Quoting Mistakes

Job Shop Quoting Mistakes That Wreck Margins and How to Catch Them

The specific quoting errors that quietly erase margin in job shops and contract manufacturing, with the symptom, root cause, and a numeric fix for each.

The single most expensive mistake in job shop quoting is spreading setup across a phantom quantity. Symptom: your quote looks competitive at qty 500 but you lose money when the customer orders 50. Root cause: setup was amortized over the RFQ quantity, not the release quantity. A 2.5 hour setup at a 95 dollar per hour shop rate is 237.50 dollars. Over 500 pieces that adds 0.48 per part; over 50 it adds 4.75. Fix: quote setup as a separate line and run the release quantity through Setup Amortization before you commit a per-piece price.

Unit-of-measure slips are the quiet killers. Symptom: a part that should cost 3.20 quotes at 0.32 or 32.00. Root cause: mixing feet and inches, pounds and kilograms, or entering a 0.125 inch wall as 0.0125. Bar priced at 4.10 per pound with a 0.62 pound blank is 2.54 of material; fat-finger the weight to 6.2 pounds and you have quoted 25.42. Fix: force every material input to one canonical unit and sanity-check that material is 30 to 60 percent of the Job Shop Quote total for machined parts before releasing.

Forgetting scrap and yield loss is the second most common margin leak. Symptom: actual material spend runs 8 to 15 percent over the quote every job. Root cause: quoting at 100 percent yield when real first-pass yield on a new part sits at 90 to 96 percent. If you buy 100 blanks and scrap 6, effective material cost per good part rises 6.4 percent, not zero. Fix: divide material and touch labor by expected yield, not by gross count. On new-to-shop geometry, seed yield at 92 percent and update from Job Costing Variance after the first run.

Stale labor and burden rates cause slow bleed. Symptom: the shop is busy, quotes win, and cash keeps shrinking. Root cause: a shop rate frozen two years ago while wages rose 6 percent and a machine got added without reburdening the pool. A 78 dollar rate that should be 92 undercharges 18 percent on every labor hour. On a job with 40 labor hours that is 560 dollars gone. Fix: recompute burdened rates quarterly from actual hours and overhead, and confirm the Contract Manufacturing Margin output still lands where you set it, typically 25 to 40 percent gross.

Quoting cycle time from the CAM ideal instead of the floor reality inflates win rate and destroys throughput. Symptom: you win the job then blow the delivery and the router shows 40 percent over standard. Root cause: the estimate used spindle-cutting time only and ignored tool changes, load and unload, gauging, and deburr. A 4.2 minute cut can carry 3.5 minutes of handling, so the true cycle is 7.7 minutes, 83 percent higher. Fix: apply a documented handling factor by part class and reconcile quoted minutes against actual through Job Costing Variance monthly.

Treating small orders like large ones leaves money on the table and starves capacity. Symptom: a 25 piece order and a 2,500 piece order carry the same per-part price. Root cause: no small-batch logic, so fixed costs like programming, first-article inspection, and setup are diluted as if volume were high. A 3 hour programming charge is 0.12 per part at 2,500 and 12.00 at 25. Fix: apply Small Batch Premium below a break quantity you define, often 100 to 250 pieces, and route rush jobs through Expedite Premium rather than absorbing overtime silently.

Bad or missing cost data on outside processes wrecks otherwise clean quotes. Symptom: heat treat, plating, or anodize invoices arrive 20 to 50 percent above what you carried. Root cause: quoting from memory or a one-year-old vendor number with no lot minimum. A plating line minimum of 150 dollars on a 40 piece lot is 3.75 per part; assume the 500 piece rate of 0.45 and you are 3.30 short each. Fix: keep live vendor quotes with lot minimums and never let an outside-process line sit at zero or a guessed number in the Job Shop Quote.

Ignoring the cost of quoting itself hides which work is worth chasing. Symptom: the estimating team is buried, yet close rate sits near 20 percent and margins on wins are thin. Root cause: no visibility into RFQ effort versus payoff, so engineers spend 4 hours on a 900 dollar job. If an RFQ costs 180 dollars of loaded estimator time and you win 1 in 5, each win carries 900 dollars of quoting overhead. Fix: track effort with RFQ Response Cost, watch Quote Win Rate by customer and part family, and use Order Profitability to stop rewarding revenue that never converts to margin.

Published 2026-07-01.