How much will manufacturing cost me?

Manufacturing cost is an important step to consider when you decide to go ahead with your idea, taking the first steps of the invention process. When you decide to order the tooling and proceed into the manufacturing process, you should take adequate time to calculate how much the manufacturing cost will be.

Below, I have provided two examples to show you the best method to calculate the manufacturing cost for your new product.

Example 1

For this example, I will use typical values for a part that is no larger than your hand. The part is made from plastic and has very little detail to it.

Tooling cost should have the design of the tool included in the price $1,000 – $5,000
First batch of 5,000 units if one part costs $1.50 $1.50 x 5,000 = $7,500
Jigs, if required to test each part to ensure passing quality control $500
Painting or other surface coating that is required to complete a batch $0.20 x 5,000 = $1,000
Cost to make the graphics on the packaging $500
Packaging of a batch of 5,000 units $1.00 x 5,000 = $5,000
Total Cost: $19, 500

This is the total cost for the first order of a batch of 5,000 units.

Once you have ordered your first batch, you do not need to pay for the tooling or jigs a second time as you will only pay for the parts and shipping as outlined below.

First batch of 5,000 units if one part costs $1.50 $1.50 x 5,000 = $7,500
Painting or other surface coating that is required to complete a batch $0.20 x 5,000 = $1,000
Packaging of a batch of 5,000 units $1.00 x 5,000 = $5,000
Total Cost: $13,500

This is the total cost for a first order batch of 5,000 units.

Example 2

For this example, I will use typical values for three parts to make an assembly that is screwed together with five screws. This assembly is also no larger than your hand.

Tooling cost should have the design of the tool included in the price x 3 tools $1,000 – $5,000
First batch of 5,000 units if one part costs $1.50 x 3 parts $1.50 x 5,000 = $7,500
Jigs, if required to test each part to ensure passing quality control x 3 $500
Painting or other surface coating that is required to complete a batch x 3 $0.20 x 5,000 = $1,000
Cost to make graphics on the packaging $500
Cost of 5 screws $0.20
Assembly cost $0.90
Packaging of a batch of 5,000 units $1.30 x 5,000 units = $6,500
Total Cost: $21,001.10

This is the total cost for a first order batch of 5,000 units.

Failure to calculate your manufacturing cost will result in unexpected surprises. Do not fall into the trap and be caught with more expensive manufacturing costs than you expected or budgeted. Estimated costs may also fall extremely short; therefore, if a supplier has provided you with estimates be sure to add at least a 10% margin on top of that for the unexpected.

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