Procurement method · should cost
Short answer: should cost is the cost a part ought to have if it were made efficiently. It is calculated from the drawing: material, time of each operation × hourly rate, scrap, overheads and margin. For a 6082 aluminium housing machined in a batch of 200, RFQdecoder gets €22.62 (price as of 5 October 2026) per part.
By the RFQdecoder team · updated 5 October 2026
Price as of 5 October 2026. Not included: anodising, dedicated tooling, shipping.
Should cost, or should cost analysis, is an estimate of a part’s production cost made by the buyer, independently of the price quoted by the supplier. You rebuild the manufacturing: which blank, which operations, on which machines, how long, at what hourly rate. Then you add what every manufacturer has to cover: scrapped parts, overheads and a margin.
The result is not a price to impose. It is a basis for discussion: every line is an assumption the supplier can confirm or correct.
The model below follows exactly these six steps on a real part.
On the example: €7.72 of material and €9.98 of processing make €17.70. Scrap at 1.4% adds €0.25, overheads at 20% €3.59, margin at 5% €1.08: €22.62.
| Step | Machine | Time | Cost |
|---|---|---|---|
| I start from a 125 × 85 × 50 mm block of 6082 aluminium (1.43 kg) | material purchase | €7.72 | |
| I cut the blank on the band saw | band saw | 1.6 min | €1.58 |
| I machine the first face and the 96 × 56 mm pocket, 30 mm deep (setup 1 of 2) | 3-axis machining centre | 2.0 min | €2.34 |
| I flip the part and machine the second face (setup 2 of 2) | 3-axis machining centre | 2.0 min | €2.42 |
| I drill 7 holes, tap 4 × M5 and ream 2 × Ø22 H7 | 3-axis machining centre | 2.6 min | €2.84 |
| I deburr and inspect the part | deburring station | 0.5 min | €0.80 |
| Scrap 1.4% | €0.25 | ||
| Overheads 20% | €3.59 | ||
| Margin 5% | €1.08 | ||
| Should cost per part, excl. VAT | €22.62 |
Real costing of the BTC-120-80-45 housing at 200 parts. Not included: anodising, dedicated tooling, shipping.
Take a supplier offer at €27.50 (example value). The gap with the should cost is €4.88. At the example’s all-in shop rate of €78 per hour (3-axis machining centre), that is about 4 minutes of machine time with an operator. The questions to ask become concrete:
Should cost answers “is this price reasonable?”. Target cost answers “can we afford it?”. TCO answers “what does it really cost us?”.
Upload the drawing to the RFQdecoder tool: it reads the part, writes the routing in plain language and costs each step with the machine, the time and the rate next to it. You get the should cost and, above all, the assumptions to discuss.
The tool interface is in French for now; the English interface is on the way. Figures, units and drawings are the same.
Should cost is what a part ought to cost if it were made efficiently, calculated item by item from the drawing: material, the time of each operation multiplied by the machine hourly rate, scrap, overheads and margin.
The purchase price is what the supplier asks. The should cost is what the part ought to cost according to an explicit model. The gap between the two shows where to negotiate: time, rate, material, batch or margin.
No. Target cost starts from the intended selling price and works back to the acceptable cost. Should cost starts from how the part is actually made and works up to a reasonable cost. Comparing the two is useful.
You need to know the routing: the operations, the machines and their times. That is what the RFQdecoder tool writes from the drawing, with the machine, the time and the rate next to each step.
No, it is a reasoned estimate. Its value comes from every assumption being visible: you can correct it with the supplier instead of arguing over a total.
A should cost methodology rebuilds the supplier’s manufacturing: blank, operations, machine times and hourly rates, then adds scrap, overheads and margin. The six steps described above are the standard sequence.
Upload your PDF, DXF or STEP drawing: the routing and the cost of each step, for your part.