Free tool
Job quote calculator for machining and fabrication.
Work out what an hour on the machine really costs you, spread set-up over the quantity, and price for the margin you want.
Adding 30% to your cost doesn't mean you keep 30% of the price. Markup vs margin, explained with an example.
Your real machine-hour rate
One machine, one year of costs, and the hours you can actually bill.
- Cost per year
- $160,000
- Billable hours
- 1,288
- If you divided by every hour
- $86.96
Charge the every-hour rate and you lose money on every job, even the ones that go well.
Price the job, with price breaks
Set-up happens once, so it's spread over the quantity.
| Quantity | Cost each | Price each | Line total | Price each with 30% markup | Markup leaves behind |
|---|---|---|---|---|---|
| $224.18 | $320.26 | $320.26 | $291.43 | $28.82 | |
| $75.11 | $107.30 | $536.51 | $97.65 | $48.29 | |
| $56.48 | $80.68 | $806.83 | $73.42 | $72.61 | |
| $45.30 | $64.71 | $1,617.79 | $58.89 | $145.60 | |
| $41.57 | $59.39 | $2,969.39 | $54.04 | $267.24 | |
| $39.71 | $56.73 | $5,672.58 | $51.62 | $510.53 |
Cost each = set-up ÷ quantity + machine time + material + outside work. Price each = cost ÷ (1 − margin). Add your own minimum line charge and rounding before the quote goes out.
Markup vs margin
Markup is a % of your cost. Margin is a % of the price.
you keep a margin of 23.1%
The starting numbers are examples from our video, not a benchmark. Your rates, hours and margins will differ. Nothing you type here is saved or sent anywhere.
Markup vs margin
Same 30%, different answer.
Markup and margin both measure the profit on a job. They just divide it by different things, so the same dollars give two different percentages.
Markup
Your profit as a share of the cost.
Markup = profit ÷ cost
Price = cost × (1 + markup)
You start from what the job costs you and add a percentage on top. It's how most shops quote.
Margin
Your profit as a share of the price.
Margin = profit ÷ price
Price = cost ÷ (1 − margin)
You start from the price and ask how much of it you keep. It's how your P&L, your accountant and the bank measure profit.
Worked example: one part that costs $100
- 1
You add a 30% markup. 30% of $100 is $30, so you charge $130 and keep $30.
- 2
Now look at it from the price. Of the $130 the customer pays, you keep $30. $30 ÷ $130 = 23.1%. That's your margin.
- 3
Same $30, two answers: 30% of the cost, but only 23.1% of the price. The 30% was never a share of what you're paid.
- 4
To keep 30% of the price, divide the cost by what's left once you take your 30% out: $100 ÷ 0.70 = $142.86. Check: you keep $42.86, and $42.86 ÷ $142.86 = 30%.
30% markup
Price $130.00
- Markup: $30 ÷ $100 cost = 30%
- Margin: $30 ÷ $130 price = 23.1%
30% margin
Price $142.86
- Margin: $42.86 ÷ $142.86 price = 30%
- Markup: $42.86 ÷ $100 cost = 42.9%
The quick check: markup is always the bigger number. If you quote with a markup, your margin is lower than the number you typed.
What it costs on a real job
The example job in the calculator: 10 parts at $56.48 each to make. Add 30% markup and you quote $73.42 a part. Price for a 30% margin and it's $80.68. That's $7.26 a part, over $72 on the job, from mixing up two words. Across a year of quotes, it's the difference between the profit you planned and the profit you get.
Cheat sheet, both ways round
| Markup you add | Margin you keep |
|---|---|
| 20.0% | 16.7% |
| 25.0% | 20.0% |
| 30.0% | 23.1% |
| 40.0% | 28.6% |
| 50.0% | 33.3% |
| 100.0% | 50.0% |
| Margin you want | Markup you need |
|---|---|
| 15.0% | 17.6% |
| 20.0% | 25.0% |
| 25.0% | 33.3% |
| 30.0% | 42.9% |
| 35.0% | 53.8% |
| 40.0% | 66.7% |
Questions
Pricing a job, in plain numbers.
What's the difference between markup and margin?
Markup is a percentage of your cost. Margin is a percentage of the price. Add 30% to a $100 cost and you charge $130, but the $30 you keep is 23.1% of the price. To keep 30% of the price, divide the cost by 0.7: $142.86.
How do I work out my machine-hour rate?
Add up a year of costs for the machine (finance or depreciation, maintenance, tooling), the operator fully loaded, and the machine's share of the shop's overheads. Divide by the hours you can actually bill, not every hour it's staffed. Seventy percent billable is a good shop.
Why does one part cost so much more than fifty?
Set-up and programming happen once per job. On a one-off, that one part carries the whole set-up; on fifty, each part carries a fiftieth. That's why quotes have quantity price breaks.
Are the starting numbers a benchmark?
No. They're the example job from our YouTube video. Every shop's rates, hours and margins are different, so put your own in. Nothing you type is saved or sent anywhere.
Do this maths on every quote, without the spreadsheet.
NE Vault's quote generators spread set-up over the quantity, price every break at once, and work out margin or mark-up, your choice. Click around a live demo shop, no sign-up.