“How exactly do you calculate the price for your machined products?”

This is a question a customer asked me today. In fact, I’ve explained to many customers how we calculate the pricing for our CNC products.

However, many customers still struggle to understand CNC product pricing, as most fastener buyers typically calculate factory costs using unit price per unit weight, thereby arriving at a price per ton.

For standard parts, calculating the unit price per ton in this way is certainly acceptable; however, for products that require turning operations, this approach is clearly inappropriate.

Because a non-standard product is manufactured at different factories, the production processes and equipment used may vary, leading to significant price differences among such products.

Today, we’ll take a detailed look at how we calculate quotes for CNC products.

I. Raw Material Costs

Raw material costs are the primary factor in pricing. As mentioned earlier, when calculating standard parts, customers typically use the unit price divided by the unit weight. However, for non-standard products, this approach does not apply; in addition to providing sufficient machining allowances, cutting and layout considerations—such as clamping positions and cutting losses—must also be taken into account.

Therefore, the theoretical weight on the material requisition form is greater than the actual weight.

Therefore, when calculating costs, we base our calculations on the cut‑to‑length weight; typically, the theoretical weight listed on the material bill is 10% to 15% higher than the actual measured weight.

II. Labor Hour Costs

CNC‑machined parts are typically manufactured through multiple process steps, such as material cutting, contour milling, drilling, countersinking, chamfering, and deburring.

At each processing step, workers must set aside time to adjust the machinery; for products requiring high precision, the time and cost associated with equipment adjustments can be substantial.

A worker may spend two to six hours, or even longer, adjusting a particular production process, and skilled workers command relatively high wages within the factory.

Assuming a technician earns 10,000 yuan per month, with an average daily wage of 250 to 350 yuan, this labor cost must also be factored into the product’s cost. For orders with larger volumes, the per-unit cost tends to be lower.

III. Consumable Costs

Tool wear is very common in CNC machining, and with frequent use, milling cutters degrade rapidly.

Milling cutters are typically made from mold steel, which is relatively inexpensive but has a shorter service life, making it suitable for small-batch production.

However, for larger order volumes, higher‑performance milling cutters are required—such as tools with a higher tungsten content. (Tool selection is also closely tied to the material of the workpiece.)

In addition, consumables such as cutting fluids, sandpaper, grinding heads, and tooling fixtures should also be factored into the cost calculation.

IV. Risk Costs

For an experienced CNC machining shop, failing to factor in scrap costs entails substantial risk.

In many cases, improper operator handling can result in dimensions exceeding the drawing tolerances, leading to a very high scrap rate.

Unfortunately, many clients don’t understand this and assume that as long as they provide you with the drawings, you should simply follow them. However, during execution, workers often overlook critical details, resulting in the entire batch being scrapped.

The smaller the batch size, the higher the risk: when a single product is scrapped, the associated cost is directly passed on to the remaining units, driving up the average order value.

V. Other Costs

CNC machining shops allocate a certain percentage of their costs to cover facility space, depreciation, utilities, and other overhead expenses.

This depends on the order quantity and the complexity of the processing.

At this point, the major cost components of CNC machining have been calculated. Of course, costs vary from one company to another, and additional expenses may arise, which can also affect the final quotation presented to the customer.