DETERMINING YOUR NEEDS
The first questions to ask yourself are: How do I want to grow my business? What services can I offer? What customers do I want to pursue? What types of keys will I need to cut? How many of these keys will I be cutting?
DETERMINING YOUR BUDGET
Determining your budget is more than just counting the money you have set aside for a large purchase. You must also decide what is an acceptable return on your investment (ROI). How long will it take for you to make enough money to recoup your investment, and start earning a profit?
In order to determine your payoff time we need to do a little simple math. First of all determine your cost of cutting a key. This cost should include material, labor and overhead. Material is the cost of the blank (let's say $0.25). Figuring the cost of labor is a little more "labor" intensive. First, add up all of your payroll expenses for an entire year including wages, taxes, workman's comp, vacations, holidays, etc. Divide that number by the number of employees (including yourself), and you end up with the average yearly cost of an employee. Divide that number by 2,080 (the average number of work hours in a year) to establish the average hourly cost of an employee. Divide that number by 60 to end up with the average cost per minute of an employee. Finally determine how many minutes it takes you to cut a key.
Let's say your total yearly employee costs are $100,000 for 4 employees. Your average yearly employee cost is $25,000 divided by 2,080 hours is $12.02 per hour which when divided by 60 results in $0.20 per minute. If we say that it takes two minutes to pull a key off the rack, gauge it and cut it, then our labor cost per key is $0.40.
Overhead cost is the last and most often overlooked cost to be determined. Add up all your costs other than material and labor expenses and divide them down to the minute just like you did with labor. These expenses should include rent, gas, advertising, etc. Let's say that you end up with $0.30 per minute in overhead costs. That means your per key overhead costs are $0.60.
Add all of these costs together to end up with $1.25 per key. Now let's say we sell this cut key for $3.00. Your net profit is $1.75 per key. Take the cost of your new key machine and divide it by the net profit of each key that you will be cutting. Given this scenario you will need to cut 286 keys to pay off a new $500 key machine, 572 keys to payoff a new $1,000 key machine and 1,143 keys to payoff a new $2,000 key machine. Let's say that you cut 500 keys on average each month. That means you could payoff a Speedex® duplicator in a couple of weeks, a heavy-duty Trace-A-Key® duplicator in less than 5 weeks, or a Blitzª Code Machine in a little more than 2 months.
Armed with this information it is now time to choose which key machine best fits your needs and budget.
If you duplicate about 500 keys per month, an HPC Trace-A-Key® (3344HQT) could pay for itself in as little as 5 weeks.
The HPC CodeMax® (1200MAXAA) will help you automatically originate new keys. And it can pay for itself in as little as 6 months by creating a little more than 400 keys each month.