The following is the process I take for making nipple cutters for bows. I will be referencing dimensions for a cutter designed for violin bows, the process is the same for cello and bass just with different dimensions.
The Basic Cutter Blank
In the lathe, starting with round stock of O1 tool steel as close to 12 mm in diameter as possible (the outer dimension doesn’t matter as much as long as it is bigger then the largest diameter of the butt end of the stick), with about 35 mm protruding from the the chuck, the stock is faced off and trued up about 30 mm.
Using a center drill just under the finished size of 5 mm, a hole is drilled just through the chamfer of the center drill. Followed by a 3 mm drill at a depth of 32 mm. This hole will allow for a round stock the same size as the hole drilled for the screw on the stick, to aid in the alignment. This hole is then followed with a 5 mm end mill to a depth of 3 mm, this relief forms the nipple.
The diameter at the back of the cutter is turned down to 6 mm for a length of about 15mm so that this cutter can be used in the bow drill.
Forming the Teeth
From here the teeth can be effectively shaped with a file. You only need 1 tooth, 2 are better. The ones I make have 4. I use a little mill with a rotating index to start the teeth so they are perfectly symmetrical and final shape and sharpen them with files.
Since we are only cutting wood, I leave these unhardened and sharpen them occasionally with a file.
A number of small lathes are available that are sufficient for most shops such as these:
I personally prefer something a little larger with added versatility. I have a SouthBend 8” and many nice 8” – 10” lathes can be found on Craigslist for $1,000 – $4,000, sometimes with a bunch of extra tooling like chucks, collets, and faceplates.
Additionally, new Chinese lathes of decent quality can be purchased from http://www.grizzly.com/metal-lathes. Grizzly offers fantastic customer support as well as machines that offer a lot for the price. We are not making space shuttle parts so the accuracy of these machines are more than adequate.
Regardless of the machine, the trick is all in the setup, just like any fine equipment (i.e. bikes, instruments, tools, etc.) and there is plenty of good videos on youtube and literature on the internet to aid in this. Tool safety is must when dealing with these tools so start there if machining is new to you!