How Do I Price My Machine Shop Profitably?
- Nate Jones, CPCU, ARM, CLCS, AU
- Oct 2
- 2 min read
Pricing your machine shop services correctly is one of the most important decisions you’ll make as a business owner. Whether you offer CNC machining, metal fabrication, welding, or precision tooling, your pricing strategy directly affects your profitability, competitiveness, and long-term sustainability.
At Wexford Insurance, we work with machine shop owners across industries like automotive, aerospace, construction, and manufacturing. In this guide, we’ll walk you through how to price your machine shop services profitably — and responsibly.
1. Understand Your Costs First
Before setting prices, you need to know your true cost of doing business. This includes:
Direct labor costs (wages, benefits, payroll taxes)
Machine costs (depreciation, maintenance, tooling)
Overhead (rent, utilities, insurance, admin)
Material costs (raw metals, plastics, consumables)
Setup and programming time
Use this guide to calculating machine hourly rates to estimate your baseline cost per hour.
2. Choose a Pricing Model
There are several ways to price machine shop services:
Hourly Rate Pricing
Charge based on machine time, setup, and labor. Typical rates range from:
3-axis CNC: $35–$55/hr
5-axis CNC: $75–$150/hr
Manual machining: $60–$90/hr
Source: CNC Machining Shop Rates in 2025
Fixed Price Per Job
Ideal for repeat jobs or standardized parts. Include all costs plus a markup.
Cost-Plus Pricing
Add a profit margin (e.g., 20–30%) on top of your total cost.
Volume-Based Pricing
Offer discounts for bulk orders to encourage repeat business.
Explore more pricing models in this CNC pricing guide.
3. Factor in Complexity and Risk
Complex parts, tight tolerances, and exotic materials require more time and skill. Adjust your pricing for:
Setup time
Programming time
Tool wear and replacement
Risk of scrap or rework
Use multipliers for complexity, such as 1.25x for oversized parts or 1.5x for high-risk materials.
See examples from Reddit’s machinist community.
4. Include Insurance in Your Pricing Strategy
Insurance is a necessary cost — and it protects your profitability. At Wexford Insurance, we help machine shop owners find coverage for:
Learn more about our machine shop insurance programs.
5. Benchmark Against Competitors
Research what other shops in your area charge. Use platforms like Thomasnet to compare services and pricing. Stay competitive, but don’t underprice — especially if you offer superior quality or faster turnaround.
Final Thoughts
Pricing your machine shop services profitably requires a balance of cost awareness, market research, and strategic thinking. At Wexford Insurance, we help machining businesses protect their margins with tailored insurance solutions and industry expertise.
Ready to grow your machine shop with confidence?
Contact Wexford Insurance today to get started.
