What Is The Best Way To Cut Steel Plate

Oxy-fuel, Plasma, Laser, or Waterjet

There are many ways to cut mild steel plate, some of which are suited for automation some are not. Some are suited for thinner plate, some for thicker. Some are fast, some are slow. Some are low-cost, some expensive. And some are accurate, some are not. This article takes a quick look at the four primary methods used on CNC shape cutting machines, compares each processes strengths and weaknesses, and then gives a few criteria that can be used to decide which process is best for your application.

Oxy-Fuel Cutting

Oxy-fuel torch cutting, or flame cutting, is by far the oldest cutting process that can be used on mild steel. It is generally viewed as a simple process, and the equipment and consumables are relatively inexpensive. An oxy-fuel torch can cut through very thick plate, limited primarily by the amount of oxygen that can be delivered. It is not unheard of to cut through 914mm, or even 1220mm of steel using an oxy-fuel torch. However, when it comes to shape cutting from steel plate, the vast majority of work is done on 300mm plate and thinner.

When adjusted properly, an oxy-fuel torch delivers a smooth, square cut surface. There is little slag on the bottom edge, and the top edge is only slightly rounded from the preheat flames. This surface is ideally suited for many applications without further treatment.

Oxy-fuel cutting is ideal for plates thicker than 1 inch, but can be used all the way down to about 6mm thick plate, with some difficulty. It is a relatively slow process, topping out around 510mm per minute on 1 inch material. Another great thing about oxy-fuel cutting is that you can easily cut with multiple torches at once, multiplying your productivity.

Plasma Cutting

Plasma arc cutting is a great process for cutting mild steel plate, offering much higher speeds than oxy-fuel cutting, but sacrificing some edge quality. That is where plasma is tricky. Edge quality has a sweet spot that, depending on cutting current, generally ranges from about 6mm up to 38mm inches. Overall edge squareness starts to suffer when the plate gets really thin, or really thick (outside of the range I just mentioned), even though the edge smoothness and dross performance may still be quite good.

Plasma equipment can be pricy when compared to an oxy-fuel torch, since a complete system requires a power supply, water cooler (on systems over about 100 Amps), a gas control, torch leads, interconnecting hoses & cables, and the torch itself. But the increased productivity of plasma vs. oxy-fuel will pay for the cost of the system in no time.

You can plasma cut with multiple torches at once, but the additional cost factor usually limits this to two torches. However, some customers do opt for as many as three or four plasma systems on one machine, but those are usually high-end manufacturers who cut a high volume of the same parts to support a production line.

Laser Cutting

The laser cutting process is suitable for cutting mild steel from gauge thickness up to about 38mm. Beyond the 1 inch barrier, everything has to be just right to make it work reliably, including the material (laser grade steel), gas purity, nozzle condition, and beam quality.

Laser is not a very fast process, because on mild steel it is basically just a burning process that uses the extreme heat of a focused laser beam instead of a preheat flame. Therefore, the speed is limited by the speed of the chemical reaction between Iron and Oxygen. Laser is, however, a very accurate process. It creates a very narrow kerf width, and therefore can cut very precise contours and accurate small holes. Edge quality is usually very, very good, with extremely small serrations and lag lines, very square edges, and little to no dross.

The other great thing about the laser process is the reliability. The consumable life is very long, and machine automation very good, so that many laser cutting operations can be done “lights-out”. Imagine, loading a 10’ x 40’ plate of 12mm steel on the table, pressing the “Start” button, then going home for the evening. When you come back in the morning, you could have hundreds of parts cut and ready to unload.

Due to the complexity of the beam delivery, CO2 lasers do not lend themselves to cutting with multiple heads on the same machine. However, with fiber lasers, cutting with multiple heads is possible.

Waterjet Cutting

Waterjet cutting also does a very nice job of cutting mild steel, giving a smooth and extremely accurate cut. Waterjet cutting accuracy can exceed that of laser cutting, because the edge smoothness can be better, and there is no heat distortion. Also, waterjet is not limited in thickness the way laser and plasma cutting are. The practical limit on waterjet cutting is around 6 to 8 inches, due to the length of time to cut that thickness, and the tendency of the water stream to diverge.

The drawback to waterjet cutting is the cost of operation. Up front equipment costs are usually a little higher than plasma, due to the high cost of an intensifier pump, but not as high as laser. But the cost-per-hour to run waterjet is much higher, primarily due to the cost of the garnet abrasive that goes into the cut.

Waterjet cutting also lends itself to cutting with multiple heads, and this can even be done with a single intensifier pump. But each additional cutting head requires additional water flow that either requires a larger pump or a smaller orifice.

Decision Criteria

So how do you make the best decision on which process to use?

۱٫ Start with Thickness:

  • Thinner than 0.080” use laser.
  • Thinner than 0.125 use plasma or laser.
  • Thinner than 0.250 use waterjet, plasma, or laser.
  • Over 8” use oxy-fuel.
  • Over 2” use oxy-fuel or waterjet.
  • Over 1.25” use plasma, oxy-fuel, or waterjet.

۲٫ Consider the Accuracy and Edge Quality requirement:

  • Can you accept the edge quality of plasma? Most fabrications from steel plate can be welded just fine using a plasma cut.
  • Can you accept the Heat Affect Zone of oxy-fuel, plasma, or laser? If not, use waterjet.

۳٫ Consider which is more important: Productivity or Cost?

  • If production rate is most important, steer clear of waterjet.
  • If low initial investment and low operating cost are most important, look to oxy-fuel.


Tolerance for Secondary Operations

  • Can you tolerate occasional dross on the bottom of the plate? If not, use waterjet or laser.
  • Do secondary operations require perfectly round holes? If so, use waterjet or laser.

Multiple Tools

Do the parts lend themselves to being cut with 2 torches, 4 torches, or more? Then oxy-fuel is going to out-pace plasma or laser. Cutting with multiple plasma torches is possible, but gets expensive when you consider the initial investment for all that equipment. With waterjet, multiple waterjet cutting nozzles can be run with a single intensifier pump, if you buy a pump with a high enough flow rate to support multiple heads. Laser cutting has traditionally been limited to a single cutting head, although fiber laser opens the opportunity for multiple head simultaneous cutting.

The Monkey Wrench

Another consideration that throws a monkey-wrench into any calculation is the idea of multi-process cutting – using two of these cutting processes on the same part. The processes that are most logically combined are waterjet and plasma, or waterjet and oxy-fuel. With the new fiber laser technology, it is now possible to combine laser and plasma or laser and oxy-fuel. The advantage of multi-process cutting is the ability to use the slower, more accurate process for some contours, but then switch to the faster and cheaper process for other contours. The result is producing parts with the accuracy they need, but for far lower cost than if you used the high accuracy process to cut the entire part.


The overlap of thickness range and capabilities of these four processes makes it hard to choose which one to use on any particular mild-steel part. So fabricators or steel service centers who need the ability to cut a wide range of materials will often wind up with machines equipped with two or more cutting processes. Some times the only way to figure out which process is optimal for a specific part is to try it several different ways, and see which one works best.

How to quickly calculate the hourly cost and rate of machines and sheet metal processing lines

I am often asked what is the operating cost for a sheet metal processing line, and in this article I will provide a method for calculating it.

We will see that, especially for new lines such as roll forming lines, punching machine and laser cutting, the payback and the number of working hours of the machine play the most significant role, and that the payback is a decision that the sheet metal manufacturer has to take.

Other times, my clients ask me how much they should charge for the machine per hour, and at the end of the article we will see that this question has a little different answer: in this case the entrepreneur has to decide how much of the overhead costs are connected to the machine operation, how much is the gross margin he wants to have and what is the hourly rate generally applied in the market.

Calculating the hourly cost of a machine

The hourly cost of a machine is the sum of the following six factors, expressed in Hourly Cost (HC)

Let’s analyze each one of these factors.

۱٫ Investment Hourly Cost

To calculate the Investment Hourly Cost, we start from the value of the investment and divide it by the number of years in which we want the machine to be paid back.

In accounting, the depreciation for a machine is generally 5 years but some companies want the payback to be completed within three years.

The obtained value has to be divided by the number of hours of expected operation of the line.

(Investment HC) = (Investment Value) / (Payback period) / (Estimated Hours of operation)

For example, an investment worth 500.000 Euro, with a Payback period of three years working 3000 hours per year will give a hourly cost of the investment of 55,5 Euro per hour.

If the machine is leased, alernatively it is possible to calculate the Investment HC by dividing the annual cost of the leasing by the number of hours of expected operation.

(Investment HC) = (Annual cost of Leasing) / (Estimated Hours of operation)

۲٫ Electricity HC

Electricity Hourly Cost is calculated from the machine power consumption.

Power consumption is not the installed power that reads on the machine label, since that is a safety value that considers all machine utilities working simultaneously, which rarely happens. Power consumption can be measured by any electrician over a period of time with a specific instrument, and is sometimes 50% of the installed power (on servo electric punching lines, it can be even 15-20% of the installed power).

(Electricity HC) = (Machine power consumption in kW) * (Cost of electricity in [Euro/kWh])

For example, a machine with power consumption of 20kW gives an Electricity HC of about 3 Euro per working hour.

New servo electric technologies are reducing considerably the power consumption: for example one modern servo electric coil fed punching machine (see picture below) has a power consumption of less than 12kW, compared to over 30kW of an hydraulic punching machine with similar characteristics.

۳٫ Labor HC

This is the labor cost that is directly involved to assist the machine. In some cases one operator can assist more than one machine, and this cost has to take into account the percentage of his/her time per each machine.

(Labor HC) = (Operator HC) * (% of time for machine assistance)

For example, if an operator has a cost of 25 Euro per hour and assists the machine 35% of its time, the Labor HC is 8,8 Euro per hour. In more automated machines, the percentage is lower than for machines with low or no automation.

۴٫ Maintenance HC

To calculate this cost, we can divide the maintenance yearly costs by the number of estimated operating hours of the machine. The cost of the maintenance can be derived from the maintenance costs of similar machines in the workshop, or it can be estimated as a percentage of the investment value.

(Maintenance HC) = (Maintenance Yearly cost) / (Estimated Hours of operation)

For example, a machine with 6.000 Euro Yearly maintenance costs with 3000 Hours of estimated operating hours, has a Maintenance HC of 2 Euro per hour.

۵٫ Consumables HC

Consumables are, for example, the cost of wear parts such as punches and dies, filters, lubricants, or the assist gas for laser cutting machines or lines that include welding.

These costs can be derived from historical values of similar machines, or calculated and they are a direct function of the number of operating hours of the line.

In the following example, we will consider a Consumables HC of 8 Euro.

۶٫ Occupied Area Hourly Cost

For sake of completeness, we can add the hourly cost of the area occupied by the machine. I suggest considering the yearly cost for renting a similar area and divide it by the number of Estimated Hours of operation in the year.

(Occupied Area HC) = (Cost of rented area per year) / ( Estimated Hours of operation)

In the following example, we will consider this cost as zero.

Total Hourly Cost

In the previous example, the Total Hourly Cost results in 77,3 Euro. This cost covers the machine or line operating costs and as we have seen it already involved the decision on the payback period.

The Investment HC for new lines is usually the most important factor of the sum. For machines that have completed their payback or depreciation period, this factors can be considered zero; usually a higher value has to be calculated for the Maintenance HC.


When calculating the cost of a production for a customer, the HC is used in this formula:

(Total production cost) = (number of parts) * (raw material cost per one part) + (HC) * [(Cycle time per part in hours) * (number of parts) + (Setup time in hours)] + (cost of tooling) + (cost of machine programming)

We observe the following:

The Hourly cost multiplied by the number of parts and cycle time, is a variable cost that depends on the total number of produced parts.

The time for the setup of the machine can be multiplied by HC as well, since the machine is standing in this time. This can be considered a fixed cost. As we will see in one of the next articles, it is possible to consider the setup time by using the parameter Efficiency for the system.

If the production requires the manufacturing of a tooling that is production-specific, this is also considered a fixed cost, just like the cost of the machine programming.

Deciding the hourly price for the sheet metal working machine

The previous calculations give us a framework for the pricing of our machine, per hour of operation.

Knowing the machine hourly cost, the entrepreneur has now to add two more factors: the repartition of the overhead costs, and the gross margin he wants to get from the machine operation.

Repartition of overhead costs

Overhead costs are the company structural costs such as commercial costs, investments, maintenance, heating, administration and service costs that are not directly connected with the production. There is not a fixed rule for the repartition of these costs, but I suggest this formula:

(Overhead cost repartition HC) = (Overhead costs) / (Total production area in square meters) * (Machine occupied area in square meters) / (Estimated Hours of operation)

In this way, a machine occupying a smaller surface on the shop floor will “absorb” less overhead costs than the larger machines.

Note: in the Machine Hourly cost, we already included the hourly cost of the investment of the machine – either as leasing cost or depreciation – and the power consumption of the machine. These costs are generally included in the Overhead costs: for the sake of accuracy, I suggest to deduct the yearly cost of the Investment and the yearly estimated power consumption of the machine from the (Overhead costs) in the above formula. By doing so, we obtain a less conservative calculation.


We know that the cost is a calculation, while price is a decision. In fact, knowing the operating costs is an essential step to a correct pricing, and also for the evaluation of a new investment.

To calculate the price, we now need to add the margin that we want to have on the worked hour, in percentage. Here is the formula:

(Hourly price) = ((Machine HC) + (Overhead cost repartition HC)) / (100 – Margin%) * 100

For example, we had found that our system had a HC of 77,3 Euros per hour. If the Overhead cost repartition is 12 Euro per hour and we want to have a margin of 15%, the final hourly price results in:

(Hourly price) = (77,3 + 12) / (100-15) * 100 = 105 Euro per Hour.

The sheet metal manufacturer should also be informed on the pricing that is generally applied in the market for the same machine type, and consider this in his final decision.


In this article I have shared a simple method for the calculation of the machine hourly cost, which can be valid for a number of sheet metal working machines and applied even outside the sheet metal industry.

All the calculations imply some evaluations and strategic decisions that the sheet metal manufacturer has to take, so it is quite common to see two companies applying different hourly prices, based on their different policies on payback time or structural cost repartition.

In any case, in order to take a thoughtful and effective decision on the pricing, the entrepreneur has to be aware also of the price per hour applied in the market by other manufacturers in his area.

Andrea Dallan – C.E.O.