How a manufacturing quote is built, line by line
A manufacturing quote is a cost build-up with a pricing layer on top. The cost is material, labor, subcontract, overhead and other, each a quantity times a unit cost or hours times a rate. The price is that cost with setup spread over the quantity, a margin or markup applied, and breaks, expedites and discounts added. This guide walks you through each step, with a worked example on labeled example rates.
The five buckets
Every cost on a quote belongs in one of five buckets. Keeping them separate is what makes a quote readable after the fact, when the job is done and someone asks where the money went.
Material is the stock the part is cut from, plus hardware and purchased parts: a quantity times a unit cost. The unit cost comes from a price list that changes over time, so a good quote records the price that applied on the day. Minimum buys and stock sizes matter here: a small part cut from a full sheet costs the sheet.
Labor is hours times a rate. It splits into setup hours, paid once per lot, and run hours, paid per piece. The rate may be a labor rate, a machine rate, or the two added together.
Subcontract is work done outside: heat treat, plating, painting, a casting. It is priced per lot, per piece or per load, usually from a vendor's quote, and it carries its own lead days.
Overhead is the building, the office and the people who do not touch the part. Carry it inside the hourly rate or in a bucket of its own, but in exactly one place.
Other is what is left: tooling, fixtures, freight, a first-article inspection, a charge that applies once across the whole job.
Rates
A rate is dollars per hour for a work center: one rate for everything, a rate per machine, or labor and machine rates added together for run time, with surcharges on top. The shop rates guide shows how to build one.
Setup amortization
Setup is the reason a quote for ten pieces and a quote for fifty pieces are not the same price per piece. The setup hours times the rate is a lot cost. Divided by the quantity, it becomes the setup share of each piece, and it shrinks as the quantity grows. That is the shape of a price break.
Margin against markup
Markup adds a percentage to cost: price equals cost times one plus the markup. Margin sets a percentage of the price: price equals cost divided by one minus the margin. At the same percentage, margin gives a higher price than markup, and the gap widens as the percentage rises. Neither is wrong, but a quote must say which it uses.
Price breaks, expedites and discounts
A price break is the same line costed at a different quantity, with setup amortized again at that quantity and lead days accumulated.
An expedite is a shorter lead time at a premium: a ladder of days faster, each with a percentage. It changes the price and the delivery, not the cost.
A discount is a percentage off a line's price, applied after margin and recorded so the margin achieved stays visible. Add-ons run the other way: required ones are in the price, optional ones are offered to the buyer.
A worked example on one bracket at two quantities
These rates are illustrative and belong to no shop. The part is an aluminum bracket with one setup, anodised outside. The labor rate is 95.00 an hour, material 12.00 a piece, setup 1.5 hours a lot, run 0.25 hours a piece, and anodise 85.00 a lot.
| Line (example rates) | Quantity 10 | Quantity 50 |
|---|---|---|
| Material: quantity times 12.00 | 120.00 | 600.00 |
| Labor, setup: 1.5 h times 95.00, once a lot | 142.50 | 142.50 |
| Labor, run: 0.25 h times quantity times 95.00 | 237.50 | 1,187.50 |
| Subcontract: anodise, 85.00 a lot | 85.00 | 85.00 |
| Cost of the lot | 585.00 | 2,015.00 |
| Cost a piece | 58.50 | 40.30 |
| Price at 30 percent markup (cost times 1.30) | 760.50 | 2,619.50 |
| Price at 30 percent margin (cost divided by 0.70) | 835.71 | 2,878.57 |
| Price a piece at 30 percent margin | 83.57 | 57.57 |
Overhead is inside the 95.00 rate in this example. The setup and anodise lines do not change with quantity; that is the price break.
How VenturusEQ does each step
- Buckets. Every line is built in the same five buckets, and every dollar is quantity times unit cost or hours times rate with the source shown. Un-costed assembly components are disclosed with the cause.
- Rates. The product ships none. An operation resolves through a rate ladder: an override on the operation, then the work center's quoting rate, then setup and run hours times labor and machine rates, with a surcharge per hour. The arm used is recorded on the line.
- Setup amortization. Up to 30 quantity breaks on a line, setup amortized per break, lead days accumulated, one break marked primary.
- Margin or markup. A house default with a per-line override. When both are supplied, margin wins, and pricing at cost raises a warning.
- Expedites, add-ons and discounts. An expedite ladder of days faster and percent; add-ons marked required or optional; a line discount percentage that is off for a company until it chooses to enable it. Totals can be shown exact, as a range, as a maximum or not at all.
See the build-up on one of your own parts
In a live walkthrough we price a part you have already quoted, in your rates, and show every bucket beside what you sent. If you would rather look first, the interactive demo is open, with no form in front of it.