How to Quote Free-Issue (Customer-Supplied) Material
October 30, 2026
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Sometimes the customer sends the material with the order: bars, plates, castings or forgings they have already bought, and you only do the machining. In Italy this is called conto lavoro; in English it is free-issue or customer-supplied material. It looks like the easy case for a quote, because the most volatile line of the estimate disappears. It is not. The material line goes, but the work of receiving, tracking and returning someone else's material arrives, and the risk of a scrapped part stays with you.
This guide shows what changes in a quote when the material is free-issue, which lines to add and which to remove, and how to protect the margin. The worked example in EUR prices the same job twice, with your own material and with the customer's.
What changes when the customer supplies the material
Three things change at once.
- The material cost and its markup leave the quote. You no longer buy, so you no longer charge the bar, the cut-off or the handling markup you normally add to purchased material.
- New work appears. The material has to be checked on arrival against the delivery note, identified and stored apart from your own stock, counted against the parts made, and the remnants and offcuts returned or accounted for. None of this is machining, and all of it takes time.
- The risk moves, but not away from you. If you scrap a part, you have destroyed the customer's material. Unless the quote says otherwise, you owe them the replacement, at a price you did not set and possibly with a lead time you cannot control.
A quote that simply deletes the material line and keeps everything else gets two of these three wrong.
Check that the material supplied is enough
Before the price, do the arithmetic on quantity. Work out the length or the blank each part needs, including saw kerf and facing allowance, and how many parts each bar yields after the bar end that the machine cannot use. Add the pieces you use to set up and a scrap allowance. Then compare with what the customer intends to send.
If the material is short, say so in the quote: "price valid for 150 pieces from 5 bars Ø40 × 3 m; a shortfall of material stops production and is not our responsibility". If it is generous, agree what happens to the remnants: returned with the parts, scrapped, or bought by you at an agreed price per kg.
The lines to add
| Line | What it covers |
|---|---|
| Receiving inspection | Count, dimensions and certificate checked against the delivery note |
| Identification and storage | Customer material kept apart and labelled, so it never ends up on another job |
| Reconciliation and return | Parts made plus scrap plus remnants matched against material received |
| Scrap allowance | The number of pieces you may scrap without paying for the material |
| Material certificate check, if required | The customer's certificate filed with your inspection record |
Each of these is a small time at your bench or inspection rate. Together they are often worth more than the handling markup you lose on the material.
Who pays for a scrapped part
Write it in the quote. A common and fair arrangement: the customer supplies a fixed number of extra pieces of material for setup and scrap; beyond that, the shop pays the replacement material at a price per kg agreed in advance. Without that sentence, a single scrapped part on an expensive alloy can cost more than the margin of the whole batch. The same applies to material that turns out to be defective: a crack or an inclusion found during machining is the customer's problem only if the quote says so. See how to estimate scrap and rework for the allowance itself.
Worked example: 150 turned pins in C45
A customer orders 150 pins, Ø40 C45, 85 mm long. Each pin needs 90 mm of bar (85 mm plus 3 mm saw kerf and 2 mm facing). A 3 m bar loses 60 mm at the end, so it yields 32 pins. With two setup pieces and a 2% scrap allowance the job needs 155 pieces, which is 5 bars. The rates below are example rates, not market prices: lathe €70/h, saw €40/h, inspection €55/h, office and stores €45/h, CAM €60/h. Steel at an assumed €1.60/kg.
Common to both quotes:
| Line | Calculation | Cost |
|---|---|---|
| Sawing | 1 min × €40/h per piece | €0.67 |
| Turning cycle | 4.5 min × €70/h per piece | €5.25 |
| In-process inspection | 0.5 min × €55/h per piece | €0.46 |
| Per piece, 150 pieces | €6.375 × 150 | €956.25 |
| Lathe setup | 1.5 h × €70/h | €105.00 |
| CAM programming | 1 h × €60/h | €60.00 |
With your own material: 5 bars × 29.59 kg × €1.60/kg = €236.75, plus 10% handling = €260.43. Total before margin: €956.25 + €165.00 + €260.43 = €1,381.68, or €9.21 per piece.
With free-issue material: no material line, but receiving inspection (0.5 h × €55/h), identification and storage (0.5 h × €45/h) and reconciliation and return of the remnants (0.5 h × €45/h) add €72.50. Total before margin: €956.25 + €165.00 + €72.50 = €1,193.75, or €7.96 per piece.
The unit price drops by €1.25, not by the €1.74 of material and handling per piece. The customer still saves money, and you get paid for the work the free-issue material really causes.
Do not let the margin shrink with the material
If you price by adding a percentage to the total cost, free-issue material lowers your profit on exactly the same work. At 15% on the totals above, the margin is €207.25 with your own material and €179.06 with the customer's, for the same machine hours. Put the margin on the work, not on the total: hours of machine, bench and office are what you sell in a free-issue job. The same logic is behind pricing on capacity rather than on cost.
Write it on the quote
A free-issue quote needs a few sentences an ordinary quote does not: the quantity and specification of material expected, the date it must arrive for the lead time to hold, the scrap allowance, who pays beyond it, what happens to remnants, and that the price assumes the material matches the drawing and its certificate. In Italy the material usually travels with a delivery note marked for processing (conto lavorazione) and goes back with a return note; whatever the paperwork, the quote should name it. A clear quote template makes these lines routine.
FAQ: quoting free-issue material
What is free-issue material? Material that the customer buys and sends to the shop, which then only machines or processes it and returns the finished parts. In Italy it is called conto lavoro. The quote covers the work, not the material.
How do you quote a job with customer-supplied material? Remove the material cost and its markup, then add the work the free-issue material causes: receiving inspection, separate identification and storage, reconciliation of parts, scrap and remnants, and the return of what is left. Check that the material supplied is enough for the quantity, including setup pieces and a scrap allowance.
Who pays if a part made from free-issue material is scrapped? Whoever the quote says. A fair arrangement is a fixed scrap allowance of extra material supplied by the customer, and beyond it the shop pays the replacement at a price per kg agreed in advance. Without that sentence the shop usually owes the material.
Should the margin be lower on a free-issue job? Not on the work. If the margin is a percentage of total cost, removing the material lowers the profit on the same machine hours. Put the margin on the machining, bench and office time, which is what the shop sells in a free-issue job.
Quoting free-issue jobs with QuoteBuddy
QuoteBuddy builds the estimate from the drawing: it reads the technical drawing, rounds the stock up to the sizes in your catalog, prices it at your material prices and builds each operation as its own line, with setup kept apart from cycle time and CAM programming on a separate line, at your shop's hourly rates. The material cost sits apart from the operations and is not an editable line: on a free-issue order you see exactly what it adds, take it out of the price yourself before you send it, and add the receiving and reconciliation time as operations of your own. Several quantities on one estimate show how the unit price moves with the batch. QuoteBuddy has no free-issue switch: the material is priced as if you bought it, and the decision to remove it stays with you.
You can watch the QuoteBuddy demo video, from technical drawing to quote. To try it on a drawing of your own, start a free 30-day trial.