True Cost per Device: How O&P Clinics Calculate What Each Orthosis Really Costs
5 min reading time
Most O&P clinics price from materials and habit. This step-by-step method adds labour minutes, workshop overheads and remakes so you know the true cost of every orthosis and socket – and where your margin is leaking.
Ask most O&P clinic owners what a custom foot orthosis or a transtibial socket costs them to make and you will hear a materials figure. Ask what it costs once technician time, workshop overheads and remakes are included and the answer usually becomes a guess. That guess is where margin quietly disappears. This guide sets out a simple, repeatable way to work out the true cost per device in your clinic, so your prices are built on numbers rather than habit.
This article is general business information for clinic owners and managers, not accounting, tax or clinical advice. Work through the method with your accountant using your own figures.
Why "materials plus a mark-up" undercharges
Materials are the easiest cost to see because you buy them on an invoice. But in most O&P workshops, the larger costs are time and overheads: rent for the workshop, electricity for ovens and thermoforming equipment, extraction, equipment maintenance, reception and admin, and the clinician's time in assessment, casting and fitting. A price set as "materials times three" can look healthy on a simple insole and lose money on a complex AFO or a socket that needs two check fittings.
The four building blocks of cost per device
For each device type you make regularly, build up the cost from four parts:
Direct materials – thermoplastic sheet, foam, top covers, lamination supplies, plaster, componentry, straps and fastenings. Use what you actually use, including a fair share of offcuts and waste.
Direct labour – clinician minutes (assessment, casting or scanning, fitting, review) and technician minutes (rectification, forming, routing, grinding, finishing), each multiplied by a cost per minute that includes salary, allowances and visa or benefit costs.
Workshop and clinic overheads – the running costs that don't belong to one device but keep the doors open.
Remakes and adjustments – the hidden cost of the devices you have to make twice.
Step by step: working out your own numbers
Step 1: Pick your top five devices
Don't try to cost everything. List the five device types that make up most of your volume – for example, custom foot orthoses, semi-custom insoles, solid AFOs, transtibial sockets and spinal braces. These are the prices that matter most to your margin.
Step 2: Time the work for two weeks
Ask clinicians and technicians to note start and finish times for each stage of each job: assessment, casting, rectification, heating and forming, trimming on the socket router, finishing on the grinder or sander, fitting and review. A simple sheet on a clipboard is enough. Two weeks of honest timings will tell you more than any estimate.
Step 3: Calculate a cost per labour hour
For each role, add up the annual employment cost and divide it by the hours that person is genuinely available to work on patients and devices – not contracted hours, but hours after leave, training, meetings and admin. That gives you a realistic cost per hour, and a cost per minute.
Step 4: Absorb your overheads
Add up a year of clinic and workshop overheads: rent, utilities, maintenance, insurance, software, admin salaries, marketing and depreciation on equipment. Then divide by the total productive labour hours you expect in the year. Management accountants call this an overhead absorption rate: budgeted overheads divided by budgeted direct labour hours. ACCA's guidance also highlights the catch – if the hours you actually work fall below budget, you under-recover your overheads. That is a strong reason to keep the workshop busy and avoid idle time.
Step 5: Add a remake allowance
Look at the last three months. If one socket in ten needs a significant remake, each socket you sell has to carry roughly a tenth of an extra socket's cost. Track remakes by reason – fit, casting, material or communication – so you can bring the allowance down over time. Better first-time shape capture, for example with Amparo casting and sockets, is one way clinics reduce that figure.
Step 6: Put it on one page
For each device: materials + (labour minutes × cost per minute) + (labour hours × overhead rate) + remake allowance = true cost. Put the five devices side by side next to your current price and your current insurer tariff. Most owners find at least one device they are subsidising.
What to do with the answer
A true cost per device gives you three levers. First, price: you can set fees from a known floor – our companion guide on pricing O&P devices with confidence shows how. Second, time: the timings show where jobs wait or repeat steps, and where reliable equipment such as the Qaadir Q5250 Adjustable Socket Router or a dedicated sander saves minutes on every device. Third, materials: once you can see what each device consumes, you can tackle waste – see stopping margin leaking from your materials shelf.
Start this month
Choose one device – your highest-volume one – and time every stage for the next ten jobs. Add the materials, apply your cost per minute and a first-pass overhead rate, and compare the result with your price. One honest number is the foundation of a stable, profitable clinic.
If you are planning to reduce workshop time per device, browse our workshop equipment range or email support@qaadir.me – our team can help you plan equipment around the devices that make you money.
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