Accurate CNC Machining Cost Analysis: Boost ROI & Make Informed Decisions

Wish to improve the Return on Investment (ROI) for your machining operations? You need to work out your total CNC machining cost.

One of the misleading calculations made by many manufacturers is this: Invest in a low-priced CNC machine tool to reduce their production costs. After all, the price of a CNC machining centre or turning centre can be tens of thousands, hundreds of thousands or even going into the millions of dollars.

Sadly, such thinking is rather common among manufacturers. It fails to consider the total costs of running CNC machining operation in any machine shop. Often, the price of the machine tool is just a small component of the real cost of CNC machining.

In this article, you will learn what the major components of CNC machining costs are, consider the hidden costs that you may miss out to think about, and uncover ways to save money on your CNC machining operations.

10 Main Components of CNC Machining Cost

Before we dive into the various components of CNC machining cost, we need to look at a typical machining process at a manufacturer that does part fabrication for its customers. 

Often, the manufacturer (our clients) receives an enquiry to quote an order to fabricate. To fulfil the job, the manufacturer needs to consider multiple factors in order to accurately work out his total machining costs. 

Without knowing exactly what these machining cost components are, he may under-quote (resulting in a loss) or over-quote (which may result in his prospect searching for alternative suppliers).

So, what are these major factors? Let us look at them below.

#1 Part Design and Complexity

First, you need to consider how complicated the part to be made would be. Indeed, part design and geometry can play a significant role in machining cost. 

The more complex a part is, the more expensive it can be to manufacture that part. This is due to various factors such as the need for a more advanced machine, the time to fabricate each part, the possible need for multiple set-ups and processes, as well as the need for more stringent quality control due to tight tolerances.

Non-standard parts with thin walls, deep cavities, irregular hold sizes, or high surface qualities may also lead to higher cost per part made.

#2 Volume of Production

This is one of the most universally understood factor in machining costs. The larger the volume of the produced part, the lower the cost-per-part would be. 

A major challenge here is the move towards high mix – low volume production, which makes it necessary for machine shops to make a large variety of products in small batches. Such practices will certainly add to machining costs.

#3 Material Types

Different materials have different costs. A standard block of stainless steel will certainly cost less than a more advanced alloy like Inconel on a price per block basis. 

Some of the standard materials used in machining include Aluminium, Stainless Steel, Brass, or even Titanium alloy. Depending on the material chosen, you will experience different degrees of machinability and cost.

#4 CNC Machine Related Costs

The efficiency, flexibility, precision, and durability of your CNC machine tool plays a crucial role in machining costs. Here, you should consider the following components of machine-related costs:

• Cost of the machine tool itself
• Estimated cost per year for spares (reflecting on quality made / used in that machine)
• Estimated number of hours the machine can operate in a year
• Labour costs needed to operate the machine
• Types of cutting tools you can use with your machine
• Surface finishes that can be achieved
• Availability of automation systems (learn how Hwacheon does it here) 
• Ability to machine across multiple axes
• Time needed to set-up, manage and handle post-processing of parts
• Maintenance and repair costs needed (learn how to adopt preventive maintenance here)

As you can see, there are many machine-related costs, well beyond the initial price of the machine itself.

#6 Programming Cost

Programming is often expensive because of the need for expert manpower to design and digitalise the required part as well as the level of CAD / CAM required. 

First, the product needs to be given to a designer which made this into a CAD (Computer Aided Design) file. Next, the manufacturing engineer would need to check that the design can be efficiently produced and make suggestions to improve its machinability. Finally, a programmer is required to turn the CAD files into a CAM file, which will then be fed into the CNC machine.

(This also relates to part complexity—the more intricate the design, the more manhours needed to design and programme it.)

#7 Set-up, Changeover and Processing Cost

In the world of manufacturing, time is money. The more time you take to produce a part, the more costly your machining process would be.

Set-up costs often involves a Production Engineer, who will have to make sure that everything is ready before the first batch of parts can be produced. He will need to plan for the production workflow, the materials needed, setting-up of the machine, as well as how to clamp the material / part and cater to changeovers needed (if any), and post-processing of the CAD file with a CAM.

#8 Quality Costs

Also known as the Cost of Quality (COQ) which is more accurately understood as the cost of poor quality, quality costs are associated with preventing, detecting and addressing product issues related to quality.

In a machining environment, such costs may include:

• Inspection costs needed to appraise a produced part for quality issues
• Test equipment required to check on quality and consistency of parts
• Internal failure costs when defective products are produced — these must be scrapped or reworked
• External failure costs which occur when a defective product is delivered to the client. These can be especially costly should there be product recalls, warranty claims, field service, and even customer lawsuits!

#9 Opportunity Costs

These are often invisible to the manufacturer, but they can make a significant difference to the profitability of your machining operations.

Opportunity costs may include any of the following:

• Downtime: The more downtime due to disruption to your manufacturing, the more money you will lose
• Disruptions: These are largely due to either human errors or equipment failure, and may even be as major as machine tool crashes.
• Capacity: Depending on your manufacturing set-up, you may be unable to take on additional jobs due to the capacity of your machining operations
• Competency: This could be another factor leading to missed opportunities, and may include the lack of the right equipment, or skilled manpower

#10 Utility, Space, Labour, Training and Other Costs

Finally, you need to consider the cost of electricity, water, waste disposal, cleaning, space, and other ongoing operating costs. These may be considerable if you are running a 24/7 operation for your machine shop. 

Let’s also not forget the need to cater to shifts in manpower, as well as the number of operators needed for each process. Depending on the proficiency and skill level of your workforce, you need to also cater to their training and upskilling needs.

Reduce Your CNC Machining Costs with Hwacheon

Keen to know how you can reduce your machining costs?

Consider investing in Hwacheon’s meticulously designed and robustly-built machine tools.

As one of the first companies in the world to deploy smart operating systems and automation software for our CNC machine tools, we take great pains to produce high quality machines that are engineered to reduce your total machining costs. The basis for our approach is “Mechanical Stability”.

These include ensuring top-notch quality and precision, extreme durability through the use of premium raw materials and top-grade casting technologies, and utmost precision through years of craftsmanship.

Our Automation Systems are also designed to provide total machining solutions. Through the use of automation, productivity-enhancing software, and multi-configurable settings, they can significantly reduce your set-up time for multiple operations and optimize your productivity.

Contact us for CNC machine recommendations, specifications or for price estimates 📧 enquiry@hwacheon.com.sg