KEVOS® MAKEOS · Money
Learning-Curve Quote (Batch Hours, Cost and Price per Unit)
With the learning curve, how many hours will this batch take, what does each unit cost, and does the price I am offered give my margin?
Quote for a batch where labour time falls with repetition: time for the first and last unit, cumulative and average hours on the unit learning curve (as the learning curve tool), set-up, labour and machine cost at your hourly rate, material per unit, overhead, total and unit cost, the price per unit for your margin, and the margin the offered price gives.
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How this tool works
Inputs, units and where to find them
| Input | Unit | Typical source |
|---|---|---|
| Hours for the first unit | h | Hours the first unit takes (estimate or prototype record). |
| Learning rate | % | Learning rate: each doubling of quantity multiplies the unit time by this (80–90% typical for manual assembly). |
| Units in the batch | Units in the batch. | |
| Set-up hours | h | Set-up hours for the batch. |
| Labour and machine rate | $/h | Hourly rate for labour plus machine (for example from the machine hour rate tool). |
| Material per unit | $ | Material and bought-in parts per unit. |
| Overhead on cost | % | Overhead added to the direct cost. |
| Margin wanted on price | % | Margin you want as a share of the selling price. |
| Price offered per unit | $ | Price per unit the customer offers. |
Method and formulas
- Unit time T_x = T₁ x^b with b = log₂(learning rate); cumulative hours = Σ T_x (as the learning curve tool).
- Cost = (cumulative + set-up) × rate + material × n, plus overhead.
- Price for margin m = unit cost ÷ (1 − m); margin offered = 1 − unit cost ÷ offer.
- Example: 50 units take 255.13 h; unit cost 676.63, price for 20% margin 845.79; the offer gives 24.819%.
Limitations
- Unit learning curve (Crawford); the cumulative-average (Wright) model gives different numbers.
- Learning stops at a floor set by machine time; check later units against standard times.
- Example values are illustrations. Replace them with values for your actual task.
Typical uses
- Quote a first production batch
- Decide whether an offered price is acceptable
- Show how cost falls with batch size
Who it is for
- Estimators
- Production managers
- Business owners
What you get
- Unit and cumulative hours
- Cost in total and per unit
- Price for the margin and the offered margin
Interpreting the result
- The first units cost far more than the average: quote small first batches with care.
References
- Machinery’s Handbook, 29th edition (Industrial Press, 2012), printed pp. 146, 134–146. Topic reference; no source tables or recommended settings are reproduced.
WORKOS tools are screening and decision-support utilities. Verify important financial, engineering, safety, legal or operational decisions using appropriate professional standards and your organisation’s approved data.
Open the Learning-Curve Quote (Batch Hours, Cost and Price per Unit) calculator
