Quoting With Quantity Breaks: Setup Amortization Math, With a Worked Example

Quantity breaks in a machine shop quote come from one thing: spreading a fixed setup cost over more parts. Per-part price = (setup cost ÷ quantity) + run cost per part + material per part, then margin on top. The math is simple; the errors come from material bought in whole bars, quantities that don't match the break, and releases that each need their own setup.

Below is a worked example using round, illustrative numbers — not benchmarks — so you can check every step. Swap in your own shop rate, times, and material price, or let the free bar stock calculator on this site do the arithmetic.

Say you're quoting a part from 6061 aluminum, 2-inch round bar. The inputs: setup of 4 hours, run time of 0.15 hours (9 minutes) per part, a shop rate of $95/hour, and bar at $203 per bar. With your part length plus kerf and facing allowance, you get 27 parts per bar. You'll quote breaks at 10, 25, 50, and 100 pieces, targeting a 35% margin on price.

Setup cost is fixed: 4 hours × $95 = $380, whether you make one part or a thousand. Run cost is per part: 0.15 hours × $95 = $14.25. Material is the subtle one, because you buy bars, not parts.

At 27 parts per bar, the naive material cost is $203 ÷ 27 = $7.52 per part. But you can't buy 0.37 of a bar. For 10 parts you buy 1 bar ($203), so material is $20.30 per part. For 25 parts, still 1 bar: $8.12 per part. For 50 parts you need 2 bars (54 parts' worth): $406, or $8.12 per part. For 100 parts you need 4 bars (108 parts' worth): $812, again $8.12 per part.

The leftover — the drop, plus whatever whole-part lengths you didn't use — is real material you paid for. Either charge for it, as above, or have a reliable way to use the remnant on a future job. Quoting the naive $7.52 means quietly giving away the drop on every job.

Per-part cost is setup share + run + material. At 10 pieces: $38.00 setup + $14.25 run + $20.30 material = $72.55. At 25: $15.20 + $14.25 + $8.12 = $37.57. At 50: $7.60 + $14.25 + $8.12 = $29.97. At 100: $3.80 + $14.25 + $8.12 = $26.17.

To get a 35% margin on price, divide cost by 0.65. That gives quoted prices of $111.62 at 10 pieces, $57.80 at 25, $46.11 at 50, and $40.26 at 100. Notice how steep the curve is at the low end: the 10-piece price is almost three times the 100-piece price, and nearly all of that difference is setup and a mostly unused bar.

Also notice where the curve flattens. Between 50 and 100 pieces, price only drops about $5.85, because setup is already a small share and run time dominates. Past that point, further breaks are about run-time improvements — fixturing, cycle time, multiple parts per setup — not amortization.

Trap one: the customer orders a quantity below the break they're paying for. If 25 pieces get ordered at the 100-piece price of $40.26, revenue is $1,006.50 against cost of $939.25 — a 6.7% margin instead of 35%. If 10 pieces get ordered at that price, revenue is $402.60 against cost of $725.50: a $322.90 loss. Worse, the danger zone is wider than it looks: at these numbers any order under 31 pieces at the 100-piece price can lose money, because 28–30 pieces need a second bar. The free quote calculator on this site flags that break-even quantity for every break. Quotes need to state clearly that pricing is per break, and acceptance needs to lock in which break was chosen.

Trap two: blanket orders with multiple releases. A 100-piece order delivered in four releases of 25, each requiring a new setup, costs four setups — $1,520 in setup instead of $380. Quote releases as releases, or price setup per release.

Trap three: guessed setup times that never get corrected. If setup actually takes 6 hours instead of 4, your 10-piece cost rises by $19 per part. On paper, that lesson rarely makes it back to the next quote; the same wrong number gets used again. Actual setup hours recorded against the job are the only way the next quote of that part gets more accurate.

Trap four: stale material prices. If the bar went from $187 to $203 between purchases, a quote built on last quarter's number is already underwater on material. Check what you paid most recently before you send.

Everything above is what the free bar stock calculator at /tools/bar-stock does: parts per bar with kerf and facing allowance, bars to order, drop per bar, material cost per part, and setup amortized across your quantity breaks. It runs in your browser and doesn't need an account.

Traveler, our quoting and shop management software, is being built to put the same math inside the quote itself — routing-based estimates, breaks priced automatically, your last three material buys shown inline, and actual hours from past runs feeding the next quote of the same part. It's in early access and not yet generally available; the calculator is the part you can use today, and the early access list on the homepage is how to follow the rest.