How to calculate shop rates, estimate cycle times, and build accurate quotes for CNC machining work.
Every machining quote boils down to one equation:
Part Cost = Material + Setup Time × Shop Rate + Cycle Time × Shop Rate + Tooling + Overhead
The challenge is estimating each component accurately. Underestimate and you lose money. Overestimate and you lose the job. Here's how to get close.
Your shop rate needs to cover all costs plus profit. Start with your annual costs and work backwards:
| Cost Category | Example Annual |
|---|---|
| Operator wages + benefits | $65,000 |
| Machine payment / depreciation | $24,000 |
| Rent / utilities / insurance | $36,000 |
| Tooling consumables | $12,000 |
| Maintenance & repair | $8,000 |
| Software, inspection, misc | $5,000 |
| Total annual cost | $150,000 |
Divide by available production hours. At 2,000 hours/year with 80% utilization = 1,600 billable hours.
$150,000 ÷ 1,600 = $93.75/hr break-even
Add your target profit margin (15–25%) → $108–117/hr shop rate. Typical rates range from $75–150/hr for standard CNC work, $150–300+ for 5-axis and Swiss.
Setup includes everything from reading the print to first good part. Common benchmarks:
| Operation | Typical Setup |
|---|---|
| Simple vise job (3-axis mill) | 15–30 min |
| Multi-op vise job with probing | 30–60 min |
| Fixture plate / custom fixture | 45–90 min |
| Simple lathe chuck job | 15–30 min |
| Lathe with live tooling | 30–60 min |
| First article inspection | 15–45 min |
Pro tip: Track your actual setup times and build a database. Estimation improves dramatically with real data from your own shop.
Break the part into operations and estimate each:
Roughing time: Calculate material volume to remove, divide by MRR. Time = Volume (in³) ÷ MRR (in³/min)
Finishing time: Calculate toolpath length, divide by feed rate. Include spring passes if needed.
Non-cutting time: Add 15–30% for rapids, tool changes (5–10 sec each), probing, and air cutting. This is the most commonly underestimated component.
Drilling & tapping: Time = (Depth + clearance) ÷ Feed Rate per hole, plus rapid time between holes.
Don't forget to account for material beyond just the raw stock price:
Bar/plate cost: Price per pound × weight, including the kerf and remnant you can't use.
Buy-to-fly ratio: In aerospace, you might machine away 90% of the material. That waste still costs money.
Minimum order quantities: If you need 2" of bar but the minimum order is 12', factor that into your pricing or build inventory costs.
For production runs, amortize tooling cost across the run:
Tool cost per part = Tool price ÷ Expected tool life (parts)
For a $25 end mill lasting 200 parts: $0.125/part. Seems small, but a job with 8 tools adds up. Insert tooling is often more economical — track your cost per edge.
Setup cost is fixed regardless of quantity, so per-part cost drops as volume increases:
| Qty | Setup/Part | Cycle | Material | Tooling | Total/Part |
|---|---|---|---|---|---|
| 1 | $50.00 | $15.00 | $5.00 | $2.00 | $72.00 |
| 10 | $5.00 | $15.00 | $5.00 | $1.50 | $26.50 |
| 100 | $0.50 | $12.00 | $4.50 | $0.50 | $17.50 |
| 1000 | $0.05 | $10.00 | $4.00 | $0.25 | $14.30 |
Notice cycle time also decreases at volume — you optimize programs, build fixtures, and find efficiencies.
Forgetting deburring and secondary ops: Hand deburring, tumbling, anodizing, plating — these add up fast.
Underestimating inspection time: Complex GD&T parts can take 15–30 minutes per part on a CMM.
Ignoring programming time: Complex 3D surfacing can take hours to program. Amortize across the run or charge separately for NRE.
Not padding for scrap: Add 2–5% scrap factor for production runs, more for difficult materials or tight tolerances.