Should I charge setup separately or build it into the part price?
Both are legitimate and shops do both. A separate setup line keeps the per-part price comparable across quantities and makes a reorder honestly cheaper, which is why it suits shops with repeat business. Burying setup in the part price gives the customer one number to compare against other quotes, which is why it suits one-off and prototype work where the customer is shopping on part price alone. What matters is knowing which you did: a shop that buried setup and then quotes a reorder off the same per-part price is giving away the setup it no longer has to do.
What actually counts as setup on a CNC job?
The work that happens once per lot no matter how many parts come out of it. Fixturing and workholding, tool setting and offsets, dialling in the first good part, and the first-article inspection with its paperwork. Programming is in the same family but behaves differently, because a reorder off the same program owes no new CAM time at all while it usually does owe a fresh setup. That is why they are worth tracking as separate numbers even if you bill them as one line.
How do I work out what the setup fee should be?
Add the hours: setup, program proveout, and first article. Multiply by your burdened labour rate, and add your machine rate for the hours the machine is tied up and not cutting, because an occupied machine is unavailable for other work. That total is what the lot has to recover before a single part is profitable. If you bill it as its own line, the per-part price only has to clear the variable cost. If you do not, divide it by the lot size and add it to every part.
Why does the same part cost so much more per piece on a short run?
Because that flat block is divided by a smaller number. Four hours of setup, programming and first article at a burdened rate is the same dollar figure at 5 pieces as at 500, so it can exceed the machining itself on a short run and round to cents on a long one. This is not a pricing preference, it is arithmetic, and it is the single largest reason a job shop loses money on small orders it quoted off a production price list.
Is a minimum order quantity better than a setup fee?
They solve the same problem differently. A minimum order quantity refuses the lot sizes where the flat work dominates, which protects your margin but turns away prototype work that often becomes production work later. A setup fee accepts the small lot and prices it honestly, which keeps the door open at the cost of a quote with two numbers in it. Many shops run both: a setup fee as standard, and a minimum below which the setup fee alone would be more than the customer will entertain.
Should a repeat order pay setup again?
Usually some of it. A reorder off an existing program owes no programming and often no first article if the customer accepts the original report, but it almost always owes a fresh setup, because the fixture came off the table and the tools went back in the crib. Shops that keep dedicated fixtures on the shelf for repeat parts are buying down exactly this cost, which is a reason to track setup and programming separately even when you bill them together.
The same flat block, spread over four lot sizes
Suppose setup, programming and first article come to 6.7 hours. At a burdened labour rate of $35.28 an hour plus a $22 machine rate on the 2.5 setup hours, that block is about $291 — the same dollar figure at every quantity below.
| Lot size | Flat block | Per part | What the customer sees |
|---|---|---|---|
| 5 | $291 | $58.20 | a part price that looks absurd, or a setup line that explains it |
| 25 | $291 | $11.64 | still the largest single line in the quote |
| 100 | $291 | $2.91 | noticeable, not decisive |
| 500 | $291 | $0.58 | rounds away against the machining |
Those are the example figures from the calculator, not a benchmark. Your own hours and rates will put the crossover somewhere else, which is the number worth knowing.
Work it out on your own numbers
The calculator takes your setup, programming and first-article hours, your burdened wage and machine rate, and shows what the flat block costs per part at every standard lot size — alongside what happens to your break-even price when you move that money into a separate setup line.