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

Setup Amortization at 72% share of setup cost charged to the customer: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop share of setup cost charged to the customer to 72%, then walk the calculation through step by step. Estimate setup cost dollars that need to be recovered in a custom job quote.

The inputs for this scenario

  • Setup hours for the quoted routing: 6.5 hr (held at the documented default)
  • Loaded setup shop rate: 125 $ / hr (held at the documented default)
  • Share of setup cost charged to the customer: 72 % (the input this scenario stresses; the baseline uses 100)
  • Expected setup first-pass success: 95 % (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Gross setup cost before quote adjustments = setup hours for the quoted routing × loaded setup shop rate.
  • recoverable setup cost works out to 556 $ at these inputs, and this is the headline figure for the scenario.
  • gross setup cost before quote adjustments works out to 813 $ at these inputs.
  • setup cost not charged in the quote works out to 228 $ at these inputs.
  • setup cost at risk from prove-out or scrap works out to 29.25 $ at these inputs.

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 28% below the baseline at 556 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to share of setup cost charged to the customer, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It treats setup as a single lump recovered on this order; if you amortize the same setup across repeat orders or a blanket release, the per-order recoverable figure will overstate what you should charge each time.

Results at a glance

  • recoverable setup cost: 556 $ (headline result)
  • gross setup cost before quote adjustments: 813 $
  • setup cost not charged in the quote: 228 $
  • setup cost at risk from prove-out or scrap: 29.25 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Setup Amortization calculator, set share of setup cost charged to the customer to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.