Profit Starts with the Quote: Estimating Smarter for a Stronger Shop, 468
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Jun 9, 2025
Discover how outdated quoting methods could be costing your manufacturing shop! Learn about the importance of accurate cost modeling, including activity-based pricing and true cost evaluations. Hear real-world tactics for confidently walking away from unprofitable jobs. Explore how speed in quoting can boost profitability and align with client needs. Dive into pricing strategies that drive sales success while managing risks. This engaging discussion highlights quoting as a key leadership decision for the future of your shop.
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question_answer ANECDOTE
Five Shops Misquoted Jobs
Mike Payne shares that in five shop acquisitions, he found quoting was done wrong every time. - These mistakes were often due to broken Excel models or outdated formulas.
insights INSIGHT
Sales Pressure Impacts Pricing
Many shops price jobs too low due to insufficient sales and marketing pressure. - Low sales pressure forces quoting every job, leading to aggressive, margin-killing prices.
volunteer_activism ADVICE
Start Tiered Estimating Systems
Use a tiered estimating approach: flat shop rate, separate labor and overhead, or activity-based costing. - Break out machine and labor costs to price expensive equipment properly and avoid cross-subsidizing.
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Are you losing money before the job even hits the floor?
If your quotes are based on outdated spreadsheets, rough guesses, or a “that’s what we’ve always charged” mindset, you might be setting your shop up to fail—before the first chip falls. In this episode of the Machine Shop MBA series, we tackle one of the most common (and costly) problems in manufacturing: bad quoting.
Mike shares lessons from five shop acquisitions—each one quoting the wrong way. Paul lays out a clear framework for cost modeling, from flat-rate estimating to activity-based precision. And Nick brings it all home with real-world strategies for walking away from unprofitable jobs and quoting with confidence.
You’ll learn how to:
Break down your true cost per hour (and why most shops get it wrong)
Quote faster and win better work
Tie quoting to sales strategy and customer fit
Eliminate jobs that quietly kill your margin
Because quoting isn’t just a math problem. It’s a leadership decision—and the future of your shop depends on getting it right.
Segments
(0:00) Friday energy, name mispronunciations, and intro banter
(1:01) Why ProShop can help you achieve on-time delivery
(2:34) Common quoting mistakes usually stem from broken models
(6:25) Scarcity mindset vs. abundance mindset in quoting decisions
(7:45) The four cost buckets you need to understand
(9:22) Estimating 101, 201, and 301: building smarter quoting systems
(12:58) How automation changes the math (or does it…?)
(16:20) Value-based pricing: how some shops quote with confidence and win
(18:00) Customer transparency: when it helps, and when it hurts
(19:50) Sales pressure and quoting leverage: why quoting ties back to marketing
(21:05) Calculating machine rates: depreciation, utilization, and more
(24:30) Overhead, tooling, scrap—when to include it, and how
(25:22) Stay tuned for Top Shops 2025 registration!
Making Chips Podcast for Manufacturing Leaders