# Minimum Order Charge Policy Checklist > Source: https://netray.co/tools/minimum-order-charge-policy-checklist > Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems. > Section: Free Tools ## Short answer A checklist for deciding the minimum order value, backing it with real fixed cost, writing it into quotes and enforcing it in your ERP. ## Category cost-finance ## Industry Job Shop Machining ## Audience - Estimator - Sales manager - Shop owner - Customer service ## Tool **Kind:** checklist **Groups:** #### 1. Cost the fixed work behind every order **Items:** **Text:** Time the quote-to-ship admin path: estimating, order entry, scheduling, certs and invoicing. **Critical:** true **Text:** Calculate admin hours per order multiplied by the loaded office rate. **Critical:** true Measure the average unbilled setup, first-piece proving and programming time on small orders. Add material handling, receiving inspection and packaging labor that does not scale with quantity. Include shipping label, paperwork and any customer portal upload time. Compare the total fixed cost per order to your average small-order revenue. #### 2. Set the number **Items:** **Text:** Set the minimum at fixed cost per order plus the margin you require on it. **Critical:** true Choose one minimum or a small table by process, for example machining, fabrication and finishing. Decide whether the minimum applies per order, per line, per release or per part number. Test the policy against the last 12 months of orders to see how many would be affected. Estimate the revenue and margin impact if affected customers consolidate orders. Decide if a lower minimum applies to blanket orders or scheduled releases. #### 3. Write it into quotes and terms **Items:** **Text:** State the minimum order charge on the quote and on the order acknowledgement. **Critical:** true Show it as a line item (minimum order adjustment) rather than inflating unit price. Define the quote validity period and the quantity range the price applies to. List what is excluded from the minimum: material pass-through, freight, tooling charges. Add the policy to standard terms and conditions and to the customer portal pricing page. Decide how quantity breaks interact with the minimum charge. **Text:** Check that customer contracts or purchase order terms do not conflict with the policy. **Critical:** true #### 4. Configure the ERP **Items:** **Text:** Create a non-stocked service or charge item for the minimum order adjustment. **Critical:** true Set a pricing rule or order header logic that adds the charge when order value is below the threshold. Make sure the charge item posts to its own revenue account for reporting. Prevent order entry from deleting the charge without a reason code or approval. Report orders below the minimum, with and without the charge, monthly. Confirm the charge appears on the invoice and does not distort quantity-based unit cost. **Text:** Test partial shipments so the charge is billed once, not on every shipment. **Critical:** true #### 5. Communicate and enforce **Items:** Brief sales and customer service on the reason and the scripted explanation. Send a notice to existing customers with the effective date and the rationale. **Text:** Define who may waive the charge, in what cases and with what approval. **Critical:** true Log every waiver with customer and reason for later review. Offer alternatives: larger lot, blanket order or consolidated releases. Review the policy every six to twelve months using waiver and lost-order data. **Scoring Note:** Aim to complete every critical item before the policy takes effect. Items left open usually show up as waived charges or invoice disputes in the first month. Re-check the table of fixed costs whenever your office rate or order process changes. ## Content **Intro:** Small orders cost almost as much to process as large ones. Without a minimum order charge, a 120 dollar order can consume an hour of estimating, scheduling, proving and shipping. This checklist walks through costing the fixed work, setting a defensible number, writing it into terms and enforcing it in your ERP. **Sections:** #### How to use it **Body:** Work through the five groups in order. Start by timing the fixed work behind a typical small order, because that cost is the only honest basis for the charge. Then set the threshold, write it into quote terms and configure your ERP so the charge is added automatically. The critical items are the ones that most often cause disputes or lost revenue when skipped. #### Where the minimum comes from **Body:** A minimum order charge recovers fixed cost per order: administrative handling, unbilled setup and programming, receiving and packaging. Add the margin you need on that effort. If admin takes 1.5 hours at 55 dollars loaded and setup absorbs another hour at 95, the fixed cost is about 177 dollars before any margin. A minimum near 250 dollars is then defensible, and you can explain the arithmetic to a customer who pushes back. #### Avoiding customer friction **Body:** Customers dislike surprise fees. State the minimum on the first quote, show it as its own line and offer ways to avoid it, such as combining part numbers on one order or placing a blanket order with scheduled releases. A policy that is transparent and applied evenly is rarely contested. Inconsistent waivers are the real problem, because they teach buyers that the charge is negotiable. #### ERP and reporting notes **Body:** Model the minimum as a service item so it is visible in revenue reporting. Test partial shipments and order changes so the charge is not duplicated or lost. Report on orders below the threshold and on waivers monthly: if waived revenue is large, either the threshold is wrong or the sales team is bypassing the policy. Revisit the number when wages or order handling change. **Cta:** If you want the minimum charge applied and reported automatically, Netray can review your ERP pricing logic and recommend a setup that fits your quoting flow. **Faq:** #### How do I decide the amount of a minimum order charge? **Answer:** Add up the fixed work that every order requires: admin, unbilled setup, proving, receiving and packaging. Multiply hours by loaded rates and add your required margin. Check it against your actual order history so it affects mainly orders that truly lose money. #### Should the minimum be per order or per line item? **Answer:** Per order is simplest and matches most of the admin cost. A per-line or per-part minimum is more suitable when each part number triggers its own setup and programming. Decide which cost drives your fixed effort and apply the minimum to that unit. #### How do I handle existing customers when introducing a minimum? **Answer:** Give written notice with an effective date, explain the cost basis and offer alternatives such as consolidated orders or blanket releases. Applying the policy to new quotes first and grandfathering open orders reduces friction. #### Can a minimum order charge reduce revenue? **Answer:** It can if customers take small orders elsewhere, but those orders are often unprofitable already. Test the policy against twelve months of orders to see how much revenue and margin sits below the threshold before you commit. ## Search terms minimum order charge machine shop, minimum order value policy, small order surcharge manufacturing, minimum lot charge checklist, minimum order fee job shop, setup charge policy checklist, small quantity pricing policy, minimum billing manufacturing --- Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json