Worked scenario
A run of two thousand on a machine that wants twenty
Short runs in converting are not proportionally less profitable — they are frequently loss-making, and accepted because the customer is valued.
3 min read
A customer who normally orders large quantities asks for a small run. It is accepted as a service. The setup is identical, the material is a fraction, and the price is scaled by quantity.
Scaling by quantity is the error
Price per thousand is a convenient way to quote and a poor way to cost, because it implies that cost scales with volume when a large part of it does not.
Minimums are a process property
Where the minimum is set per customer relationship it becomes a negotiation. Set per process, on the basis of setup time, it is a fact that can be explained without giving offence.
Grouping is the alternative to refusing
Several small orders in compatible specifications can sometimes share a setup. That requires seeing them together, which requires knowing what is in the queue — and it turns an unprofitable order into an acceptable one without a difficult conversation.
What changes
- Setup cost separated from run cost in every quotation
- Minimum quantities defined per process rather than per customer
- Short-run pricing that reflects setup honestly
- Small orders grouped where the process allows
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