How to Calculate ROI for Metal 3D Printers
While metal 3D printing carries incredible hype, the most important factor in determining whether or not to purchase one is its potential value-add to your business. In this section, we’ll show how to better understand ROI for metal 3D printers and calculate a time to financial ROI.
How to Calculate Financial ROI
Financial ROI will tell you approximately how long it will take for a new machine to create enough value to offset its acquisition costs.
First, start with acquisition costs. These include:
1. The purchase price of the machine.
2. Facility upgrades.
3. Cost of machine shipment and installation.
4. Cost to warranty and maintain the machine, plus replace parts, as needed.
5. Cost to train your workers, which is separate from fixed costs but important.
Depending on your unique facility needs and the type of printer you choose, acquiring a metal printer can cost anywhere from $150,000 to more than $1 million.
Next, calculate an average operating cost savings per unit time. This should be measured against your current process and adjusted/averaged over time. Use these steps to start.
6. Pick a part that represents what you would commonly print with the machine.
7. Determine cost per part by getting a part quote from a 3D printer OEM.
8. Estimate the cost to produce the same part with your traditional methods at your typical manufacturing volume.
9. Calculate cost savings per unit time by subtracting the printing cost from fabrication cost with a standard method. Divide that number by fabrication time.
10. Now, take the overall machine cost and divide it by the cost savings per unit time we found in step
4. The number you get will be the amount of time it takes to pay for the new metal 3D printing machine.
Example: Direct ROI (Shukla Medical)
Shukla Medical predicted that a Markforged Metal X would pay for itself in less than two years if they used it to in-source prototyping operations.
- Acquisition Costs: All in, the Markforged Metal X system cost Shukla between $150k and $175k. This included the full system, installation, warranty, and small facility changes.
- Cost Savings: By replacing their overseas prototyping operation with parts printed on their Markforged machine, they calculated they could save around $1,000/prototype at a volume of about 10 per month. Based on this, they believed the monthly savings would be about $10k/month.
- ROI: Based on costs and savings accrued over the first year of owning their machine, Shukla is on track to achieve ROI in about 18 months. Their calculations have proven accurate, and they’ve found other ways to generate value with their printer.
–“We either would send it out of house to a third-party vendor or Protolabs or just another machine shop, and that’s fine, except it’s usually pretty expensive — high machine costs drove us to get a Metal X.” -Zach Sweitzer, Product Development Manager, Shukla Medical
Financial ROI will give you a bulletproof case for acquiring a metal 3D printer. However, ROI based on part costs only tells part of the story. Leveraging in-house printing of 3D printed metal parts can benefit your organization in a wide variety of tangible ways.
ROI can go beyond financial investments.
Additional benefits that extend beyond traditional cost- and time-value calculations include:
- Decreasing part lead times: In addition to decreasing part cost, 3D printing also delivers parts at much shorter lead times. This can speed iteration, get products to market faster, and increase uptime.
- Decreasing labor to make parts: Some 3D printers require much less labor than conventional machines. Save CAM programming time, operator time, and engineering drawing time (for parts that do not need drawings for tolerances) by printing parts.
- In-sourcing parts gives you more control: Outsourcing saves labor, but can introduce uncertainty into a fabrication process. Bringing fabrication in house gives you control.
- New fabrication capability: 3D printing parts can enable higher-performing designs and new parts that can’t be made traditionally.
Brainstorm the ways you might use metal 3D printing to solve those problems that you can’t easily assign a financial benefit. Then, add it to your demonstrated financial ROI from the previous page.
Example: Indirect ROI (Shukla Medical)
In addition to building a strong financial case to invest in metal 3D printing technologies, Shukla found acquiring a machine allowed their R&D department to run more efficiently.
Decreased Lead Times: Faster lead times allowed Shukla engineers get their products in the hands of surgeons faster, iterate more, and deliver products to market faster.
In Sourcing: Bringing fabrication in-house allows Shukla greater control over what’s getting made when, as well as greater freedom to explore new parts and make one-offs.
–“Being able to prototype more efficiently and get finished products to market more quickly will keep us on the forefront of the industry.” - Zach Sweitzer, Product Development Manager, Shukla Medical
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