Contract Manufacturing, Job Shop Quoting & Make-to-Order worked example

Setup Amortization at 110% share of setup cost charged to the customer: a worked example

Push share of setup cost charged to the customer up to 110% and the picture changes. This example computes every intermediate figure at that operating point. deciding how much setup cost to include in a low-volume quote or repeat order

The inputs for this scenario

  • Setup hours for the quoted routing: 6.5 hr (unchanged)
  • Loaded setup shop rate: 125 $ / hr (unchanged)
  • Share of setup cost charged to the customer: 110 % (raised for this scenario; the documented default is 100)
  • Expected setup first-pass success: 95 % (unchanged)

Working through the calculation

  • Applying the documented formula (Gross setup cost before quote adjustments = setup hours for the quoted routing × loaded setup shop rate) to the inputs above produces each figure below.
  • At this operating point the engine returns 849 $ for recoverable setup cost, the number this scenario is built around.
  • At this operating point the engine returns 813 $ for gross setup cost before quote adjustments.
  • At this operating point the engine returns -81.25 $ for setup cost not charged in the quote.
  • At this operating point the engine returns 44.69 $ for setup cost at risk from prove-out or scrap.

How this compares with the baseline

  • Against the tool's baseline example, where share of setup cost charged to the customer sits at 100% and the headline result is 772 $, this scenario comes in 10% above the baseline at 849 $.
  • It computes the recoverable setup dollars by multiplying gross setup cost (hours × loaded rate) by the share you charge the customer and your expected first-pass setup success. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • recoverable setup cost: 849 $ (headline result)
  • gross setup cost before quote adjustments: 813 $
  • setup cost not charged in the quote: -81.25 $
  • setup cost at risk from prove-out or scrap: 44.69 $

Run it with your numbers

  • Every input above is editable in the live Setup Amortization calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.