Do faster fiber laser cutting speeds translate to better profit margins?

May 10, 2023

Fiber lasers have become a driving force in the metal fabrication industry. One of their biggest claims to fame is impressive power and cutting speeds. The technology has been rapidly evolving with more and more power, so much so that the possibilities with these machines are almost limitless. Increased power and speed leads to more parts cut per hour, which translates into higher productivity and money in your pocket. But does it really mean better profit margins for your business? Let's break it down.

Cut More, Earn More

When you’re in the business of cutting parts, time is money. There is a fixed cost to operating a laser and your competitors are driving down the price you can charge for the job. Material costs remain the same no matter the machine. The differentiator is how long it takes you to do the job. The more time it takes, the more you pay for operator and handling costs, thereby reducing profit.

When we talk about high-power machines producing more parts per hour, what exactly does that mean? To show the influence of laser power on the number of cuts, POWER-TECH compared the Eagle iNspire 1530 model with 4-kW, 8-kW and 15-kW resonator. The chart here shows parts cut per hour based on 8mm mild steel, 210mm by 287mm and total cut length length of 1975mm.

Going from a 4-kW to an 8-kW machine or an 8-kW to a 15-kW will more than double the parts per hour. Most drastically, the 15-kW laser cuts more than four times the parts of a 4-kW.

Parts Mean Profit

That opportunity to cut more parts doesn't just mean bragging rights. The number of parts cut per hour directly translates into profit. POWER-TECH breaks down the profit in relation to the cost of production of a workpiece in the chart below, assuming the market price of a cut part is €2 or CAD $2.92. (We’ll be converting these numbers to Canadian dollars, assuming a $1.46 exchange rate.)

The profit amounts shown here also factor in the different operating costs per machine. Your operating costs will increase when running a higher wattage machine and we have factored in European operating costs for labour, power, etc. The 4-kW fiber laser costs are calculated assuming an operating rate of €100 or CAD $146 per hour, the costs for the 12-kW machine are shown at a €132 or CAD $192 per hour rate and the 15-kW at €145 or CAD $210 per hour.

With a 4-kW laser, the cost to produce one part is $2.28, so the profit is $0.64. With the 8-kW laser, you can cut double the parts per hour so the production cost goes down to $1.26 for the piece, and your profit goes up to $1.67. Let's look at the 15-kW laser. With this increased power, the cost of the same part is $0.77 and your profit more than triples, compared to the 4-kW, to $2.15 per part.

Considering the number of parts you can cut per hour with each machine, you can earn $41.16 per hour cutting 64 parts with the 4-kW laser. Or you can earn $595.13 per hour cutting 277 parts with the 15-kW fiber laser. With these assumptions, you can increase your profits by fourteen times with the 15-kW laser compared to the 4-kW. Imagine how that could scale to a full day or week!

While these numbers do account for higher operating costs, what the chart doesn't account for is the investment costs of upgrading from a 4-kW to a 15-kW machine. A higher-powered fiber laser can cost substantially more when purchasing new. However, while a 12-kW or 15-kW machine is more expensive upfront, higher productivity means faster amortization of the machine, so you can start pocketting the profit from the faster cutting speeds, sooner.

Here for the Long Run

Depending on the volume and nature of your business, your bottom line may not reap the rewards of that extra profit right away. Consider the cost of a machine upgrade in your calculations. Switching to a machine with essentially the same mechanical attributes that makes double, triple or even four times the parts is a long-term game. While you may not see these benefits over a month or even a year, there is incredible potential to boost your productivity and profits in the long run.

Your profit margins are an important metric you need to keep an eye on. Producing faster is an important factor to reduce the impact of fixed and variable costs per part. The above charts show how more power affects margins and make a compelling case for Fiber Lasers role in increasing the bottom line for fabricators.

Eric St. James is president of Paramount Machinery Inc.