but does happen occasionally. Often this is added to the cost-sheet as a fixed cost per project / job, and can vary significantly from business to business. Some business may just lump this cost under “Overhead”.  20 v Estimating Time – Machine Time Machine time is a per-hour (normally) cost associated with the purchase and (non-consumables) operation cost of a particular device, such as a 3D Printer. There are several methods for determining machine-time costs. Since we don’t normally have an expected production life-hours of a machine in advance, we generally estimate how long a device should take to “repay” its initial cost + maintenance / parts cost over that period, and factor that by the expected operational (running / production) hours in that time. This gives us a rough value of how much one hour of machine time on the device should cost our business. Some businesses include costs like Electrical under this category as well.  21 v Estimating Time – Machine Time For Example: If I spend $5000 on a Resin printer + $~1500 on spare parts per year of operation (build platform, resin tray, UV bulb, FEP film etc.), and expect to run it approximately ~60 hours per work-week on average, and expect to keep the printer in operation for two years, my machine time per hour calculation would thus be: ($5000 + (2*$1500)) / (52 weeks * 2 years * 60 hours) = $1.28 per machine-hour Note that changes in any of these values can significantly alter results – if I planned to run 30 hours per week, without additional parts, my per hour machine time cost would be doubled!  22 v Estimating Time – Machine Time ($5000 + (2*$1500)) / (52 weeks * 2 years * 30 hours) = $2.56 per machine-hour At $2.56 per machine-hour, and expecting to run 1560 billable hours per year, the return on my $8000 investment at these rates is roughly 50% per year - that is, I plan to recoup 50% of my up-front capital cost per year for the first two years. (After that, if the device is still running well and I still charge the same amount per hour, my profitability goes up and I have extra cash to invest in new endeavors or equipment).  23 v  24 v Overhead and Other expenses In addition to the machine time, capital cost, consumables cost and labour, a business has various other expenses as well – rent, utilities, coffee for the break room, etc. These costs are generally not broken down on a per-job basis, and – unless you only have a very few number of devices or staff and can associate directly with projects – are often applied as a general mark-up to other activities.  25 v Cost of a Project – Putting it all together Once you have established rates and formulas for your costs, you can summarize them into a total estimated cost for a particular job. Add your material and labour costs, and overhead factor, and then apply a margin for profit (most businesses are out to make money after all!) Costs can add up very quickly...  26 v Example Cost Sheet + Price Estimate ITEM Cost per unit Units Sub-Total Material Cost: $0.07 per gram 30g $2.10 Admin Labour: $15 per job 1 $15.00 Operator Labour: $46.42 per hour 1.5 $69.64 Machine Time: $2.56 per hour 2.5 $6.40 Total Project Cost: $93.14 Overhead +30% +$27.94 Profit: +25% +$23.28 TOTAL SELLING PRICE: $144.36  27 v Cost vs Value Cost vs. Value  Distribution of Digital Goods / Virtual Products  29 v Why produce Products at all? Many companies and individuals are exploring different ways to distribute 3D print files instead of (or in addition to) selling physical objects. This has pros and cons, including: PROS: No logistics of physical goods to worry about Can access a global audience instantly Facilitates direct contact between your organization and the consumer Limitless supply Little or no per-sale infrastructure cost  30 v Why produce Products at all? CONS: Lower total transaction value Version control concerns and issues No control over quality of produced items, or the resulting customer experience Potential exposure of trade secrets Potential benefit to your competition Piracy / File Sharing concerns  31 v Trade Secrets vs. Open Source Do you want to encourage community made add on parts to your product? Some of these may be improvements, but others could be bad or poorly implemented ideas that hurt the performance of your product. Consider: Does your industry currently have “after-market” parts? Some industries – like automotive – have supported after-market parts (at least partly) for a long time. How do you set your “OEM” items apart? Business Examples  33 v 3DPhacktory Full service Commercial 3D Print & Design studio / service provider. Offers 3D consulting and design, 3D print output and Post Processing / Finishing services. Can work with your files, or build from your sketches, or just rent a workstation out to you for you to use directly. Approx. $95 per hour for design-time. Manufacturing facility is physically located in Toronto’s East End (Leslieville area), with offices downtown Toronto, Vancouver, Montreal and Calgary. 3dphacktory.com http://3dphacktory.com  34 v 3DPhacktory http://3dphacktory.com  35 v Proto3000 Full service Commercial 3D Print, Engineering and Design. Headquartered in Vaughan, Proto3000 is one of the best known industry leaders in 3D engineering, print and design. It was founded in 2007 and has some of the most advanced 3D printing technologies available. It has approximately 45 employees in 2021, with additional offices in Quebec and Georgia (USA). proto3000.com https://proto3000.com  36 v Proto3000 https://proto3000.com  37 v Proto3000 https://proto3000.com  38 v Proto3000 https://proto3000.com  39 v Anubis 3D Industrial 3D design-engineering & print facility located in Mississauga. They have expertise in using generative design & 3D print to create custom parts and assemblies for automated / robotic manufacturing facilities and production lines. Primarily uses EOS brand SLS 3D print devices. Switching tools from traditional metal to nylon plastics can significantly reduce the weight of fixtures and assemblies, and make producing replacement parts exceptionally more cost effective. https://anubis3d.com  40 v Anubis 3D https://anubis3d.com  41 v Anubis 3D https://anubis3d.com  42 v Anubis 3D https://anubis3d.com  43 v Selftraits Toronto based full-body 3D scanning and printing services. Also does 3D scanning for video game and movies. Scans take about 20 minutes to complete, and use a custom built scanning “dome” with 140 DSLR Cameras built into it. Pricing ranges from ~$130 (5” figure) to $640 (14” figure). https://studios.sculptraits3d.com/  44 v Selftraits https://studios.sculptraits3d.com/  45 v Selftraits https://studios.sculptraits3d.com/  46 v Hypecolor Home-based design and 3D print business (extensively using LEDs to augment products). Prints using FDM printers and high end / specialty finish filaments to add unique style to their custom designs. Quickly gained a large following on TikTok to help drive sales and fans – https://www.tiktok.com/@pinklumenade https://hypecolor.com/  47 v Hypecolor https://hypecolor.com/  48 v Hypecolor https://hypecolor.com/  49 v Ikea - FLAMTRÄD In January 2022, Swedish Furniture company IKEA released a line of 3D printed décor in the German Market. The range features decorative wall and desk items 3D printed using SLS 3D printing processes and Nylon (Polyamide) 12 for the printed material in Black and White options. While the objects in the line are primarily decorative in nature, Nylon 12 is considered to be a general-use plastic well known for its ability to flex without fracturing and general toughness. Objects are priced at ~$42 to ~$70 CAD (€29.99 to €49.99 in the German market). https://3dprint.com/287936/ikea-introduces-3d-printed-consumer-line-in-germany/  50 v Ikea - FLAMTRÄD https://3dprint.com/287936/ikea-introduces-3d-printed-consumer-line-in-germany/  51 v Ikea - FLAMTRÄD This isn’t the first 3D printed product offerings from Ikea. In 2019, Ikea Israel launched ThisAbles – a line of 3D printed products designed to make select Ikea products more accessible to people with physical disabilities. In addition to being available for purchase as printed items, the files for 16 objects from the range are available for download on the ThisAbles website so that anyone can download and print them! https://www.3dprintingmedia.network/ikea-launches-flamtrad-on-demand-3d-printed-decorative-items/ Marketing Examples  53 v Nokia – Customizable Phone Case Templates After having success with phone models that could be customized via removable faceplates, Nokia took it one step further by releasing 3D printable files for phone cases. They encouraged owners to remix, re-colour and inexpensively 3D print phone cases and accessories – customized and on-demand! https://www.wired.com/2013/01/nokia-3d-print-case/  54 v Nokia – Customizable Phone Case Templates https://www.wired.com/2013/01/nokia-3d-print-case/  55 v Charity Barnados puts donors Houses in Snowglobes Raising awareness for homelessness in the holiday season, BBH London and U.K. charity Barnados selected one donor each day, designing and printing a custom, 3D printed snow globe of the donor’s home. The donor was sent the snowglobe, and everyone else was reminded of how much having a home means – especially over the holiday season. https://www.creativebloq.com/3d/personalised-3d-printed-snowglobes-make-home-christmas-12121569  56 v Nescafe prints Instant-Coffee Lids with an Alarm Clock built into them Combining clever electronics and custom 3D printing, Nescafe worked with Publicis Mexico to produce 200 exclusive jars of instant coffee with a wake-up alarm clock built in. The only way the alarm clock could be turned off was by opening the jar. 3D printing allowed them to make minor changes and adjustments quickly and ensure everything fit together correctly. https://www.bloomberg.com/news/articles/2014-05-14/nescaf-s-new-lid-has-a-built-in-alarm-clock  57 v Nescafe prints Instant-Coffee Lids with an Alarm Clock built into them https://www.bloomberg.com/news/articles/2014-05-14/nescaf-s-new-lid-has-a-built-in-alarm-clock  58 v Office Chair Designer Aeris Sends miniature furniture to clients Looking to stand out in a competitive marketplace of discerning clients in the fields of architecture and interior design, Aeris decided to replace their traditional brochures with miniature versions of their high-end office chairs. The product specs and information were incorporated into the special packaging needed to ship the tiny chairs safely. https://3dprintingindustry.com/news/3d-printed-marketing-sends-clients-tiny-chairs-24494/  59 v Office Chair Designer Aeris Sends miniature furniture to clients Combining clever electronics and custom 3D printing, Nescafe worked with Publicis Mexico to produce 200 exclusive jars of instant coffee with a wake-up alarm clock built in. The only way the alarm clock could be turned off was by opening the jar. 3D printing allowed them to make minor changes and adjustments quickly and ensure everything fit together correctly. https://3dprintingindustry.com/news/3d-printed-marketing-sends-clients-tiny-chairs-24494/ HAVE YOU SEEN ANY INTERESTING APPLICATIONS OF 3D PRINTING IN MARKETING? Thank GCM you 750 | for 3D joining! Printing Lee Eldridge [email protected] COPYRIGHT NOTICE All original materials and contents © 2021 - 2023 Lee Eldridge. Supplemental (uncredited) images & illustrations © 2021 - 2023 Deposit Photos, Inc., Used under license to Lee Eldridge. Students registered in this course can use the materials for the purposes of this course. No other use is permitted, and there can be no sale or transfer or use of the work for any other purpose without the explicit written permission of the copyright holder(s). GCM 750