ROI Case Study: 5-Axis CNC Investment
How a mid-sized shop achieved 18-month payback on a $250K investment
Company Profile
Background
- Industry: Aerospace component manufacturing
- Shop Size: 25 employees, 8,000 sq ft
- Annual Revenue: $4.2M (pre-investment)
- Existing Equipment: Three 3-axis VMCs, one 4-axis horizontal
- Customer Base: Tier 2 aerospace suppliers, medical devices
Business Challenge
The shop was losing bids on complex parts requiring 5+ setups on 3-axis machines. Competitors with 5-axis capability were winning these jobs at 20-30% lower prices due to reduced labor and setup time.
Management identified $800K/year in lost opportunities from RFQs they couldn't competitively quote.
Investment Breakdown
Equipment Purchased
DMG MORI DMU 50 (5-Axis Universal)
- • Travel: 500×450×400mm (X-Y-Z)
- • Spindle: 18,000 RPM, 54 Nm torque
- • Rotary axes: ±120° (A-axis), 360° (C-axis)
- • Tool changer: 42 positions
- • Heidenhain TNC 640 control
- • Coolant through spindle
Total Investment
| Machine base price | $220,000 |
| Installation & rigging | $8,500 |
| Tooling package (holders, fixtures) | $15,000 |
| CAM software upgrade (Mastercam 5-axis) | $12,000 |
| Operator training (2 weeks) | $6,000 |
| Programmer training (1 week) | $4,500 |
| TOTAL INVESTMENT | $266,000 |
Financing: 60-month lease at 4.5% APR = $4,950/month
Financial Performance Analysis
Year 1 Results
New Revenue
(5-axis only jobs)
Cost Savings
(existing parts optimized)
Total Financial Benefit
(Year 1)
Revenue Sources Breakdown
| Revenue Category | Year 1 | Year 2 | Description |
|---|---|---|---|
| New aerospace contracts | $285,000 | $420,000 | Complex brackets, turbine components |
| Medical implant work | $68,000 | $125,000 | Titanium spinal implants (single-setup critical) |
| Mold/die contracts | $32,000 | $85,000 | Complex cavity molds with undercuts |
| New Revenue Total | $385,000 | $630,000 | Jobs not possible with 3-axis only |
Cost Savings from Existing Parts
| Part Family | Before (3-axis) | After (5-axis) | Annual Savings |
|---|---|---|---|
| Manifold blocks | 4 setups, 180 min cycle | 1 setup, 85 min cycle | $38,000 |
| Angled mounting brackets | 3 setups, 95 min cycle | 1 setup, 52 min cycle | $31,500 |
| Precision housings | 5 setups, 240 min cycle | 1 setup, 135 min cycle | $22,800 |
| Cost Savings Total | Reduced labor + setup time | $92,300 | |
Investment vs. First Year Benefits
Total Investment: $266,000
Total Benefits: $477,300
ROI Calculation
Year 1 Financial Summary
| New Revenue | $385,000 |
| Cost Savings (existing parts) | $92,300 |
| Total Benefit | $477,300 |
| Operating Costs: | |
| Lease payments (12 months) | $59,400 |
| Tooling consumables | $18,500 |
| Additional labor (operator + programmer) | $45,000 |
| Energy, maintenance, insurance | $12,000 |
| Total Operating Costs | $134,900 |
| Net Profit (Year 1) | $342,400 |
Target was 24-36 months
$342K profit on $266K investment
Assuming 20% revenue growth/year
Key Success Factors
What Worked Well
- ✓
Pre-sold $180K in contracts
Before machine arrived, secured commitments from 3 customers
- ✓
Invested in training upfront
2 operators + 1 programmer trained before first job
- ✓
Optimized existing parts first
Re-programmed high-volume parts for 5-axis to prove capability
- ✓
Targeted specific markets
Focused on aerospace where 5-axis is required, not "nice to have"
Challenges Overcome
- ⚠
Steep learning curve (3 months)
First jobs ran at 60% efficiency; solved with CAM templates
- ⚠
Collision risk on complex parts
Implemented simulation software (Vericut) to prevent crashes
- ⚠
Workholding limitations
Invested additional $8K in modular vises and tombstones
- ⚠
Programming time underestimated
5-axis programs take 3-4x longer initially; improved with experience
Lessons Learned & Recommendations
Management's Advice for Others
1. Validate demand before buying
"We analyzed 18 months of lost quotes and confirmed $800K opportunity. Don't guess—use data."
2. Budget 15-20% extra for ecosystem costs
"The machine is just the start. CAM, simulation, workholding, tooling—it adds up fast."
3. Don't skimp on training
"Best $10K we spent. Operators confident from day one = faster ramp-up and fewer scrapped parts."
4. Start with familiar parts
"We re-programmed existing manifold blocks first. Knew the part, so could focus on 5-axis technique."
5. Market the capability aggressively
"Updated website, called every customer, went to trade shows. New capability = active sales effort."
Would They Do It Again?
"Absolutely. The 5-axis transformed our business. We went from competing on price for commodity work to winning high-margin contracts our competitors can't touch. Two years later, we bought a second 5-axis machine. It's not just ROI—it's survival in aerospace manufacturing."
— Operations Manager, Anonymous Aerospace Shop
18-Month Payback Timeline
Installation, training, first test parts. Revenue: $12K (training parts only)
Ramp-up phase. First production jobs. Avg revenue: $18K/month
Full production. New customers onboarded. Avg revenue: $35K/month
High-margin aerospace work. Avg revenue: $42K/month. Payback achieved!
Cumulative Cash Flow (18 Months)
Calculate Your Own ROI
Use our calculators to model the financial impact of adding 5-axis capability to your shop: