Definition
Manufacturing cost is the total cost to produce a part: material, machine and setup time, tooling, and a share of factory overhead, combined into what it actually costs a factory to make one unit. It is distinct from the price charged to a customer, which also includes margin and other business considerations.
Why manufacturing cost is built from components, not guessed directly
Manufacturing cost is built up from several components (material, setup time, cycle time, tooling, overhead), each estimated separately during pre-calculation and compared against reality during post-calculation, rather than being one number a person guesses directly.
Where manufacturing cost comes from
Not on the drawing; it's calculated by a work preparer or estimator based on the routing, material, and factory's rates, derived from the part's requirements rather than stated on them.
Common mistakes
Confusing manufacturing cost with price; price includes margin, risk allowance and business considerations on top of the underlying manufacturing cost.
Manufacturing cost is built up from several components (material, setup time, cycle time, tooling, overhead), each estimated separately during pre-calculation and compared against reality during post-calculation, rather than being one number a person guesses directly.
See how Blake reviews a partFrequently asked questions
Is manufacturing cost the same as price?
No, price is what a customer is charged, typically manufacturing cost plus margin and other business considerations.
What are the main components of manufacturing cost?
Material, setup time, cycle (machine) time, tooling, and a share of factory overhead.
How accurate is a manufacturing cost estimate?
It depends on the quality of the underlying pre-calculation; post-calculation compares the estimate against what actually happened to check and improve accuracy over time.