David Krause1 · The price is the smallest of the three figures
A cutting tool causes cost in three places: when it is bought, when it is changed, and in every minute it is in the cut. The purchase price is the only one of these that appears on the supplier's quotation — and usually the smallest.
+ change time × hourly rate / tool life in parts
+ machining time per part × hourly rate
Tool life in parts = parts per tool until it is changed · hourly rate = full hourly rate of the cost center
The first two terms depend on tool life, the third on the cutting data. A tool that tolerates higher feed rates reduces the largest item — even if the tool itself is more expensive.
2 · Worked example: two cutters, one part
Finishing on the titanium housing in cost center 210. Full hourly rate €89.60/h (Chapter 9), i.e. €1.49 per minute. Tool change including measuring: 4 minutes.
| Item | Cutter A | Cutter B | Difference |
|---|---|---|---|
| Purchase price | €52.00 | €68.00 | +31 % |
| Tool life | 40 parts | 65 parts | +63 % |
| Machining time per part | 6.0 min | 5.4 min | −10 % |
| Tool per part | €1.30 | €1.05 | −€0.25 |
| Tool change per part | €0.15 | €0.09 | −€0.06 |
| Machine time per part | €8.96 | €8.06 | −€0.90 |
| Cost per part | €10.41 | €9.20 | −€1.21 (−11.6 %) |
The more expensive cutter reduces the cost per part by €1.21. At 9,980 parts a year that is about €12,000. Three quarters of it come from the shorter machining time, not from the tool itself. Even the tooling budget falls: 250 cutters at €52 cost €12,974, 154 cutters at €68 cost €10,441. A price comparison per piece would have ruled out cutter B.
3 · What the saved machine time is worth
0.6 minutes per part add up to about 100 machine hours a year at 9,980 parts. Their value depends on what the machine can do with that time — the same distinction as in Chapter 13.
| Situation of the cost center | Valuation rate | €/h | Value per year |
|---|---|---|---|
| Costing, normal utilization | full hourly rate | 89.60 | €8,960 |
| Free capacity, time stays unused | variable machine costs | 17.66 | €1,766 |
| Bottleneck, time is filled with orders | contribution margin per machine hour | 179.00 | €17,900 |
With free capacity the time saving hardly justifies the higher price — there, tool life decides. At a bottleneck every minute gained is the most valuable thing purchasing can buy.
4 · Regrinding and scrap belong in the comparison
| Variant | Cost | Parts | Tool per part |
|---|---|---|---|
| New, no regrinding | €52.00 | 40 | €1.30 |
| New + three regrinds at €15 | €97.00 | 136 | €0.71 |
Assumption: each regrind reaches 80 % of the original tool life. A tool that cannot be reground has to make up for this advantage through price or tool life. On top comes the scrap revenue for carbide (Chapter 15.3).
5 · No comparison without consumption data
The formula needs a figure that purchasing usually lacks: tool life in the company's own process. Catalogue values apply to standard conditions, not to your own material and clamping. Two sources provide it:
| Source | What it provides | Maturity level per Chapter 15 |
|---|---|---|
| Tool dispensing system | every withdrawal with cost center and time; consumption per machine, outliers, shrinkage | 2 — cost per tool type and spindle hour |
| Tool life trial | parts produced per tool on a defined order, plus the machining time | 3 — for the most expensive tools |
A tool dispensing system is first of all an investment in order: search times disappear because every tool has a place and a stock level. The bigger effect lies in the data. Wear and waste become visible per cost center, and purchasing negotiates for the first time with its own consumption figures instead of the supplier's sales list.
6 · Sequence in purchasing
| Step | Question | Result |
|---|---|---|
| 1 | Which tools cause the most cost per spindle hour? | ranking from the consumption data — in CC 210 solid carbide cutters lead with €5.50/h |
| 2 | Which alternative reduces the cost per part? | trial with a test tool, calculation using the formula above |
| 3 | At what price and in what form? | price negotiation, framework agreement, consignment stock |
| 4 | What does the ordering process itself cost? | bundle small parts — every order line costs money (Chapter 9.6) |
Price negotiation is deliberately in third place. A five percent discount on the wrong tool saves €2.60 per cutter in the example; the right tool saves €1.21 per part.
7 · Checklist
- 1Are tools compared by cost per part, not by price per piece?
- 2Is tool life measured in your own process, not taken from the catalogue?
- 3Does machining time enter the comparison at the cost center's hourly rate?
- 4Is it clear whether the machine is free or a bottleneck — and is the time valued accordingly?
- 5Are regrinding and scrap revenue included?
- 6Is consumption data per cost center available before negotiating?
