The first question that many potential customers ask when they approach us with a metal fabrication project at P&D Metal Works is — how much will my project cost? We understand and we know that you have to protect the bottom line and find the most cost effective way to take your project from concept to reality.
The reality is that there are many factors that impact the cost of a custom metal fabrication project, from materials to labor — and each project is different from the last. The costs of your project are dependent on many factors and potential customers want to know how businesses calculate the costs of a custom metal fabrication project.
Here is some general insight into how the costs for a custom metal fabrication project are calculated.
5 Steps to Help Calculate Custom Metal Fabrication Costs
The truth about custom metal fabrication costs is that — costs for your project will vary based on many factors and no two projects are the same.
This means that there will always be variable costs that impact the total cost of the project. Material costs can change based on availability and the economy. Labor costs can vary based on the complexity of your project. Overhead costs may increase based on increased utility or rental costs for the fabricator.
That doesn’t mean that you can’t get a general idea of how much a project may cost with a bit of quick math and the right formula. Here is a quick look at a formula and factors you can use to calculate metal fabrication costs and get a better idea of how much your project may cost.
Total Project Cost = (Material Costs + Labor Costs + Overhead Costs) x (1 + Profit Margin)
1. Calculate Material Costs
The first and maybe most important cost you need to consider is the cost of your materials. Material costs for the average metal fabrication project can account for 30% – 40% of the overall costs. Costs will vary based on the type of metal you choose for your project and can be calculated by looking at average material costs and multiplying the estimated weight by the unit cost.
2. Estimate and Predict Labor Hours
Labor costs and the time it takes to manufacture and produce your product represent a variable cost in the equation. More complex projects — even if they are smaller in size or volume — may require additional steps in the process and additional labor. If you want a general idea of the labor hours for your cost calculations, you can break down the processes needed and estimate the hours each part of the process may take.
3. Estimate Hourly Shop Rates
The next cost you need to estimate for your calculation is the hourly shop rate. This element of the calculation can be difficult to estimate and can include direct labor costs, the cost of setup time, overhead costs for the fabricator, and more. Use average estimates for your calculation and divide that number by the estimated production hours to determine an average hourly rate.
4. Add Profit Margins
If you want to get an idea of how much a custom metal fabrication project costs, you need to include estimated profit margins for the fabricator within your cost calculations. The average Net Profit Margin for metal fabrication will range from 5% – 10% based on the manufacturer. The average Gross Profit Margin for metal fabrication before you account for overhead and sales costs will typically range from 25% – 40% and will vary based on the manufacturer.
5. Add Additional Costs
There will always be additional costs associated with custom metal fabrication projects that go beyond material, labor, and overhead costs. These are often one-time costs for a project that can be added to your overall costs. Additional costs you may need to include in your calculation are shipping, installation, and finishing costs.
READ MORE: What Is the Average Lead Time for a Custom Metal Fabrication Project?
Do you want to get a general idea of how much your custom metal fabrication project will cost? Metal fabrication costs will always vary based on a multitude of factors, but we may be able to help provide you with a general idea at P&D Metal Works with this overview of how to calculate the costs of your custom metal fabrication project with average costs.
Contact P&D Metal Works in Neenah, WI to get an estimate for your custom metal fabrication project!
