The fast, economical and accurate way to calibrate a quantity of dial indicators is to invest in a Dial Indicator Calibrator. These mechanical devices are available in inch or metric models from several manufacturers. They are in effect a micrometer head with a large 3.5" diameter, .00005" accuracy and 0-1" range. The dial indicator is positioned in front of the spindle. The micrometer head is rotated and readings are compared. Ideally, readings should be taken at every numeral printed on the indicator dial, or as your quality manual requires. In practice, a reading taken every half revolution is sufficient. It will be necessary to have this unit regularly calibrated by a calibration lab to maintain traceability.
If you need to calibrate large quantities of analog and/or digital indicators you may want to invest in the electronic i-Checker which is hooked up to a computer system and generates inspection certificates.
Gage blocks are an accurate but time consuming way to check your dial indicators. Fasten the indicator in a stand on a granite plate. Lower the contact point to the surface and set the indicator at zero. Now it's a simple procedure to insert gage blocks under the contact point and take the readings. Be certain that the blocks are clean and wrung to the surface, that the indicator is perpendicular to the surface, and that it's securely fastened. Blocks should be used which will allow a reading at every half revolution or as your calibration manual stipulates. Obviously, the gage blocks will need to have their accuracy certified on a regular basis (annually is the norm).
The indicator is deemed accurate if it does not deviate more than one graduation over the first 2-1/3 revolutions and not more than one additional graduation per revolution thereafter. Most manufacturers offer better accuracy than this, particularly on the short range indicators. Check with the manufacturer for specific details.
Repeatability should be less than half a graduation in all cases. Allow the contact point to come down several times onto the same gage block. Any variation in readings will indicate a problem with repeatability. If this occurs, check once again that your indicator is firmly attached to an indicator stand of some substance. Check that the screws on the indicator back are tightened (if you're holding the indicator by its lug back) and check that the contact point is tight as well. The indicator will need to be serviced if repeatability is unacceptable.
Gage blocks: investing in eight gage blocks (.020" .025" .050" .100" .250" .400" 1.00" and 2.00") will allow you to calibrate all your inch reading dial indicators with ranges up to 2" travel. With these blocks you'll be able to check each indicator at the 2-1/2 revolution mark as well as the full range mark. This will serve as the absolute minimum requirement for indicator calibration. NIST certificates included. Calibration Grade 0.