CNC Quote Margin and Floor Price Calculator
Before a quote leaves the building, three questions matter: what is the margin at full cost, what is the lowest price that does not lose cash, and how much does each machine hour earn? This checker answers all three from your own cost inputs.
Your numbers
Includes labor, depreciation, facility and overhead allocation.
Direct labor, power, consumables and tooling only, no fixed overhead.
Your results
Decision aid. Fixed overhead recovery, capacity utilization and strategic value are judgments, so use the variable floor only for deliberate filler work when machines would otherwise be idle.
Margin vs quoted price
Sweeps Quoted price per piece from 15 to 90, holding your other inputs fixed.
Check quoted margin vs actual margin
Optional: we can review how quoted job margins compare with actual costed margins from your ERP.
Optional. The tool and every export work without this. No spam.
How to use the checker
Enter the quoted price per piece, lot quantity, material and outside processing per piece, run time per piece and setup hours. Provide two rates: your fully burdened machine rate, and a variable rate that includes only out-of-pocket costs. The tool returns margin on price at full cost, the price needed to hit your target margin, a variable floor price, and throughput per spindle hour compared with your burdened rate. Use the chart to see where your price crosses zero margin and the target.
- Burdened rate equals full cost recovery, variable rate equals cash cost
- Use the same lot quantity as the quote, setup per piece changes with it
- Compare the gap output across jobs competing for the same machine
Formulas and meaning
Full cost per piece = material + outside + run time / 60 x burdened rate + setup hours x burdened rate / quantity. Margin on price = (price - full cost) / price. Target price = full cost / (1 - target margin). Floor price is the same cost build using the variable rate. Throughput per spindle hour borrows from throughput accounting: (price - material and outside cost) x quantity, divided by the spindle hours the job uses. When that figure is below your burdened rate, the job is not paying for the machine's time, whatever the cost sheet says.
Reading the result
With the defaults, full cost is about 42.2 dollars per piece and a 48 dollar quote earns roughly 12 percent, below a 30 percent target, which needs near 60 dollars. The variable floor is near 20 dollars, so the job is clearly cash positive. Throughput per spindle hour is around 215 dollars against a 90 dollar burdened rate. That combination says the job is worth taking if capacity is idle but is underpriced against your target. Sharing these four numbers gives sales and shop leadership a common basis for deciding.
Common mistakes
The most dangerous habit is quoting at the variable floor on every job, which never recovers fixed costs. Also avoid mixing margin and markup when you set targets. Teams sometimes include material in throughput per hour, which hides weak jobs with expensive material. Finally, the floor price is only valid if the machine would otherwise sit idle. If a better job could use those hours, the opportunity cost is higher than the variable rate suggests.
Frequently Asked Questions
What is a good margin for a CNC job shop?
It varies by market, complexity and utilization. Many shops target 25 to 40 percent gross margin on price at full cost. Use your own history of actual job margins rather than industry averages to set the target.
When is the variable floor price acceptable?
Only when capacity is otherwise idle and the work does not set a price expectation with the customer. It should be an exception with a manager's approval, not a pricing method.
What does throughput per spindle hour tell me?
It tells you how much revenue after material and outside costs each machine hour earns. Comparing it with your burdened rate shows whether the job covers the real cost of the machine's time.
Why use margin on price instead of markup?
Margin on price maps directly to income statement ratios, making it easier to compare jobs and track against company targets. Convert to markup only when a customer or system requires it.
If you want quote margins and hourly throughput checked automatically against actual job costs in your ERP, Netray can help connect those numbers.
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Guides
- How to Quote CNC Machined Parts: A Step by Step MethodHow to quote CNC machined parts step by step: material, setup, cycle time, outside processing, quantity breaks and margin, plus common costly mistakes.
- How to Price Small-Lot and Prototype Work in a Job ShopHow job shops price prototypes and small lots: setup amortization, programming, first article, minimum lot charges, scrap allowance and quantity breaks that protect margin.
- Gross Margin Analysis by Product and CustomerGross margin analysis by product and customer: build a contribution model in ERP, allocate freight and rebates, and find the 20 percent of SKUs losing money.