How to price a fabrication or welding job — the formula, step by step
Short answer: add up direct costs — material with a scrap allowance, labor hours at your rates, machine burn time, consumables, and outside services — then apply overhead to that cost, then apply margin to the cost-plus-overhead number. Sequential, not additive. Getting the order wrong under-prices every job you win.
What goes into the price of a fab job?
Five direct cost lines, then two percentages:
| Line | How to figure it |
|---|---|
| Material | weight (lb) × your $/lb for that alloy × (1 + drop/scrap %) |
| Labor | hours per discipline (cutting, fitting, welding, finishing) × that discipline's shop rate |
| Machine / burn time | plasma/laser minutes × your burn rate per hour |
| Consumables | gas, wire, abrasives — a per-weld-hour rate beats guessing per job |
| Outside services | galvanizing, powder coat, heat treat — vendor price passed through |
| Overhead | × (1 + overhead %) on the cost subtotal — rent, power, insurance, office time |
| Margin | × (1 + margin %) on cost plus overhead — this is your profit |
Why does the order of overhead and margin matter?
Because margin applied to bare cost ignores your overhead. On a $1,248 job with 18% overhead and a 30% target margin, sequencing correctly quotes $1,914; adding 48% to bare cost quotes $1,847 — you'd silently give away $67 on one job, on every job.
A fully worked example
One weldment: 240 lb of A36 at $0.85/lb with 15% drop, 35 minutes of burn at $120/hr, labor of 1.5 h cutting ($75), 3 h fitting ($80), 4 h welding ($90), 1.5 h finishing ($65), consumables at $12 per weld-hour, $85 of outside galvanizing, 18% overhead, 30% margin:
| Line | Amount | |
|---|---|---|
| Material | 240 × $0.85 × 1.15 | $234.60 |
| Labor | 1.5×75 + 3×80 + 4×90 + 1.5×65 | $810.00 |
| Burn time | 35 min × $120/hr | $70.00 |
| Consumables | 4 weld-h × $12 | $48.00 |
| Outside services | galvanizing | $85.00 |
| Shop cost | $1,247.60 | |
| + Overhead 18% | $224.57 | |
| + Margin 30% | on cost + overhead | $441.65 |
| Quoted price | $1,913.82 |
What are the most common underbidding mistakes?
Forgetting consumables (one shop's $75 job cost $85 in shielding gas alone), pricing material without drop allowance, applying margin before overhead, and cloning old quotes at last year's steel price. Each one is invisible on the quote and very visible on the year-end P&L.
Spreadsheet or software?
A spreadsheet with the formula above is genuinely fine — until you're re-typing rates into every copy, a broken cell reference under-prices a month of quotes, or the customer wants a clean PDF and you're screenshotting Excel. Purpose-built quoting keeps one rate library, applies the same math every time, and produces a branded document in minutes. Start with our free template either way.
QuoteFoundry runs exactly this math from your shop's stored rates — no AI guesswork — and turns it into a branded PDF quote in about 10 minutes. Free during the founding-partner beta; flat per-shop pricing, no per-user fees.
Quote your first job free →