How to provide instant quotes for Multi Jet Fusion parts

As part of our ongoing series about the HP Multi-Jet Fusion, we’ll be talking today about how to price Multi-Jet Fusion parts. This article will be a follow-on from our conversation with Ludwig Hendl on Phasio Connect.

What should I charge my customers?

For many manufacturers, this is a surprisingly difficult question to answer. There are a series of different schools’ of thought which one could apply to this issue, including:

• Cost-plus pricing
  Estimate your costs of production and charge a margin on top
• Value-based pricing
  Evaluate the value of the part to the end user and charge based on value-added
• Demand-based pricing
  Determine your man-hour cost and adjust that pricing according to how busy your staff are

These different pricing methodologies each have advantages and disadvantages.

The most important thing to note is that there is no correct answer here, and to operate effectively as a Multi-Jet Fusion business, or any manufacturing business for that matter, you need to apply all three methodologies.

If I need all 3, how can I automate quoting?

Great question. Automated quotations are not an all-or-nothing solution and they cannot replace an effective growth strategy for your business.

The point of an instant or automated quotation is to respond as quickly as possible to an RFQ (Request for Quote) while your competition is still running the numbers. The numbers don’t have to be perfect, they just have to be good-enough to ensure that you respond with a reasonably accurate number as quickly as possible.

The value added by an automated quotation system is the time you save as a manufacturer. The system cannot replace the need to work directly with your customers and, honestly, it’s not desirable that such a system should do so!

Let’s start with an example. A customer comes to you looking for a shoe implant. They use an instant quotation logic to get a price based on a CAD file they have. Obviously, you want them to order in large quantities, so you might imagine that a good pricing logic would look something like this:

But this is not a good pricing logic at all. Why? Because we don’t know anything about the part yet. Instant quotations don’t understand your customers’ use case and hence they price based on a cost-plus basis.

This logic probably works fine for simple projects with limited engineering constraints, but what if the customer later communicates:

“Oh, I forgot to mention. The parts are medical orthotics and will be prescribed to patients by a doctor.”

Would this change the price that you’d be looking to charge the customer? It certainly should, since the expectation of the doctor and patient is higher and you may even need to manufacture according to a medical standard. In this case, a value-based pricing methodology would be more suitable.

So even in this simple example, it’s clear that the instant quoting logic is not everything. It’s great that we get to speak to this customer before our competitors and we have a starting price to work with, but it’s only the first step in the journey.

Quotations in a B2B world

The competition in the world of manufacturing is a fight for clients. The most sought-after clients treat their vendors well and place large, repeated orders which give the vendor a chance to make a margin.

When you work with a client like this, you’re unlikely to make use of an instant quote solution. Why is that? Because the volumes are too high and the orders are too nuanced. There’s a dual-purpose to engaging with your clients personally on these orders:

1. You need to understand whether there are engineering constraints you need to consider on this order
2. Orders for certain industries, like Medical or Defense, are likely to justify a higher margin than other customers.

Ideally, and according to Phasio’s Three Virtues of Manufacturing, you should minimize the time you’re spending on lower-value quotes and focus instead on high-value customer relationships.

The point of instant quotes is to empower you to do exactly that. You can automate the lower-value, simple quotes while focusing your time on the larger, high volume orders.

Why this is so important for Multi-Jet Fusion

The primary benefit of the Multi-Jet Fusion is it’s ability to serve the $1 trillion Industrial Products & Services market. It’s good at this because of 3 things:

• It prints in industrial grade polymers like PA11 and PA12
• It’s reliable
• Most importantly, it’s most effective at high nesting densities

The build time and material cost is the same regardless of how many parts you have in a build chamber (barring powder recycling, of course). This creates a clear incentive for you to increase the margin on each build by maximizing the number of parts that are packed into it.

As you can see in the image above, the nesting issue is often out of your control. It really comes down to the relationship that you have with your customers and whether or not they are re-ordering large volumes of parts from you.

The point of the instant quote is to give you space to focus on nurturing those high-value relationships and to drive down the costs associated with quoting one-off orders. This allows you to obtain a higher nesting density at a lower cost.

Balancing Automation and Customization

While automation can help in scaling your Multi-Jet Fusion business, remember that the human element comes first, especially for complex or high-value orders. Consider implementing a hybrid approach:

1. Automated First Pass: Use your automated system for the initial quote on all inquiries. This ensures quick response times and sets a baseline.
2. Human Review for High-Value Orders: Set up a system where quotes above a certain threshold are automatically flagged for human review before being sent to the customer.
3. Follow-Up Calls: For potentially valuable clients or complex orders, have a sales representative follow up on the automated quote with a personal call. This allows for relationship building and the opportunity to better understand the customer’s needs.
4. Customization Options: Provide clear avenues for customers to request customization or special considerations that may not be captured by the automated system, such as medical or other certification requirements.
5. Educational Content: Alongside your quoting system, provide educational resources about Multi-Jet Fusion technology, material properties, and design considerations. You can also explore using a dedicated AI tool for customer education like Manufacturing AI.

By striking the right balance between automation and personalized service, you can maximize the efficiency of your Multi-Jet Fusion operation while developing the high-value customer relationships that drive long-term success in the AM industry.

So how do I do it?

If you’ve reviewed this content and you’re interested in going deeper into the math of how to price Multi-Jet Fusion parts, we encourage you to reach out to the Phasio team. We are here to help you develop a pricing logic and deliver that logic to your clients in a user-friendly way that makes ordering simple.