Haha, yeah... I've got a few working ones, too. I believe LilG does as well, just not, perhaps, BoltAction at this point.
LilG, While I don't run or own a Reciever Company, I can give some insights given my background in engineering and operations.
Ultimately, it comes down to fixed and variable costs... conceptually it can be a little tricky, but hang in there with me, and we'll walk through it.
Specifically, let's focus on the receiver itself (IE, not bolt, coatings, trigger assemblies, or any other parts/treatments that are sometimes outsourced.)
As indicated by one of the other members, you will need a CNC machine to mill the parts, which can cost $500k-$1mm or more! Aaron at Gunwerks has some amazing videos of some of this stuff and touches on optimization and vertical integration aspects, quite eloquently in this video:
Click Here Alt:
Generally, these machines will be financed or depreciated over a given period (7 years is not uncommon)... So you're looking at ~$16,500/mo to pay for this equipment, assuming a 10% interest rate for a business loan at $1,000,000.
In addition, you'll need a facility to run this machine in. For a facility the size of Aaron's, linked above... I'd estimate somewhere along the lines of $12,000-18,000/mo, inclusive of property taxes. Let's call it $13,500 for simple math.
You'll also need a guy/gal to oversee the facility and manufacturing operation. $100k-$200k annually for an Ops Manager, is not uncommon (depending on the industry and size of the overall operation.) for simple math, let's call it $15k/mo after you include benefits and all that fun stuff.
If you add those three together and another $5k for misc items such as insurance, marketing, and General and administrative expenses, you've got your large components of "overhead" covered at a sum total of $50k/mo. These costs will be there if you make zero parts, one hundred parts, or one thousand parts/mo. while fixed in nature, these are called your variable costs... because they vary according to how many units you make.... confused, yet? Hear me out:
Say your raw material for each receiver is a $50 block of metal. While you may get some volume discounting, it will never scale in the same way your overhead costs will. Same with the person that is operating your machine. If your operator makes 4 receivers/hr, and, because he's a skilled technician running an expensive piece of equipment, he makes $40/hr. That means you are spending $10/receiver in labor. These costs are your fixed cost because you have to spend $50 for each block, and you have to pay your operator for each 15min that he/she is making your receivers. So $60/receiver.
The math for receiver cost goes like this:
1 receiver/month = ($50,000 / 1 receiver) + $60 = $50,060/receiver
100 receiver/mo = ($50,000 / 100) + $60 = $5,060/receiver
1000 receiver/mo = ($50,000 / 1000) + $60 = $560/receiver
Do you see, now, why the overhead costs are considered variable, and how the per-piece costs are considered fixed?
Great!
So if we make 1000 receivers/mo, we can lower our costs to $560 each.
If we want to make money... we will have to add a margin (profit) into the equation.
While I don't know the profit margins of receivers, I do know that in my Industry, we target a 37% contribution margin (or better).
So if we used that number: $560/(1-.37), we get to a sales price of $888.88 to make our target revenue per receiver sold.
$888 sounds pretty close to some of those numbers you're familiar with
If you wanted to cut the cost more, you could add another machine and another operator... or run the machine up to its theoretical limit of 24/7 operations. Ideally, you want to fully absorb your overhead (make your variable costs as little $ as possible), or at least as much as your business demand and personnel can handle!
certainly the above is a very watered-down version of what goes into running a manufacturing facility and business. Still, hopefully, that helps to show what costs can go into it, aside from the machining of the metal itself.
