Estimating price of CNC projects

      Formulas for calculating how much to charge on CNC jobs. January 3, 2001

Does anyone have a formula they use when bidding jobs using CNC equipment?

Forum Responses
Here's the way I do it.
Machine time (how long to run the parts)
+ Program time (how long to program the parts)
+ Spoil board (do I need to make a spoil board or fixture?)
+ Tooling (how much will the tooling cost me?)
+ Packaging (add labor to skid, band, and shrink wrap)
+ Special adds (anything that I have to add extra, material, etc.)
= Total price

After you have done it a few times and get a little experience, you will have a good idea on the tooling. For instance, I have a table tied to this spreadsheet where I can quickly retrieve info on tooling life with different materials. The table includes new price and sharpening cost.

Typically, I am machining someone else's material. So I have no material cost, nor do I have any waste. The "special adds" field is in the event that I do supply the material.

You will notice I charge a different rate for CNC time than I do for programming time. This is because it costs more to run the P2P than it does for me to sit on my butt in the office.

Brian Personett, forum technical advisor

I donít have a CNC, but am planning on purchasing one pretty soon. I have been in business now for 10 years, doing fine custom furniture with a team of eight skilled cabinetmakers. I use a pricing formula for all my jobs that I think can be applied to CNC, with some modifications.

Basically it's (M(w)+L(b))P=S

Let me explain:

M= All material cost
w= Wastage factor (about 10%)
L= All labor charge
b= Shop burden (about 40%)
P= Profit markup (10-30%)
S= Sales Prices

The shop burden is calculated like this:

Total Shop charges (rent, electricity, phone, etc.): What the shop would cost if you were to open it at the beginning of the year, and not produce anything during that period. For example, 140,000.

Letís say you have seven men working 2000 billable hours per year. Thatís 14,000 hours total. This means that one hour of shop time will cost you $10. Let's say that the average cabinetmakerís salary is $20/h, including social benefits. This means that your shop rate should be $30/h, (20/h+10/h(burden). The shop burden would be 50%.

The formula would read like this

($100 Material+10%waste)
+1h labor +(50% burden)
multiplied by 1.3 (30% profit)


Sale price of $182

I picked up this formula 10 years ago in 'Fine woodworking'.

Donít forget to think about waste disposal! I machined 6000 parts last year for a Christmas display, and although I didn't supply the materials, the contract read that the buyer would pick up only the finished parts. I thought, great, no delivery! It ended up costing just over $600 to remove the waste.

We just cut and machined 10,000 parts for someone and made them buy an extra 3400 parts or pay for disposal. It would have been 1000+ 16" x 8' rips. This was their material. We now charge extra for packing, palleting, shrink wrapping, etc.

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  • KnowledgeBase: Business: Estimating/Accounting/Profitability

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