Small-batch sheet metal processing is done without using moulds. The pricing strategy in this case deviates somewhat from that of mass production. In a way, it resembles that of handmade production. The total cost of a part in small-batch production can be determined from the cost of basic materials, the cost of converting those materials into a part, and the cost of any finishing touches. The materials cost is determined by first calculating the gross weight. The processing cost is calculated by multiplying the materials cost by a conversion factor somewhere between 1.0 and 1.5. Finishing touches can entail a variety of lavish procedures and so can be a wild card in the cost calculation.
Profits are commonly derived as a percentage (usually around 15-20%) of the total incurred costs. Material costs figure prominently among those total costs. An important point to understand is that we calculate those material costs without considering tax; the figures are before tax. We perform sheet metal work on a fairly large scale, which necessitates the use of moulds, though we also do some work where no moulds are required. When moulds are involved at a typical large scale, we have found that the per-part processing fee tends to decrease; however, what we have also found is that the tax-exclusive material costs tend to be a fairly significant segment of the total.
For businesses engaged in massive sheet metal production, direct costs are only part of the picture. To arrive at a clear understanding of actual profitability, companies also need to consider and monitor indirect costs, particularly those related to waste. How much scrap is produced? How much of it can be recouped, and at what price? These essential questions pertain not only to environmental impacts but also to the sheet metal shop's essential mission: to achieve and maintain profitability.