Engineering · Design for Manufacturing · 8 of 8
Manufacturing Cost Estimation and Optimisation
What will one of these parts really cost, and which design change moves that number most?
A cost estimate is just an honest list: material, machine time, setup spread over the batch, tools, inspection, packing, then overheads and profit. Once you can build that list you can see which line to attack. This page has a part cost calculator, a material utilisation check, a cutting time estimate, a cost-against-batch-size chart, a process break-even tool, a make-or-buy tool and a lifecycle cost comparison.
1Cost components in manufacturing
Material cost
Type, weight or volume, grade and form, market price.
Manufacturing cost
Machining time, setup time, tooling and consumables, operator and machine rate.
Bought-out components
Standard parts, pneumatics, sensors, motors, fasteners, supplier pricing.
Assembly cost
Assembly time, fasteners, testing and calibration, skilled labour.
Indirect and overheads
Design and engineering, fixtures, quality inspection, factory overheads.
Logistics and packaging
Packing materials, freight, import duties if any.
Profit and contingency
Business margin, cost fluctuation, scrap and rework allowance, risk buffer.
Lifecycle cost
Maintenance, spares, energy use, downtime cost.
2The eight-step estimation approach
1. Understand requirements
Function, performance, quality, volume.
2. Choose the manufacturing process
Machining, fabrication, sheet metal, casting.
3. Estimate material cost
Material type, weight, wastage, rate.
4. Estimate manufacturing time
Machining, setup, tooling, secondary operations.
5. Add bought-out components
Standard parts, supplier quotes.
6. Add assembly, testing and overheads
Labour, consumables, inspection.
7. Add profit and contingencies
Business margin and risk buffer.
8. Evaluate and optimise
Compare alternatives and cut cost.
3Try it: part cost build-up
Part cost calculator
Defaults are an illustrative 0.25 kg aluminium bracket, 120 × 80 × 25 mm, in a batch of 100. Overheads are applied to the subtotal including packing; profit is applied on top of that. Taxes are excluded.
4Material utilisation and cost
Blank size and wastage
wastage = 1 − utilisation
Poor utilisation means a large blank and a lot of chips. Better utilisation comes from shaping the part to the stock, using a nearer standard blank, or choosing a near-net-shape process.
5Machining time estimate
Cutting time
Add rapid moves, tool changes, deburring and inspection: they usually add 10 to 20 percent of cutting time. See DFM for CNC Machining for a fuller calculator.
6Setup cost and batch size
Cost per part against batch size
Smaller batches mean a higher cost per part, larger batches a lower one, because the setup cost is spread over more parts. Red is setup per part, blue is variable (machining and consumables) and green is material.
7Process selection and cost comparison
| Process | Suitable for | Tooling / setup cost | Piece cost, low volume | Piece cost, high volume | Typical tolerance |
|---|---|---|---|---|---|
| CNC machining | Prototypes, precision parts | Low to medium | High | Medium | ± 0.01 to 0.1 mm |
| Sheet metal | Enclosures, brackets | Low | Medium | Low | ± 0.1 to 0.5 mm |
| Fabrication (welding) | Machine frames, large structures | Low | Medium | Low | ± 0.5 to 2 mm |
| Casting | Complex shapes, high volume | High (mould) | High | Low | ± 0.5 to 2 mm |
| Additive (3D print) | Prototypes, low volume | Low | Very high | High | ± 0.2 to 1 mm |
Break-even between two processes
8Bought-out parts against in-house manufacturing
Buy standard when
- Widely available and proven parts.
- Lower cost than making it in-house.
- Reduces design and lead time, and improves reliability and serviceability.
- Examples: linear guides, bearings, motors, gearboxes, pneumatic parts, sensors, cable chains, fasteners.
Make in-house when
- Custom design is required.
- Non-standard sizes or special features.
- High cost or long lead time for the standard part.
- Integration and performance need it.
Make or buy
9Lifecycle cost
Total cost of ownership
Do not judge a design by purchase price only. The cheaper machine can cost far more over its life in downtime, energy and spares. Figures here are examples for illustration.
10Try it: cost-estimation checklist
Cost scorecard
Remember
- Material, machine time and setup drive most part cost; attack those first.
- Batch size changes cost per part more than most design tweaks.
- Standard and bought-out parts usually beat custom parts below high volumes.
- Compare lifecycle cost, not only purchase price.
- Boothroyd, Dewhurst and Knight, Product Design for Manufacture and Assembly (CRC Press), for the DFM and DFA method.
- Machinery’s Handbook (Industrial Press), for machining, sheet metal and welding practice.
- Rates, prices and quantities in the defaults are examples. Replace them with your supplier quotes and shop rates.
Illustrative defaults only. Indicative figures: use your own machine rates, material prices and quotes. Taxes and freight are excluded unless you add them.