How to quote a machining job so it still makes money when it ships

A machining quote is four numbers and one decision. The numbers are material, setup, cycle time and overhead. The decision is your margin. Almost every quote that loses money loses it in the same two places, and neither is the margin.

Material: the price today, from the supplier you will actually call

Start from the stock you will buy, not the finished part. A part that weighs two pounds might come out of a four pound piece of bar once you allow for facing, parting and gripping length. You pay for the four pounds.

Use today's price, not the one on the last invoice you happen to remember. In a year when steel moves, a quote built on a three-month-old price is a quote built on a number that no longer exists. If you sell the chips back, that recovery belongs in the quote too — it is small, but it is real and it is yours.

Setup: the number that decides whether you win the job

Setup is a fixed cost per lot, so what matters is not the setup time but what you divide it by. This is the first of the two places quotes go wrong.

Say a job has forty-five minutes of setup at a $95 rate — about $71. On a lot of one that is $71 a part. On a lot of fifty it is $1.42. If you quote a lot of fifty by pricing one part and multiplying, you have added roughly $70 a part to a job that does not carry it, and you will lose that order to a shop that did the arithmetic properly.

The subtler version: when the same part appears several times in one assembly. Two shafts per gearbox and an order for five gearboxes is ten shafts through the lathe in one setup. Spread the setup over ten, not two.

Cycle time: be honest about the shop you actually have

Cycle time is where optimism lives. The number that belongs in a quote is not the best cycle you ever achieved on a good day, it is the one that includes tool changes, in-process gauging, the deburring nobody counts, and the part you scrap on the first piece.

This is the second place quotes go wrong, and it is the one that does not announce itself. A twenty percent optimistic cycle on a repeat job compounds every time you run it, and because the price was accepted, nothing ever prompts you to check.

Overhead and margin: keep them apart

If your hourly rate already carries a share of fixed overhead — rent, insurance, the phone, the software, the hours you spend quoting — then do not add a general overhead percentage on top of it. Doing both is how shops end up with prices they cannot explain and quietly discount under pressure.

Margin goes last, on top of a cost you believe. A margin applied to a cost you invented is a guess wearing a percentage sign.

A worked example

The part did not change. The price per part fell by 61% because the setup found more shoulders to sit on. If your quoting method cannot show you that, it is costing you the larger orders — which are the ones worth having.

The check almost nobody does

Quote, run the job, then compare. Not the money — the minutes. If you estimated six hours and it took nine, you did not have a bad week, you have a router that is wrong and will be wrong again the next time that part comes through.

Shops that close that loop stop being surprised. Shops that do not keep quoting from a number that was invented once, years ago, by someone squinting at a print.