The part cost used when quoting is often found by adding a multiplier to the raw material price. This method may win you work in the short term; but it does not show which job is making money and which is making a loss.
In this article we break the cost down item by item and show, through a worked example, where and how much is being lost.
Cost items
| Item | Typical share | What it includes |
|---|---|---|
| Raw material | 50 – 70% | Virgin material, masterbatch, additives |
| Machine hour | 20 – 35% | Depreciation, energy, labor, overheads |
| Mold amortization | 3 – 10% | The mold price divided by the planned quantity |
| Scrap | 1 – 8% | Material going to waste + machine time spent |
| Secondary operations | Variable | Assembly, printing, packing, quality control |
It is normal for the shares to cover such a wide range: in a technical part the raw material share falls and labor rises; in a simple packaging part raw material is the dominant item.
Step 1 — Part weight and raw material cost
Raw material cost = (Part weight + Runner share) × Price per kilogram
With a cold runner, the runner share can reach a significant proportion of the part weight. If the runner is granulated and reused, the cost falls but does not drop to zero — granulating has a cost too.
With a hot runner this item disappears completely: What is a hot runner system
The use of regrind needs to be controlled: Regrind and scrap recovery
Step 2 — Machine hourly rate
The machine hourly rate is what one hour of that machine's operation costs the plant:
Machine hourly rate = (Annual depreciation + Energy + Labor + Overheads) / Annual operating hours
Points to watch:
- Annual operating hours must be realistic. Calculating on the basis of 8,760 hours is misleading; stoppages, maintenance and setup times must be deducted
- Energy varies markedly with machine type: Energy consumption and savings in injection molding
- Labor is divided according to how many machines one operator looks after
Step 3 — Combining with cycle time
Machine cost per part = (Machine hourly rate / 3,600) × Cycle time / Cavity count
This formula shows directly the effect of cycle time on cost.
Worked example
The data for a part:
| Input | Value |
|---|---|
| Part weight | 45 g |
| Runner share (per part) | 5 g |
| Raw material price | unit/kg |
| Cycle time | 30 s |
| Cavity count | 4 |
| Machine hourly rate | unit/hour |
Machine time per part: 30 / 4 = 7.5 seconds
So the number of parts that can be produced in an hour: 3,600 / 7.5 = 480 parts
Machine cost per part: Machine hourly rate / 480
Now assume you reduce the cycle time from 30 seconds to 25 seconds:
- Time per part: 25 / 4 = 6.25 seconds
- Hourly output: 3,600 / 6.25 = 576 parts
- Machine cost per part falls by 20%
Because the raw material cost does not change, the reduction in total cost is smaller — but capacity has increased by 20%. More work can be taken on with the same machine.
Methods for shortening cycle time: How to shorten injection molding cycle time · Calculators: tonnage, screw and cooling calculations
Step 4 — Mold amortization
Mold cost per part = Mold price / Planned total quantity
Two mistakes are often made here:
1. The planned quantity is kept optimistic. A quantity that is not achieved means the mold cost has not been covered. 2. Maintenance cost is forgotten. The maintenance and overhauls carried out over the life of the mold are also part of this item: Mold maintenance and periodic inspection plan
Step 5 — The effect of scrap
Scrap is not only lost material. A part that goes to waste has also used up machine time.
Real cost = Calculated cost / (1 − scrap rate)
On a line running with 5% scrap, the real cost of a good part is about 5.3% above the calculated value. When the rate rises to 10%, the difference approaches 11%.
To find the source of scrap: Defect troubleshooting guide · Process diagnostic methods
In high-volume production, reducing the scrap rate usually gains more than negotiating the raw material price.
Invisible items
Items that are not included in the standard calculation but do create cost in reality:
Color and material changes. The machine does not produce during cleaning; purge shots consume raw material. In a job with frequent color changes this item must not be underestimated: Cleaning time in color and material changes
Mold change time. In short runs the mold change reaches a serious share alongside production time: Mold change time
Unplanned stoppages. A screw and barrel overhaul, a mold failure or a dryer failure — all mean parts that cannot be produced: Screw and barrel wear
Excess masterbatch. The extra color given as a safety margin in volumetric dosing is a loss repeated in every cycle. This waste in the most expensive component is eliminated with gravimetric dosing: The difference between gravimetric and volumetric dosing
Energy. It appears within the machine hourly rate, but when it is not broken out, the opportunity for improvement does not appear either.
The order for reducing cost
Looking at the shares of the items, the order of priority emerges by itself:
1. Raw material — the largest item. Reducing runner loss, using regrind in a controlled way, bringing the masterbatch ratio down to the real need 2. Scrap — both material and time lost; a double effect 3. Cycle time — directly increases capacity 4. Energy — gives quick gains once it starts to be measured 5. Stoppages — become predictable with planned maintenance
This order also tells you where to spend your effort: in a part where the raw material share is 60%, a 10% improvement in energy makes a very small change in total cost.
When setting up the calculation
- Calculate separately for each part; working with average values is misleading
- Take the data from real production: the actual cycle time, the real scrap rate
- Update the calculation regularly; as raw material and energy prices change, the basis for quoting changes too
- Include the invisible items when quoting
For production efficiency and equipment selection, you can consult our technical support team.
The way to lower the machine hourly rate permanently is to choose a machine of the right size for the job; oversized tonnage inflates both the investment and the energy item. The list of series with their tonnage bands: plastic injection molding machine models.