Laser Cutting Cost Center
Cost management tools for laser cutting operations. Estimate shop rates, allocate overhead, examine hidden cost drivers, and explore pricing scenarios using your own assumptions.
New to cost center analysis?
Cost Center tools help you understand the true cost of running your shop and pricing jobs accurately. Many shops unknowingly lose margin by missing setup time, piercing overhead, finishing work, and proper overhead allocation.
Start here (about 15 minutes)
- 1. Use Hourly Rate Builder to calculate your true shop rate.
- 2. Pick one representative job and estimate all time components (setup, pierce, cut, finish).
- 3. Compare your estimate against actual time and cost for that job.
- 4. Identify the biggest gap and decide what to measure or refine next.
Common "aha" moments
- • Setup time is 25–35% of small-batch costs.
- • Perforated parts have 2× the pierce time originally assumed.
- • Overhead rate was far below what fixed costs actually require.
- • Deburring on thin parts can take longer than cutting.
Shop Hourly Rate Builder
Calculate a complete hourly shop rate including depreciation, labor, energy, maintenance, facility, and overhead. This is the foundation for time-based pricing and is best for shops that want a defensible, documented internal rate rather than a guess.
Overhead Allocator
Distribute facility, management, and indirect costs across jobs fairly. Without proper allocation, you may undercharge high-overhead jobs or overcharge simple ones. Essential for multi-machine shops and service bureaus.
Setup Time Estimator
Estimate setup and changeover time based on programming, loading, machine preparation, inspection, and batch size. Highlights when setup dominates small-batch work and is best for high-mix or changeover-heavy environments.
Piercing Time & Cost Estimator
Calculate piercing time and cost by material, thickness, hole count, and strategy so you can see when holes become the bottleneck. Most useful for perforated parts, thick sections, and jobs where pierce quality matters.
Kerf Width Reference
Quick reference for kerf width by material, thickness, and nozzle diameter to support path compensation and material planning. Best used when programming new materials or checking whether nesting assumptions match reality.
Edge Finishing Time Guide
Estimate deburring, chamfering, and finishing time by material, edge length, method, and quality level. Shows when edge work rivals or exceeds cutting time, especially on thin-gauge or cosmetic parts.
Quotation Margin Simulator
Simulate pricing scenarios with target margins, payment terms, risk factors, and volume discounts. Best used after you know your true costs and want to test different price and margin strategies before sending quotes.
Why Use Cost Center Tools?
Accurate Cost Allocation
Many laser cutting shops underestimate true costs by overlooking setup time, piercing overhead, finishing requirements, and proper overhead allocation. These tools help you capture all cost components for accurate job costing.
Data-Driven Pricing
Move beyond gut-feel pricing to structured margin analysis. Understand your break-even points, optimal batch sizes, and how volume discounts impact profitability.
Hidden Cost Discovery
For perforated parts and small batches, modeled piercing, setup, and finishing time can become a large share of total processing time. Use these tools to quantify how much these contributors matter in your own jobs instead of treating them as generic overhead.
Process Optimization
Identify where your shop's costs are highest and find opportunities for improvement. Should you invest in automated deburring? Is nitrogen generation cost-effective? When should you batch orders?
Real-world impact (typical ranges)
15–25%
Margin improvement many shops see after explicitly modeling setup, piercing, and finishing time on small-batch perforated parts.
$8–15/hr
Common "missing overhead" discovered when shops build their first full hourly rate instead of relying on legacy shop rates.
30–40%
Typical reduction in quote preparation time once costs are systematized with a consistent cost-center workflow.
These ranges are illustrative and depend on your starting baseline and implementation effort; use them as a sense-check, not as promised results.
How to Use These Tools
Start with Hourly Rate Builder
Calculate your true shop hourly rate including all cost components. This is the foundation for accurate job costing. Update quarterly or when major costs change.
Estimate All Time Components
Use Setup Estimator for job changeover time, Pierce Estimator for hole-intensive parts, and Finishing Guide for edge work. These hidden times often exceed cutting time.
Allocate Overhead Properly
Use Overhead Allocator to distribute facility, administrative, and indirect costs across jobs. Choose allocation method that reflects your actual cost drivers.
Set Pricing with Margin Simulator
Enter total costs and use Quotation Margin Simulator to model different scenarios. Factor in payment terms, risk, and volume discounts to arrive at optimal pricing.
Typical Cost Center Workflow
These tools work together to build a complete picture of job costs. Use this workflow as a guide and adapt it to your own quoting and scheduling process.
Calculate base shop and overhead rates
Establish your true shop hourly rate and overhead allocation method. Update when major costs change (rent, wages, energy, or equipment fleet).
Estimate job time components
Calculate all time components for the specific job. Multiply each by your hourly rate from step 1 to arrive at a complete cost picture instead of focusing only on cutting time.
Set price and margin
Apply appropriate margins considering risk, customer type, payment terms, and volume. Compare a few scenarios before finalizing the quote.
Cost Center Best Practices
Track Actual vs. Estimated
Record actual times and costs for jobs, then compare them to your estimates. Refine your inputs over time so the modeled results better reflect how your shop actually runs. The goal is alignment with your own data, not any specific accuracy percentage.
Update Costs Quarterly
Material prices, gas costs, and labor rates change. Review and update your cost inputs regularly (for example, every few months) and whenever there are major changes such as new equipment, wage increases, or facility moves.
Do not Forget Hidden Costs
Setup time, piercing, finishing, scrap, rework, and material handling can significantly increase total time beyond direct cutting. Use the calculators to make these contributions explicit in your costing instead of treating them as undifferentiated overhead.
Use Consistent Allocation Methods
Overhead includes costs that are not tied to a single job (rent, office staff, insurance, supervision, etc.). Allocation is how you spread those costs across jobs—commonly by machine hours, labor hours, or material cost. Choose one primary allocation method that matches your biggest cost driver and apply it consistently. Consistency is more important than perfection; review annually to confirm it still reflects how your shop actually runs.
Related Calculators & Resources
Laser Cutting Cost Calculator
Complete end-to-end cutting cost calculation with material, power, labor, and gas costs
Equipment ROI Calculator
Evaluate payback period and return on investment for laser cutting equipment purchases
Material Utilization
Optimize nesting and reduce material waste to lower per-part material costs