'Menu Pricing' Keeps Work on Track
This shop's strategy for pricing work not only helps eliminate midstream delays and disruptions, but also provides customers with extra flexibility.
An increasing share of work at Cavalier Tool & Manufacturing involves tight-tolerance automotive tooling. This particular mold is used to create an automotive fan shroud. (Image courtesy of Creative Technology Corp.)
One of the first things that caught my eye on the questionnaire that would eventually win Cavalier Tool & Manufacturing this year's Leadtime Leader Award was the shop's strategy for maintaining a consistent workload. This strategy involves keeping workload at 110 percent of total capacity, then outsourcing the extra 10 percent to trusted partners who are better able to handle portions of the build that are less cost-effective for Cavalier.
However, in the high-mix, low-volume environment characterizing a mold shop, things don't always go according to plan. Cavalier has certainly not been immune from the pain and disruption associated with customers changing designs mid-stream or requesting a much earlier delivery. Indeed, keeping jobs on track has required a different, complementary strategy: what company president Brian Bendig calls "Menu pricing." Essentially, Cavalier sets prices according to delivery dates (so, a 12-week mold will cost less than a 9-week mold).
For the shop, this approach minimizes disruptions by encouraging due diligence at the front end of a project. Yet, Bendig points out that customers can benefit as well. Essentially, he explains, the ball is in their court. Rather than giving out a number, the shop gives customers various options to work with according to their own pricing and schedule priorities. This strategy also helps facilitate the sort of close communication that’s so critical to understanding customers’ needs and desires, he explains. “Customers still need a price to see if we’re competitive, but they might not release the job for weeks or months. This allows them to tell us where they’re going to land. And if schedules change, we can accommodate, and they know what to expect in that event.”
All that said, pricing isn't a chief concern for Cavalier, Bendig says. In fact, it's last on the list. Whether the shop is selling a mold or buying a machine, quality reigns supreme. Given its niche in particularly difficult work, this is a shop that can afford such an approach. To learn more about this and other factors that earned Cavalier Tool & Manufacturing this year's Leadtime Leader award, read this June-issue feature article.
