Laser Cutting Services: In-House Manufacturing Vs. Outsourcing

Is it better to send out the laser-cutting portion of a job to manufacturers who specialize in that kind of work and pay their laser cutter prices? Or does it make more cents (sorry) to buy the machinery and keep the revenue?

In-house manufacturing vs. outsourcing sounds like a simple enough argument. But when you perform a comprehensive cost/benefit analysis, things can get a bit fuzzy with custom laser cutting services.

Laser Cutter Services & Cost Per Hour: More Than Meets the Eye

How much does a laser cutter cost? They aren't cheap -- as you might have guessed -- ranging from around $200,000 to $500,000. And remember, that up-front investment is not the only consideration when figuring out the profits vs. the cost of running a laser cutting machine.

Other laser cutting price considerations include:

• Labor costs to operate the equipment and any other work required by the process
• Operating costs for power, consumables, tooling, repairs, and maintenance
• Expenses associated with buying the laser cutter, such as monthly payments and how much the machinery’s value will depreciate by the time you want to sell it.
  
  

The Real Problem: Time

As with many manufacturing processes, it's important to note that these cost issues are related to time:

• Hourly wages for workers
• Hours spent repairing and maintaining equipment
• Monthly payments to have the machinery in the shop
  
  

On the other hand, the price of laser cutting steel when it’s outsourced can be clearly estimated at a per-hour rate. For example, it may cost $16 per hour to cut out certain metal parts.

Figuring out the cost per hour for using an in-house machine is a lot more complicated. There are several factors involved:

• For how long is the laser cutting machinery idle during a work day? Can you keep the machinery producing for 18 to 24 hours a day to achieve peak efficiency?
  
  
• How much does a kilowatt hour of electricity cost? Without electricity, there’s no laser.
  
  
• How long does it take to cut through a given thickness of steel? The thicker the material, the longer it takes for a laser to cut it. Time is money. It might be better to use another kind of cutting technology if your material’s super thick.

The point is to try to look at all variables before deciding to invest in machinery rather than outsourcing the work and avoiding those complications.

In-House Manufacturing or Outsourcing? It All Depends

Your project's cost-effectiveness is about far more than just the laser cutter's cost per hour.

The merits of manufacturing in-house vs. outsourcing laser cutting depend on the kind of work a particular fabricator does. If the component requires a lot of complex cutting and tight tolerances, it might be worth it to bring the process in-house. This would allow the highest level of quality control and help remove another often-ignored cost -- fixing screw-ups. The alternative, of course, it to find a reliable metal fabricator and outsource the headache.

The cost per hour of bringing laser cutting into your manufacturing facility will vary from case to case. To find out if it’s a good move to outsource, those manufacturers who are already doing their own cutting might do well to send out a few small projects to see how the costs and quality stack up. For manufacturers who are considering moving cutting in-house for the first time, there’s no easy way to decide. It’s a matter of doing that dreaded cost/benefit analysis and being thorough.

We advise any manufacturer thinking about taking metal laser cutting services in-house to reduce costs to have a candid conversation with a fabricator. A full-service manufacturer should know the process and what goes into laser cutter prices. It’s the best place to start, whether you need laser tube cutting services or laser-cut sheet metal services.

(Editor's note: This article was originally published in October 2018 and was recently updated.)