From the bandsaw to setup: hourly numbers from owners' own quotes
Every owner who shows a rate sets it per task or per machine, not one rate for the whole shop. These are single examples from their own quotes, not market averages.
| A | B | |
|---|---|---|
| 1 | What the hour is for | Rate heard |
| 2 | Bandsaw cutting | About $20 an hour |
| 3 | Many steps in one owner's quoting template | $60 to $75 an hour |
| 4 | A whole job in an estimating demo | $85 an hour |
| 5 | Run time in a quoting software demo | $100 an hour |
| 6 | Programming and setup in the same demo | $150 an hour |
The spread is on purpose. An hour on a precision mill holding tight tolerances is worth far more than an hour cutting bar stock on a saw, so owners who price by task charge more for the mill and accept much less for the saw. One flat shop rate either overprices the easy work or underprices the hard work.
Why setup is billed higher than run time
Setup needs your most skilled person at the machine, while run time can often be watched by someone newer, so owners who split the two charge more for setup. In the demo above, setup and programming ran at $150 an hour and run time at $100.
Splitting the rate also moves money toward the first part. A one-piece prototype is almost all setup and programming, so it carries the higher rate, while a 150-piece run is mostly run time. In the same demo, a tight-tolerance anodized part came out at about $1,200 for one piece and $116 each at 150.
Why a $150-an-hour shop can make the cheaper part
A higher hourly rate does not mean a higher price per part if the machine is faster. Take a shop charging $150 an hour that makes 50 parts an hour, and a shop charging $50 an hour that makes 10. The first shop's part costs the customer $3 ($150 / 50). The second shop's costs $5 ($50 / 10).
So compare rates only after you compare cycle times. Better equipment is one of the few ways to raise a shop rate and still give the customer a lower price per part, as long as the faster machine has enough work to keep it running.
Where our sample shop's $71.72 comes from
The sample shop's break-even rate is its $61,700 of yearly overhead plus the full cost of an owner, a machinist and a part-time deburr helper, divided by the hours that are really billed. The owner's hours are the smallest share of that bottom number, because most of an owner's week goes to quoting, programming questions, ordering and invoices.
In one metal fabrication shop's line-by-line build, the hard cost came to $51.56 an hour before any markup. Wages with payroll taxes and benefits come first, then rent, power, insurance and consumables spread over the year's labour hours. The sample shop lands higher, at $71.72, because it bills fewer hours: a three-person shop where the owner spends most days off the floor.
The formula and the reasons behind each input are in the true hourly rate guide. Put your own shop's numbers into the free true hourly rate calculator.
What a CNC hour costs once the machine is counted
A CNC mill hour should carry the machine's own running cost on top of the labour rate, and a bench hour carries none. Take what each machine costs a year in payments and upkeep, divide by the hours it actually runs, and add that when a job uses it.
In the sample, that puts a loaded CNC mill hour at about $88 before cushion and profit, and about $110 after. That sits inside the $85 to $150 range in the table above. A new machine that sits idle half the week has a high running cost per hour; an old paid-off saw has almost none.
Markup on stock and on the anodizer: 20%, 50% or 150%
Owners mark up stock anywhere from about 15% to 150%, and the right percent depends on how small the stock bill is. In the examples we found, one estimating demo marks material up 50%, one shop marks the anodizer's bill up 20%, another adds 15% to anything it buys or sends out, and one owner goes to 150% on tiny parts.
That 150% sounds like a lot until you see the dollars. On a small piece of aluminum that costs $1.20, a 150% markup adds $1.80. The percent is huge and the money is less than $2, which does not begin to pay for ordering, storing and sawing it.
On a small part, look at the dollars the markup adds, not the percent. The sheet keeps separate markups for stock and outside services so each can be set on its own.
What the sample bracket job keeps
The sample 25-bracket job keeps $678.53, which is 24.1% of its $2,815.25 price, after every cost including the owner's wage. That is a 31.8% markup on full cost.
A common floor you will hear from shop owners is never less than a 30% markup on hourly cost. Be careful with the word: a 30% markup keeps only about 23% of the price ($30 out of $130). The sample sits just above that floor.
The gap between markup and margin trips a lot of shops up; the markup vs margin guide has the formula, and overhead and profit covers what counts as profit once the owner is paid. The full bracket quote, line by line, is on how to price CNC work.
Set the rate once in the Shop Setup tab
The Machine Shop Pricing Calculator works out your break-even rate and each machine's running cost once, then uses them on every quote. Change a machine payment or add a machinist and every future price updates. It opens in Excel and Google Sheets.