The basic machining cost formula

A quick internal estimate can start with three blocks: material, run time and preparation. Material cost is blank cost multiplied by quantity. Run cost is machine minutes per part multiplied by quantity and the all-in hourly shop rate. Preparation covers one-time programming, setup and job administration that are not already included elsewhere.

Total estimated cost = material + machining + preparation. Cost per part is total cost divided by quantity. This is a costing model, not yet a selling price.

Margin is not markup

Target margin is profit divided by selling price. Markup is profit divided by cost. If the target margin is 20%, selling price is cost / (1 − 0.20). Adding 20% to cost produces only a 16.7% margin.

Dimvo asks for target margin and shows cost, selling price and unit price separately so the commercial assumption remains visible.

Worked example: ten machined parts

Assume 10 blanks at €8 each, 15 machine minutes per part, an all-in shop rate of €60/hour and 90 minutes of one-time preparation. Material is €80, machine time is €150 and preparation is €90. Total cost is €320.

At a 20% target margin, the calculated selling price is €400, or €40 per part. This transparent baseline makes it easier to discuss whether risk, tooling or inspection still needs to be added.

What the quick calculator intentionally leaves out

A formal quote should add every material cost, operation and commercial risk that is real for the job. The quick calculation is valuable because it exposes a baseline; it is not valuable if omitted work is silently assumed to be free.

  • Tooling, fixtures, inserts and expected tool life.
  • Programming, proving, first-article inspection and documentation.
  • Scrap allowance, rework risk and yield.
  • Deburring, cleaning, heat treatment, coating and subcontract work.
  • Packaging, transport, payment terms, rush work and VAT where applicable.

Where better quoting creates value

The biggest improvement is usually not a more complicated universal formula. It is a shop-specific model with saved machine rates, setup patterns, material prices and proven cycle data. That turns a free one-off estimate into a repeatable quoting workflow without hiding the calculation from the estimator.