Part Cost Calculator

What goes into the cost of one part

Every machined, molded, or repaired part carries seven cost lines: material, machine run time, setup, operator labor, tooling, consumables, and packaging. Plenty of quotes cover two or three of them and hope the rest work out. That hope is why a shop can finish a busy month with no money in the account.

Material is the only line that arrives as a supplier invoice, which is why it gets all the attention. Machine time never shows up as a bill. Setup is paid once per batch, so it hides in the first hour of a run and disappears from the price of the last piece. Tooling is bought weeks before the job, and packaging comes by the case. Each one is a real cost, and each one comes out of the same quote.

Repair work follows the same logic with a batch of one. A replacement bushing for a pump might use $6 of bronze and 45 minutes of shop time, and holding it still takes the same setup that a hundred piece order would pay for once. Pricing it from the metal alone gives away the afternoon.

The calculator on this page adds all seven lines, spreads the batch level costs across the run, and reports the cost of one part next to the cost of the whole order.

The unit cost formula this calculator uses

Unit cost is the sum of every cost line divided by the number of good parts. The batch level lines are divided by quantity, and the per part lines are added as they stand:

Unit cost = material with scrap + machine run time + setup per part + labor per part + tooling per part + consumables + packaging

• Material with scrap is the stock consumed per good part, grossed up for the pieces that never ship. Divide material cost by the yield, where yield is one minus the scrap rate.
• Machine run time is the shop rate multiplied by the cycle time in minutes, divided by 60.
• Setup per part is setup hours multiplied by the shop rate, divided by batch quantity.
• Labor per part is operator minutes multiplied by the labor rate, divided by 60.
• Tooling per part is cutters, inserts, and fixtures divided by batch quantity.
• Consumables and packaging are small per piece costs, and they are the easiest to forget.

Scrap sits inside the material line because a scrapped part consumes stock that a good part has to pay for. At a 5 percent scrap rate one good part needs $4.42 of material when the raw cost is $4.20. The arithmetic is $4.20 / 0.95 = $4.42, and the extra 22 cents is the cost of the parts that went in the bin.

Quote price is a separate step. The calculator multiplies unit cost by one plus the markup you enter, so a 30 percent markup on $18.85 gives a quote near $24.50. Markup and margin are not the same number, and the last section on this page covers the difference.

Material cost and scrap rate

Material cost per part starts with the stock you consume, not the weight of the finished part. A bracket cut from 1.25 inch bar uses the length fed into the saw, plus the facing allowance, plus the drop left in the chuck. On a lathe that lost end runs two or three inches, and on a small part it can be a larger share of the material bill than the chips.

Scrap comes in two flavors and only one belongs in this line. Expected scrap is the drop, the test piece, and the first article off the machine. Rejects are parts that failed inspection after the machine time and labor were already spent, so a part rejected at the end of the run costs far more than its metal. The scrap rate here is the share of started pieces that never ship, priced at material cost only, which keeps the estimate on the safe side.

Most machining jobs run in the 3 to 8 percent range. Thin wall castings, first runs of a new program, and parts with tight flatness calls land higher. If you already track rework on the shop floor, use that number instead of a guess, and do not add a second scrap allowance on top of it. Counting scrap twice makes the quote uncompetitive on parts you make well.

Bar stock also comes in lengths that rarely divide evenly into the part. A 12 foot bar that yields 47 pieces instead of 48 carries the cost of the leftover end, and that leftover is part of the material consumed per part. The same applies to sheet nesting, where the skeleton between parts is paid for whether or not it becomes a part.

Machine time, setup, and tooling

Machine run cost is the shop rate multiplied by cycle time. A rate of $85 per hour on a 6.5 minute cycle costs $85 x 6.5 / 60 = $9.21 per part. Cycle time has to be the real one, including the tool change and the in cycle deburr, not the number from the CAM simulation that assumes a perfect tool load.

The shop rate is not a wage. The BLS Occupational Outlook Handbook puts median machinist pay near $25 an hour, and an $85 shop rate carries depreciation on a machine that cost six figures, power, coolant, maintenance, rent, insurance, and the unpaid hours between jobs. Shops that quote machine time at the operator wage lose money on every spindle hour. A second opinion on burden rates is available through the NIST Manufacturing Extension Partnership, which works with small manufacturers on cost accounting.

Setup is a fixed charge per batch. Two and a half hours at $85 is $212.50, and across 250 parts that is $212.50 / 250 = $0.85 per part. The same setup on 10 parts is $21.25 each, which is why short runs and one off repairs need a minimum charge or a bench fee.

Tooling covers cutters, inserts, drills, and any fixture built for the job. A $600 fixture and cutter package across 250 parts adds $600 / 250 = $2.40 per part. Consumable inserts that wear out on a predictable cycle can go in either this line or consumables, but they should not sit in both.

Two minutes of cycle time is worth $6.38 per part at this rate, which is more than most of these parts carry in material. That gap is the reason cycle time improvements pay for themselves faster than almost any other change in a job shop.

Operator labor, consumables, and packaging

Operator labor covers loading, unloading, deburring, inspection, and packing. Two minutes per part at $32 an hour costs 2.00 x $32 / 60 = $1.07. The labor rate should carry payroll taxes and benefits, which add roughly 25 to 40 percent to the wage, plus the paid time that never touches a part.

If one operator tends two machines, only half of that person's hour belongs to each part. Divide the labor minutes by the number of machines tended, or track the real attendance and divide the total. Shops that charge a full operator hour to each of two machines are quietly doubling their labor line and losing work to shops that are not.

Consumables are the small items that wear out: coolant top offs, way lube, shop rags, gloves, deburr wheels, and inspection media. They rarely merit a purchase order and always show up in the overhead. A flat per part allowance of 25 to 75 cents is normal for small machined parts, and it should rise for abrasive materials that eat tooling and coolant.

Packaging is quoted more often than it is costed. A bag, a foam wrap, a box, and a label can run 40 cents to $3 per part depending on size, and export crating can run far more. If the customer wants parts in individual bags with a barcode label, that is a packaging cost with labor attached, and it belongs in the unit cost rather than in a vague handling charge.

Freight deserves a mention even though it is not in the formula. Inbound stock freight can be folded into material cost per part, while outbound freight is usually quoted separately. Picking one convention and stating it on the quote prevents the argument that arrives with the first invoice.

Step-by-step worked example: a 250 piece bracket run

A shop quotes 250 aluminum brackets. Material is $4.20 per part, the scrap rate is 5 percent, the machine rate is $85 per hour, cycle time is 6.5 minutes, setup takes 2.5 hours, the operator spends 2 minutes per part at $32 per hour, tooling is $600, consumables are $0.35 per part, packaging is $0.55 per part, and the target markup is 30 percent.

1. Material with scrap: $4.20 / 0.95 = $4.42.
2. Machine run time: $85 x 6.5 / 60 = $9.21.
3. Setup: 2.5 x $85 = $212.50 for the batch, or $212.50 / 250 = $0.85 per part.
4. Operator labor: $2.00 x $32 / 60 = $1.07.
5. Tooling: $600 / 250 = $2.40.
6. Add the lines: $4.42 + $9.21 + $0.85 + $1.07 + $2.40 + $0.35 + $0.55 = $18.85.
7. Batch cost: $18.846 x 250 = $4,711.50.
8. Quote at a 30 percent markup: $18.846 x 1.30 = $24.50, which leaves $5.65 of profit per part.

Profit on the run is about $1,413 at the 30 percent markup, before any expedite fee, freight, or payment terms. If the customer pays in 60 days, the shop also finances $4,711 of material and labor for two months, and that financing cost is real even when it never appears on the quote.

How batch size moves the unit cost

The per part lines barely move with quantity. Material, machine run time, labor, consumables, and packaging cost the same on part 5,000 as on part 5. What changes is the fixed batch cost: $212.50 of setup plus $600 of tooling, or $812.50 before the first good part. Spread over 250 parts that is $812.50 / 250 = $3.25 each. Spread over 50 parts it is $16.25 each, which nearly doubles the unit cost.

Two forces bend the curve. The first is amortization, which fades fast: going from 50 to 250 parts removes $13.00 per part of fixed cost, and going from 250 to 5,000 removes another $3.09. The second is the learning curve on a repeat run. The second batch of a part usually runs faster than the first because the program is proven, the fixture is dialed in, and the operator has seen the part before.

Volume also changes purchasing. A 5,000 piece order can justify mill lengths, a custom extrusion, or a casting instead of bar stock, and those change the material line rather than the setup line. Recompute the whole cost when the process changes, not just the divisor. A quote built for 250 pieces and reused for 5,000 leaves money on the table, and the reverse quote loses the job.

Using the unit cost to quote and to say no

The unit cost is the floor under a quote, and the markup is a business decision made on top of it. Markup on cost and margin on price are different numbers: a 30 percent markup on $18.85 gives $24.50, and the $5.65 of profit is 23 percent of the selling price, not 30. If the shop needs a 30 percent margin, the price has to be cost divided by 0.70, which is $26.92. Mixing the two up is the most common pricing error in small manufacturing.

Repair and replacement work needs a floor of its own. A single part carries a full setup, a trip to the saw, and often a drawing that has to be read twice, so a minimum bench charge of one or two hours keeps small jobs from running at a loss. Quoting the material plus ten minutes is a habit that feels generous and pays nobody.

Quotes also need a shelf life. Material prices move with the metal market, and a quote that holds for a year is a bet on prices that nobody can underwrite. Thirty days is common, with a stated surcharge if the mill price moves more than a few percent before the order is released. Put that sentence on the quote itself rather than in a conversation.

Finally, keep the cost sheet after the job closes. Comparing quoted cycle time to actual cycle time, and quoted scrap to the scrap bin, is how the next quote gets better. A shop that never reconciles the two is guessing with more confidence each year, and guessing is not a pricing strategy.