Quoting Math

How to Calculate a Job Shop Quote: The Core Formulas With Worked Numbers

A step-by-step walk through the five formulas that build a make-to-order quote, from setup amortization to lead time, using real units and worked numbers.

A defensible job shop quote is built from five calculations, not one number pulled from experience. Start with the per-part cycle time: run time plus load and unload. If a bracket has 6.5 minutes of spindle time and 1.2 minutes of load/unload, cycle time is 7.7 minutes per part. Multiply by the fully burdened machine hour rate. At $95 per hour, that is 7.7 divided by 60, times 95, equals $12.19 in machine cost per part before setup, material, or margin. The Job Shop Quote calculator chains these steps so you enter time and rate and read cost per part directly.

Setup amortization is where small batches quietly lose money. The formula is setup cost divided by lot quantity. A 2.5 hour setup at a $95 rate is $237.50. Spread across 500 parts that is $0.48 per part. Spread across 20 parts it is $11.88 per part, roughly the same as the entire machining cost above. Always compute setup per part explicitly with the Setup Amortization calculator rather than folding it into a shop rate, because the value swings by more than 20 times between a 20-piece and a 500-piece lot on the same job.

Material cost per part starts from purchased stock, not the finished weight. Take a 1.25 inch diameter 6061 bar: a 3 inch billet weighs about 0.36 pounds at 0.098 lb per cubic inch. At $2.40 per pound that is $0.86 of stock, but if the finished part is 0.22 pounds you scrapped 0.14 pounds in chips. Add cutoff and facing allowance, typically 0.125 to 0.25 inch per part, before multiplying by count. Buy-to-fly on machined aluminum commonly runs 2.5:1 to 4:1, so a part that ends at 0.22 pounds may consume 0.6 to 0.9 pounds of billet.

Roll the pieces into full cost per part: machine cost plus setup per part plus material plus any secondary operation. Using the numbers above at a 200-piece lot, that is $12.19 machine, plus $1.19 setup ($237.50 over 200), plus roughly $1.60 material with scrap, equals about $14.98 before overhead and margin. Apply your overhead factor, often 1.15 to 1.35 on top of direct cost, then add markup. A 30 percent margin on price means dividing cost by 0.70, so $14.98 becomes a $21.40 sell price per part.

The small-batch premium is a separate multiplier, not a guess. Compare cost per part at the quoted quantity against cost per part at your reference volume, then express the difference as a factor. If a 25-piece lot costs $28 per part and the same part at 500 pieces costs $16, the premium factor is 1.75. The Small Batch Premium calculator returns this ratio so you can either quote it as a line item or justify a minimum lot charge. Most shops set a per-order minimum of $250 to $500 to cover the fixed setup and handling that a tiny lot cannot absorb.

Lead time is a calculation, not a promise. Sum queue time, setup time, run time for the full lot, move time, and any outside process turnaround, then divide run time by parts per hour. A 200-piece lot at 7.7 minutes each is 25.7 machine hours, or about 3.2 shifts at 8 hours. Add 2 days queue, 1 day for heat treat at an outside vendor, and 1 day inspection and shipping, and the Make-to-Order Lead Time calculator returns roughly 8 working days. Quoting 5 days on that job guarantees a late delivery.

Expedite pricing follows the same structure with an added premium. The base premium recovers the cost of displacing scheduled work: overtime at 1.5 times labor, bumped jobs, and lost setup efficiency. Express it as a percentage adder on the standard price. A common range is 15 to 40 percent for a moderate pull-in and 50 to 100 percent to cut lead time in half. The Expedite Premium calculator takes standard price and the premium percentage and returns the rush price, keeping the standard quote and the rush quote on the same cost basis.

Close the loop after the job runs by computing job costing variance: actual cost minus quoted cost, divided by quoted cost. If you quoted $14.98 per part and ran at $17.20, that is a 14.8 percent unfavorable variance, almost always from underestimated setup or scrap. Feed that number back into the next quote. The Job Costing Variance calculator turns shop-floor hours and material issues into a percentage you can trend, which is the only way estimating accuracy improves instead of drifting.

Published 2026-07-01.