Sheet metal fabrication blog -

Introduction of custom sheet metal part production projects for industrial engineers and purchasers

What does a sheet metal fabrication quote consist of?

When we take a closer look at the total cost of a sheet metal fabrication project, there are several factors to be considered, which affect the cost structure, thus the final price too.
While the below list is quite comprehensive, there might be, in some cases, other factors to be considered during the quotation process.

1, Quantity
This is a major component of the cost structure and quite easy to understand. When the customer orders more of the same sheet metal part, the unit price naturally is reduced. The reason is that there are so called fix costs, such as set up, changeover, programming and tooling cost. These are independent from the quantity, has to be built in the price. However, the higher number of the same parts are in an order, the lower the fix cost added to the unit price. For example, when placing a 10 piece order, to each piece 10% of the fix costs is added, while when placing a 100 piece order, it is reduced to 1%.

Punching tool - Melior Laser sheet metal fabricationIn addition to this fix cost, there are so called variable costs. These affect the total cost by other means than the quantity. Raw material and other tools and material assisting the production can be purchased at a discount when ordering large quantities, for example. The price of the templates and appliances necessary for production is a variable cost element in the total price which decreases when the quantity is higher. Here should be mentioned the cost of the packaging and the possible handling of the product.

2, The complexity and design of the sheet metal part
The cost structure can greatly fluctuate depending on the design too. The production of a sheet metal part which can be manufactured with one single punch costs much less than of a part which can be made with several complex bends.
If the component requires the use of many sheet metal fabrication machines and processes, until the part is eventually ready, the necessary human resource should be considered too which arises at each operation step. When using external suppliers the prices of the suppliers affect the final price too. It is an important professional aspect to select the most cost effective solution when having several technologies of the same type which differ only slightly. 

Material handling is also a factor that adds to the costs. When manufacturing a sheet metal part it should be taken into account that raw and semi finished material must be moved from one work station to the next one. The more complex a part is, the more work stations, thus the more handling and moving we are talking about. The handling cost can be further broken down to energy costs and the indirect cost of the necessary maintenance cost of the handling equipment.
Another aspect during production which cannot be neglected is the size of the part. It does matter that in the case of operations requiring manpower, how many workers can carry out the task. 

Rolled steel sheet

3, Current steel market situation
It is true that the effect of raw material on the total price is already mentioned. However, there is another variable which is independent of the order quantity but it has a large impact on the shet metal fabrication cost structure. The global steel demand and supply is characterised by a fairly large fluctuation. The steel oversupply may decrease the raw material prices and this may occur even at the customer level. Conversely, if there is too much demand for steel, the raw material price naturally goes up. For this reason it has the outmost importance to monitor raw material prices.

 4, Geographic location
Even an obvious factor like the location of the sheet metal processing plant can occur as cost affecting point in the sheet metal part price. It is important that the staff wages are competitive in the area, otherwise fluctuation grows within the company and the cost of training new employees should be also built in the price.  The shipping costs may vary depending on the location, both in terms of raw material delivery and customer order fulfilment.

5, Customer requirements in quality assurance
Our production system, by default, operates by a standard quality assurance system covering all products and procedures. The processing cost is calculated based on this quality system operation. Occasionally it is a customer requirement to apply such quality assurance tools and methods which go well beyond standard or demands more time consuming professional quality work. (E.g.: applying PPAPs, first sample audits, etc.). These quality assurance actions are also cost factors that are built into the unit price according to separate agreement or subject to other accounts.

We, at Melior Laser examine all aspects of the cost structure of sheet metal part production in order to be able to offer the highest quality for the most competitive price.





Melior Laser Ltd. H-2051 Biatorbágy, Tormásrét u. 5/B.
Phone: +36 23 313 270
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  • Last Modified: Friday 06 April 2018, 08:33:27.

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