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?

Direct cost lines — some per-part, some one-time — then two percentages:

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:

Pricing machined parts: setup, tooling, and quantity price breaks

Machine shops add two costs a per-lot fab quote often forgets — setup & programming (a one-time cost you spread across the run) and perishable tooling (endmills, inserts, abrasives). The formula the shop-built Excel sheets converge on:

Part cost = (setup ÷ qty) + (cycle time × machine rate) + material + tooling + secondary ops, then overhead, then margin.

The key move is amortizing setup across the lot: two hours of setup is brutal on one piece and trivial on a hundred. Quote the same job at several quantities and the per-part price falls as the one-time cost spreads out. Example — $150 setup (2 h × $75) + $50 tooling = $200 one-time, plus $40 variable cost per part, at 18% overhead and 30% margin:

Same math as the formula above — only the setup share per part changes. A quoting tool that shows this price-break strip as you type lets you answer "what's your price at 100?" on the spot, without rebuilding the quote.

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.

Where do the material and labor rates come from?

The formula is only as good as the rates you feed it — but you don't have to guess them. Start from published references, then adjust to your own supplier quotes and payroll:

Treat these as starting points, not live market data — steel moves weekly and wages vary by metro. And your billed labor rate isn't the wage itself; it's wage × overhead burden × utilization. Research-backed references get you a defensible first number to adjust, not a rate to trust blindly.

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.

Free download: the metal fabrication job calculator (spreadsheet)

Try the formula before you sign up for anything. A free, formula-driven metal fabrication & machining job calculator spreadsheet — the same math on this page, live. Edit your rates, quantity, setup and tooling; it prices the job and shows the quantity price breaks automatically.

Three tabs: a live Calculator with a quantity price-break table, the worked $1,913.82 fabrication example, and Rates & sources — suggested material $/lb and labor $/hr with the research links (MetalMiner, Material Price Book, BLS wages) to verify against. It's the same engine as QuoteFoundry; when the spreadsheet starts costing you re-typed rates and screenshotted PDFs, the app picks up where it leaves off.