Contract Manufacturing Job Cost Calculator

Overhead (also called the "burden rate") covers everything that keeps the job running beyond the operator's wage: machine depreciation and running cost, factory rent and utilities, supervision, quality control and admin time. AccountingTools and Patriot Software both describe overhead rates from roughly 25% to well over 100% of direct labour cost depending on how capital-intensive the process is - a manual assembly job typically sits at the low end, and CNC machining or moulding with expensive machine time sits higher.

Divide the batch quantity you need to deliver by (1 minus the scrap percentage), then round up. A 250-unit order with a 3% scrap allowance needs 250 ÷ 0.97 = 257.7, rounded up to 258 units started, so that even after losing roughly 3% to scrap you still have 250 good units to ship.

Shoplogix and MetricHQ both put a scrap rate under 5% as the widely used general manufacturing benchmark, with under 1% considered excellent in most sectors and high-precision work often expecting less still. If you don't have your own historical scrap data for this process, 3-5% is a reasonable starting point; adjust it once you have a few completed batches to compare against.

The calculator doesn't cap your labour rate, but it flags it against the statutory floor: the National Living Wage for workers aged 21 and over is £12.71/hour from 1 April 2026, rising to £10.85/hour for 18-20 year-olds and £8.00/hour for under-18s and apprentices, per gov.uk's National Minimum Wage rates page. A skilled machine operator or toolmaker's pay rate is normally well above this floor once skill and experience are reflected.

Equipment Calculators' CNC business benchmarks report typical UK CNC/job-shop net margins of 15%-35%, and Starter Story's contract manufacturing profitability report puts average gross margin for contract manufacturers around 30%. The Assessment module on this page reads your entered margin against that 15%-35% band: below 15% shows "Thin Margin," 15%-35% shows "Healthy Margin," and above 35% shows "Premium Margin."

Setup and tooling are fixed costs - they don't change however many units you make. Spread across a 250-unit batch, £570 of combined setup and tooling cost is £2.28 per unit; spread across a 20-unit prototype run, a smaller £150 setup cost alone is £7.50 per unit - over three times as much per unit despite the total fixed cost being lower. This is the single biggest lever a job shop has on unit price: consolidating small repeat orders into one larger batch cuts the fixed-cost share sharply.

It's the number of units you'd need to sell at your quoted price just to cover the fixed setup and tooling cost, before any material, labour or overhead profit contributes. In Worked Example 1, 106 units covers the £570 fixed-cost pool at that price - since the batch is 250 units, the job clears break-even well before the full run, which is a useful sanity check before you commit to a tooling spend.

No. Target margin here is gross margin - profit as a percentage of the final selling price. A 25% margin on a £9.33 cost gives a £12.44 price (profit is 25% of £12.44). A 25% markup on the same £9.33 cost would instead give an £11.66 price (25% added on top of cost) - a materially different number. Check which convention your own costing spreadsheet uses before comparing figures.

Yes. The cost structure - materials, labour, overhead, setup/tooling and scrap - applies to any batch manufacturing process. Tooling cost is typically far more significant for injection moulding (mould cost can run into thousands of pounds) than for simple assembly, but the calculator handles that the same way: enter your real tooling cost, whatever the process.

Enter £0 in the Tooling cost field. Many jobs - manual assembly, standard off-the-shelf fixtures, simple sheet-cutting - need no dedicated tooling, and the calculator handles that correctly: the fixed-cost pool becomes the setup/changeover cost alone.

Use your own measured or estimated cycle time per unit, including load and unload time, not just cutting or moulding time. If you don't have a measured cycle time yet, time a small trial run of 5-10 units and use the average - a labour time estimate that's off by even 20% shifts a £16.50/hour, 8-minute-per-unit job's labour cost by over £1,300 across a 250-unit batch.

No - each scenario changes one variable at a time from your baseline inputs (batch size, material cost, labour rate, or scrap rate) and recalculates independently. Real-world cost increases often compound (a quality problem that raises scrap can also slow the line and raise labour time), so treat the scenario rows as individual sensitivity checks, not a combined worst case.

Every cost figure shows £0.00 and the Assessment status shows a waiting message asking for a batch quantity above 0, rather than showing a divide-by-zero error. Enter at least 1 unit to see a real result.

Treat it as a costing worksheet, not a finished quote. It does not add VAT, carriage, packaging, payment terms, or currency risk on imported materials (see Method and limits above) - add those separately before the number goes on a customer-facing quote document.

Not directly in one pass. Run the calculator once per stage using that stage's own labour time, rate and scrap rate, then add the resulting material, labour and overhead totals together and enter the combined setup/tooling cost as a single fixed-cost figure - see Method and limits for the same guidance.