CNC Machining Cost Estimation
How to build a shop rate, price a part, and stop leaving money on the table.
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The Machine Hourly Rate Formula
Every CNC job shop needs to know their true cost per hour to quote profitably. The formula is deceptively simple:
Fixed Costs (Monthly)
- • Machine payment / Depreciation
- • Facility rent (per machine)
- • Insurance & Taxes
- • Software licenses (CAM, ERP)
- • Operator salary & benefits
Variable Costs (Per Hour)
- • Electricity consumption
- • Cutting tools & inserts
- • Coolant & chip disposal
- • Compressed air
- • Maintenance & repair reserve
Billable Hours
- • Available hours: ~2,000/yr (1 shift)
- • OEE factor: ×0.65 to ×0.85
- • Effective: 1,300–1,700 hrs
- • 2nd shift adds ~1,500 hrs
- • Lights-out adds ~1,000 hrs
2026 Shop Rate Benchmarks
These are typical fully loaded shop rates (USD) including operator, overhead, and profit margin. Your rate depends on location, machine age, and utilization.
| Machine Type | Low | Typical | High |
|---|---|---|---|
| Manual Mill / Lathe | $35 | $50 | $75 |
| 3-Axis CNC Vertical Mill | $65 | $85 | $125 |
| CNC Turning Center | $60 | $80 | $110 |
| 4-Axis HMC | $95 | $135 | $175 |
| 5-Axis Simultaneous | $125 | $175 | $250 |
| Swiss-Type Lathe | $100 | $150 | $200 |
| Wire EDM | $75 | $110 | $150 |
Source: Industry surveys and job shop owner reports. Rates include operator labor, overhead, and ~15-20% profit margin. Aerospace/Medical shops may charge 20-40% premiums.
Cost Per Part Breakdown
Setup Cost (Amortized)
Setup time divided by batch quantity. A 30-minute setup on 10 parts = 3 min/part. On 1,000 parts = 1.8 sec/part.
This is why batch size is the single biggest lever on per-part cost.
Machining Cost
Cycle time multiplied by shop rate. A 4-minute cycle at $85/hr = $5.67/part.
Optimize this by reducing cycle time — see our 5 Ways to Reduce Machining Time.
Material Cost
Raw material + waste. A part machined from $12 bar stock with 40% material removal = $12 × 1.05 (kerf/scrap factor) = $12.60/part.
Tooling Cost
Insert cost divided by parts-per-edge. A $15 insert that cuts 200 parts = $0.075/part. Add $0.02-0.05/part for holder amortization.
Worked Example: Aluminum Bracket (Qty 50)
| Cost Element | Calculation | Per Part |
|---|---|---|
| Setup (45 min @ $85/hr) | $63.75 ÷ 50 | $1.28 |
| Machining (6.5 min @ $85/hr) | 6.5 × $1.417 | $9.21 |
| Material (6061-T6 block) | $4.50 × 1.05 | $4.73 |
| Tooling (3 tools) | amortized | $0.35 |
| Deburr / QC (2 min @ $50/hr) | 2 × $0.833 | $1.67 |
| Total Cost Per Part | $17.24 | |
| Sell Price (+25% margin) | $21.55 | |
5 Quoting Mistakes That Kill Profit
Not counting setup time
A 30-min setup on a 5-part run adds $85 to the job. On a 500-part run it's negligible. Always amortize setup across the batch.
Using CAM cycle time as actual time
CAM doesn't include load/unload, deburring, inspection, or the 80% efficiency factor. Real time is 1.5-2× CAM time.
Ignoring tooling wear
Titanium and Inconel can burn through $50 in inserts per 100 parts. Track cost-per-edge religiously.
Quoting too many billable hours
If your OEE is 65%, you have 1,300 billable hours — not 2,000. Overestimating hours underestimates your true rate.
Forgetting secondary operations
Deburring, tapping, anodizing, heat treat, packaging — these add 10-30% to total part cost.