Low price has always been the number one goal for a buyer. Quality has been a fear factor behind failure of a so called lowest price. The service level, such as response speed to an urgent demand or change, is usually ignored at the time of negotiation. While a decision maker understands that his/her business success depends on the optimization of these three factors, many decision makers fail to achieve the right optimization of the complex decision making process of choosing the right partner. An accurate price manufacturing quote should be sustainable for your type of industry and business model that can position your product as the leader of your competitive area, when an operating situation changes with time.

It is standard practice to get a quote for your custom manufacturing project before jumping in and getting started, but getting one that is accurate requires more than just asking a company how much they charge. Accuracy is only obtained when that company has enough details to factor everything, such as quality and service, into the cost. Since a lot of parameters are not clear or based on failed projection, accurate price quoting becomes a very challenging issue as it requires an accurate or well-defined supply chain status, which is not available at the time of quoting. Thus a quote based on assumptions is made, which can lead to future negotiation troubles when a situation changes with time.

Receiving general questions from prospective clients about how much their project will cost is common in the contract manufacturing industry, but it is a difficult one to answer at an early stage without getting into the details of service. The answer to the question will likely be “it depends”. Let’s say a new client wants to make a custom bicycle helmet, for example. Even if there are already several bicycle helmets on the store shelf, the cost to manufacture each of those may vary greatly, which means the cost of those helmets may not relate to what that of the new client’s helmet will be at all. Why?

Different bill of materials, quality specifications, variations in design, MOQs (set-up fee and non-recurring engineering fee), volumes (amortization), supply chains, leads times, and more all factor into the cost of a product and therefore a quote. Just by looking at a similar bike helmet on the shelf (which has its own unique matrix of volume, service and supply chain model), it is hard to determine what some of these factors were when the product was made. A product can generally be made as cheap or as expensive as wanted. But it all depends on how the numerous variables that make up the project are laid out and what expectations need to be met.

What Can Affect a Quote

A request for quote (RFQ) process typically goes deeper than just price per item. The more specifications, the more accurate it can be and the more comparable across suppliers. There are many factors to consider that can make a difference in a quote. Of course many are very direct such as materials, quality levels, required processes and equipment, and labor costs, for example. But when you start to think outside these types of parameters, an accurate quote become much more complex.

A supply chain consists of a whole network of elements that are organized in such a way to complete a project and deliver it to the customer. Supply chains may be set up differently depending on needs and one change may lead to another. For example, a change in location may in turn increase logistics costs. One supplier may have lower MOQ’s, but the tradeoff may be higher operational costs. It all very much depends on specific needs, and in order to go forth with a project, it must be worth it for all parties.

Providing Project Details

In order to get the most accurate quote during the request for quote (RFQ) process, first make note of as many details as possible. Being ready to share the necessary details is the best way to get a close estimate of what your actual costs will be. Details and materials to provide include:

• Design Drawings– Provide any 3D drawings, 2D drawings, and sketches. A completed design is critical for an accurate quote. Often a manufacturing company can help with design completion and DFM revisions to make the product manufacturable in larger scales. However, the further along a design is when approaching your manufacturer, the smoother the RFQ process will go. The more call outs and specifications provided on the design, the better.
• Samples– It is helpful for a manufacturer to have any existing samples or prototypes in hand to review. Prototypes are a cost-effective way to ensure your parts and products are perfect before they’re produced in volume. If you do not already have one, your contract manufacturer can help determine whether it would be recommended to have one created before a full production run.
• Volume- How many units of your product are you looking to build initially? Bring to the conversation a few different volumes that you would like the quote based on. Typically higher volumes will produce a lower per unit cost due to NRE costs.
• Timeline- If you have expectations for producing your product faster than standard timelines, this would be important to share. Within reason, there may be room for flexibility in lead times, but this may affect multiple segments of the supply chain and could increase costs. It is safe to say that longer lead times can usually amount to a lower cost.

Be prepared for a phone call meeting to go over all of the details. This level of specificity greatly reduces guesswork and helps ensure the quote given hits the mark. Once details are provided, your contract manufacturing team can go forth with mapping out the project, including determining what type of equipment will need to be used and what type of processes need to be done to suit your needs.

By thinking about these points, you’ll help deliver a pricing estimate that reflects your job’s specific needs and ensures your expectations are met after the job is done.