Having read all replies and reread your original post, I think I
have some contributions.
The alignment of the holes and the surface finish is the most
important factors. If this isn't perfect, the punch will stick
and/or break. The cut disc might be deformed on its way out. The
angle of the punch's cutting edge is also important, more so with
thicker sheet metal. Tempering some or all of the parts doesn't hurt.
If you look at commercial disc cutters, they rarely are made in one
piece. I have three and they are assembled of at least 3 parts (not
counting the punches). In one of them, the exit opening at the base
is slightly larger than the cutting diameter (size 19-25 mm). All my
punches are tempered.
I also have an assortment of custom made single dies (just one size)
some round, some square and some others but they are without any
alignment. You have to set it in a press with wax (or similar) in
the "cut" stage and then raise the punch, put your metal on the die
and then initiate the cutting. I have a hydralic press and a
swingpress (I believe it is called). I cut metal, leather and PCB.
With enough force (using the hydralic press) I've been able to cut
almost 2 mm sheet of silver.
Often I get a sharp edge but that's easily remedied with steelshot
tumbling or a planishing hammer.
I have made many tools myself and with the aid of an engineering
shop but sofar disc cutter isn't one because it is not expensive
considering the complex task at hand unless, of course, you make a
Elaine's suggestion would be a thing I'd spend time on. It's a
matter of engineering, machining parts and in the end, save a bundle
compared to buying one.