Hello, this is Ryuta Hamamoto from TIMEWELL.
Search for how to estimate machining time and you will find cutting-condition formulas. Spindle speed from surface speed and diameter. Feed rate from chip load, flute count, and rpm. Tooling suppliers explain all of it carefully, and they explain it well.
The trouble is that this is not what the person writing the quote is stuck on. Knowing your cutting conditions does not give you a price.
What a quote needs is the number of minutes a machine and a person are tied up producing one part. That includes setup. Tool changes. Inspection. Waiting. And then it needs a rate to turn those minutes into money. This piece is about how to build that number up.
The short version:
- Quote time is setup plus run plus inspection. Cutting time is a fraction of the run
- Setup happens once per lot; run and inspection happen per piece. That is why small lots cost more
- The charge rate divides cost by the hours you actually sell, not by theoretical capacity
- Once you hold cost as hours times rate, a price negotiation becomes an explanation
Quote time is not cutting time
Start by breaking the work apart. Time per piece decomposes roughly like this.
Setup. Reading the drawing, pulling material, changing fixtures, loading the program and picking up the zero, cutting a first article and measuring it. This happens once for the whole lot. Ten pieces or a hundred, you set up once.
Run time. The machine actually moving. Cutting conditions matter here, but so do rapid moves, tool changes, and loading and unloading the part. This is per piece.
Inspection. Measuring, recording. Per piece for 100% inspection, prorated by frequency for sampling.
Add those three and you have the time the job occupies your shop. Cost per piece then falls out:
Cost per piece = setup time × rate ÷ lot size + (run time + inspection time) × rate
The reason small lots are expensive is right there in the formula. An hour of setup spread over ten pieces adds six minutes to every one of them. Over a hundred, it adds thirty-six seconds. The same drawing prices differently at different quantities not because you feel like charging more, but because the arithmetic says so.
When a customer asks why this order costs more than the last one, being able to show that line changes the whole conversation.
Work out your own charge rate
The rate is what converts hours into money. Split it in two.
Machine rate covers depreciation, rent on the floor area the machine occupies, power, maintenance and repair, coolant, and tooling consumed.
Labour rate covers the operator — salary plus statutory benefits and bonuses, not just the headline wage — along with an allocation of indirect staff and office costs.
Plenty of shops carry a single combined number, which is fine. Keeping them apart is useful when some operations run lights-out and others need someone standing there.
Total those costs for the year, then divide. This is where it goes wrong.
Say you work 240 days at eight hours. That is 1,920 hours. Do not divide by 1,920. Changeovers, maintenance, gaps with no work, rework — the hours you can actually bill are far fewer.
At 70% utilisation you have 1,344 hours. The same cost divided by 1,344 instead of 1,920 gives a rate 40% higher. Quote at the theoretical rate for long enough and you end up busy and broke. If that description sounds familiar, this is the first place to look.
One more thing: you need more than one rate. A five-axis machining centre and a manual lathe do not carry the same equipment cost. Hold a rate per machine, or at least per process group.
Struggling with AI adoption?
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The time everybody forgets
Quotes come in low mostly because time was not counted. The usual suspects:
Tool changes and tool prep. Not just the programmed tool change, but hunting down the tools and laying them out on the setup bench. If a special tool has to be ordered, that lead time hits the delivery date too.
Material prep. Cutting from stock, digging through the offcut rack, incoming inspection. For customer-supplied material, receiving and checking it.
First article. Make one, measure it, apply offsets. Fold this into setup or carry it separately, but carry it.
Inspection records. When a certificate of conformance is required, writing the record can take longer than the measuring.
Waiting. Time sitting at the heat treater or the plating shop. That is not machining time, but it is delivery time.
Rework. It happens at some rate. Whether you build a scrap allowance into the quote is a policy decision — but if you do not, you need to check separately that you are recovering it in practice.
Reconstructing this list from memory on every quote is how estimates start varying by who wrote them. Turn it into a checklist. There is a spreadsheet at the end of this article that does exactly that.
Numbers change how price negotiations go
This part matters in practice, so let me spend a little time on it.
Material, energy, and labour costs go up, and you go to your customer to ask for a price revision. "Things are tight, please pay more" does not work. What decides the outcome is whether you can show what went up, by how much, and what that did to the cost of this specific part.
Japan's SME Agency publishes material for exactly this. Its price negotiation handbook lists, among the things a supplier should have in place, a documented workflow and quotation checklist, product-level cost accounting, and a quotation template suited to the business1. It also distributes a cost-item negotiation format for presenting labour, material, and energy costs as separate lines2.
In other words, the government is telling suppliers to build this, and handing out the forms. March and September are designated price negotiation promotion months, with pressure applied to the buying side as well.
This is where the build-up pays off. If you hold cost as hours times rate, you can say: the minimum wage went up, so the labour rate rose by so many yen, this part takes so many minutes to machine, so the unit price moves by this much. That is a calculation, not a feeling.
Hold cost as a single lump sum and you cannot make that argument at all. I think the difference between shops that negotiate well and shops that do not is rarely negotiating skill. It is whether the cost is broken down.
The spreadsheet
There is a machining time build-up sheet that takes everything above as input. Enter setup, run, and inspection time per operation along with the charge rates, and it returns cost per piece and unit price by lot size. The easily forgotten items are there as a checklist.
It is laid out so you can hand it to a customer as the basis for a quote, which makes it useful in a negotiation too. The download link is at the end of this article.
Automate after you have the method, not before
Everything here can be done by hand. Most shops do it in the estimator's head.
The problem is that it lives in one or two heads. When that person is busy, quotes stop. When that person leaves, the reasoning leaves with them. A new hire takes years to reach the same accuracy. Estimating machining time is a skills-transfer problem as much as a costing problem.
Our enterprise AI, ZEROCK, helps with the part where the build-up starts from the drawing: pulling up similar past drawings and what they actually took, so this quote starts from evidence rather than a blank sheet. You reason from the delta against past jobs instead of stacking from zero.
Let me be blunt about the limit, though. This only works if the manual method is already settled inside the company. Put AI on top of a process where every estimator does it differently and all you get is inconsistent answers, faster. Decide the method first. Automate second.
There is more on drawings in quoting from drawings and cost estimation in manufacturing.
In summary
- Quote time is setup plus run plus inspection. Cutting time is only part of the run
- Setup is per lot, run and inspection are per piece. Small lots cost more because the formula says so
- Divide costs by hours you actually sell. Theoretical capacity produces a busy, unprofitable shop
- Put the forgotten time — tool prep, material, first article, records, waiting, rework — on a checklist
- Hours times rate turns a price request into an explanation. The SME Agency even publishes the format
- Automate after the method is settled
If you want to straighten out how your shop estimates, or reduce how much of it sits in one person's head, get in touch.
References
Footnotes
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Price Negotiation Handbook for SMEs (SME Agency, revised January 2026, Japanese). The handbook lists documented workflows and quotation checklists, product-level cost accounting, and a quotation template suited to the business among its confirmation items ↩
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Price negotiation and cost pass-through support tools (SME Agency, Japanese). The cost-item price negotiation format, which separates labour, material, and energy costs, is distributed on this page. The underlying policy is the Guidelines on price negotiation for appropriate pass-through of labour costs (Japan Fair Trade Commission) ↩
