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CNC Setup Amortization and Quantity Price Break Calculator

Every machining quote with quantity breaks hides the same curve: a fixed setup cost divided by a growing lot. This calculator builds the curve from your own setup, run, material and scrap numbers so you can set price breaks you can defend.

Your numbers

50 parts

Pieces ordered on this release.

hours

Fixture install, tool loading, offsets, program prove-out.

$/hr

Burdened machine plus setter rate.

$

First article inspection, CMM program, special gauges.

min
$/hr
$
$
3 %

Share of pieces expected to be scrapped. Cost is spread over good pieces.

30 %

Margin as a share of the selling price, not markup on cost.

Your results

Total cost per piece
$33
Price per piece
$47
Cost divided by (1 minus margin) delivers the stated margin on price.
One-time cost for the lot
$388
Setup labor plus first article and one-time costs.
Run cost per piece
$9
Variable cost per good piece
$25
Run, material and tooling, grossed up for scrap.
Setup cost per piece
$8
Total lot price
$2,358
Setup share of cost
23.5%
Quantity where setup is 10% of cost
139
Derived from onetime / qty = 0.1 / 0.9 x variable cost.

Planning aid. Costs are your own inputs, and price breaks should also consider material buy quantities, capacity and customer relationship. Scrap is spread over good pieces by dividing variable cost by (1 minus scrap).

Save results:

Cost and price per piece vs lot quantity

Sweeps Lot quantity from 1 to 500, holding your other inputs fixed.

Quote breaks from real setup actuals

Optional: we can review how actual setup hours in your ERP compare with the figures used on quotes.

Optional. The tool and every export work without this. No spam.

How to use the calculator

Enter the setup hours and rate, plus any one-time first article cost. Then enter run time, run rate, material and tooling per piece and a scrap allowance. Set the lot quantity with the slider and read cost and price per piece. The chart sweeps quantity from 1 to 500 so you can pick break points such as 10, 25, 50, 100 and 250 directly from the curve. The last output tells you the quantity at which setup falls to 10 percent of piece cost, a practical rule of thumb for where further price breaks give diminishing returns.

  • Use the same machine rate you use on your quote worksheet
  • Put CMM programming and special gauging in the one-time field
  • Re-run for the repeat order case with setup reduced to 0.5 to 1 hour

The costing method

Unit cost = (run + material + tooling) / (1 - scrap rate) + (setup + one-time) / quantity. Dividing variable cost by the good-piece yield spreads scrap over what you ship. Price uses margin on price: price = cost / (1 - margin). This is the standard contribution view used in job shop costing, and differs from markup, which multiplies cost. A 30 percent margin on price equals a 42.9 percent markup on cost. Keep the two straight when quoting, because mixing them is the most common reason quoted margins come in below target.

Reading the break curve

With the defaults, one-time cost is 387.50 dollars. At 10 pieces setup adds about 38.75 per piece, at 50 pieces about 7.75 and at 500 pieces under 1. The curve falls steeply and then flattens, so the first quantity doublings matter most. If a customer asks for 25 and 100 piece prices, the gap should roughly equal the setup saved per piece, not a flat percentage. Showing that arithmetic in your quote note makes the price break easy to justify and discourages arbitrary discount requests.

Common mistakes

Spreading setup over the quantity ordered but forgetting that scrap pieces also absorb setup is a common slip, so the scrap gross-up here is applied to variable cost. Another is quoting a price break that is lower than variable cost plus a fair share of setup for repeat orders. Also avoid using a single setup figure for every part family: a simple turned part and a five-axis housing have very different setups. If you have routings in your ERP, pull setup hours from actuals rather than standards.

Frequently Asked Questions

What is the difference between margin and markup?

Margin is profit as a share of selling price, and markup is profit as a share of cost. A 30 percent margin needs a 42.9 percent markup. Confusing them is why many quotes miss target profit.

Should repeat orders use the same setup?

Usually not. Repeat orders reuse fixtures, programs and proven offsets, so setup often falls to 0.5 to 1 hour and first article cost drops to zero. Quote the repeat price as a separate break to stay competitive.

How should I treat scrap?

Use the historical scrap percent for similar parts and apply it to variable cost, since scrap pieces consume material and machine time. Keep a separate allowance for first-lot proving-out if that is typical in your shop.

Where should I place quantity breaks?

Place them where setup per piece changes meaningfully, often at 1, 5, 10, 25, 50, 100, 250 and 500. Use the chart to confirm that each break saves the customer a visible amount without cutting below your floor margin.

If setup hours and scrap rates live in your ERP routings and shop floor data, Netray can pull actuals into this calculation so quantity breaks reflect what jobs really cost.

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