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Estimating part pricing

Page history last edited by Brogan Miller 1 year, 2 months ago

Hey all!

 

I used to have but have (at some point lost) a "cheat sheet" on how to think of various part costs for consumer electronics. Something along the lines of:

  • Plastic part: $1-3 depending on complexity
  • Sheetmetal part: $1
  • Screws: $0.10 each
  • Magnets: $0.25 each
  • Diecuts: $0.15 each
  • etc....

Does anyone have or use something like this? Any tips on where to find this kind of information? And yes, I understand that this is extremely variable depending on way too many factors, but as a gut check this is a useful exercise for me.

 

Please let me know, and thank you!

 

Best,

Tom Cohlmia

 

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Hey Tom,

 

As far as I know, there is not an easy answer to your question. However, a year or so ago I created a financial projection for the next iteration of a product we were working on. My methodology:

 

1. I took all my mechanical quotes throughout my career and categorized each part into a two variable designation eg metal small, plastic large, fastener large, etc. For electrical, I went a bit more granular eg caps, motors, fabs, etc

2. I then measured the $ drop in price for each subsequent larger volume, mapped that to a % drop from the previous volume, and then averaged the % drop per subsequent volume step for each category.

3. I then assumed that I could take this data and create a stepped linear regression. Turns out that practically every category displayed a negative logarithmic relationship with regards to volume vs % drop... I think the regression is called that.

4. Then you just pop in whatever initial price you have for a given volume and voila, a SWAGy ass projection pops out!

 

Below is an example of 3 parts/quotes for "metal medium" graphed out:

image.png

 

Below are my volume vs % drop estimates (based off of qty5, if I recall correctly):

image.png

 

Notes:

-Categorizing them by complexity was not logical because "complexity" for every supplier is different.

-The spreadsheet is not up to date with current supply chain conditions. I'm out of the loop at the moment.

-I also created the ability to estimate the landed cost of the entire product. This included conversion, freights/tariff, value add, fixtures, inflation adjustments, etc. This one was SWAGier, but I stand by it in a ±20% range.

-I left the company, and a very experienced consultant was brought in to take over this task. He gave my projections the thumbs up. So some external validation. That being said, I'm not a supply chain dude so I am eager to be humbled by the list.

 

I can't send the spreadsheet over but, as always, I'm more than happy to jump on a call! To be honest, this is a beefy boy of a spreadsheet, so I would have to do some relearning.

 

 

Thanks,

Brogan

 

---

 

That's a cool strategy, Brogan! 

 

I have two suggestions for part costing. But I suppose if you're actively negotiating or just estimating for review. These are more negotiation tactics: 

 

1. Bottom Up Costing

I will start by creating an independent part cost estimate. I have an excel sheet that allows me to input:

(1) raw material costs 

(2) part weight 

(3) estimated equipment costs $/hr (consider machine tonnage)

(4) labor costs $/hr 

(5) cycle time 

(6) # of cavities 

(7) any post processing operations 

(8) material yield loss

(9) overhead % (factory lights, administrative, etc) 

(10) profit % 

 

If you are doing injection molding, you will need to consider things like runner weight, degating, etc. If it is metal stamping, you will need to consider sheet utilization, deburring, etc. So different fabrication processes require specific critical thinking on how their costs are affected and what additional assumptions are needed. You may need to start with estimations and then tweak your numbers until things look closer to reality. Oftentimes you can simply ask your vendor to provide information to replace your assumptions. Providing a sheet for suppliers to fill out to obtain details along with the quote shows you mean business.

 

2. Part and Tooling Catalog 

The second thing I do is catalog costs for every tool and part I have kicked off (along with details like part material, part weight, tool material, MOQ, factory location, production date, factory name, contact etc). It's become a great quick gut check reference for myself. Rereading Brogan's reply, this is similar. Although, he takes it to another level. 

 

Hope this info is useful. I've found it's pretty difficult to find online information about part and tooling costs. If anyone has any leads for that, I would love to know, as well. 

Cheers,

Andrew Deagon

 

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I have a quick method to check if an estimate is in the ballpark. It's more of a check or a strategy to come up with a goal before you get quotes.

Find something on the market that is similar in materials and complexity. Get it's weight. Find the $/lb ratio.

Similar products have the same price/weight ratio.

For instance, a low cost car is under $10/lb (Honda Fit 17120/2568=$6.66)

A luxury SUV (Cad Escalade $80k/5635=$14.2) is roughly twice the cost/weight of a low cost car.

 

I used this to estimate a gearbox I developed. It weighed 6lbs and I wanted to have it manufactured under $35.

A low cost drill press ($110/20=$5.5)

a drill press vise ($29/6.5=$4.46)

In the end the $35/unit was achievable ($5.80/lb)

 

You can also get an idea of what factor to apply to the raw material cost and use that ratio to make an estimate.

I wonder if anyone ever used this method. I hope it's useful.

 

Miguel Praca

MAPS'95

 

---

 

I worked with our supply chain team regularly on a similar model to what you have below. It’s was a good tool and helped us as we could assign cost down responsibilities across the team as a function of what they had control over. 

 

Physical aspects such as part weight or secondary operation costs (as a function of operation counts or machine time) went to the designers. Negotiated costs such as base rate for tool time, overhead or margin went with the supply chain team. We also examined personnel efficiency - with CNC operations for example we might negotiate few operators to oversee more machines (1 to 4 for example) if the operations requires little or no intervention between tool changes. 

 

Biggest win was landing brushless motors for the Astro robot well below initial quoted costs. Our history with “should cost” gave us the confidence to commit early and the team pulled it off!

 

John Johnston 

 

 

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