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NRE & Tooling Costs

Non-Recurring Engineering (NRE) and tooling costs with proration over initial order quantities.

High-quality manufacturing often starts with some upfront work. Whether it's building a custom die or running a few test samples, these "Non-Recurring Engineering" (NRE) costs are part of the process.

We usually break these down into: - Tooling - Jigs, fixtures, or molds needed for your part. - Prototyping - Making samples to prove out the design (Crucial for our Maturity Lifecycle). - Engineering - One-time setup, programming, or documentation effort.

You can quote these as separate line items or "spread" them across the first batch of parts.

Cost Categories

1. Tooling Costs

Type Description Typical Cost Range Ownership
Jigs & Fixtures Workholding devices ₹5,000 - ₹50,000 Seller
Cutting Tools Special tooling ₹2,000 - ₹20,000 Seller
Dies & Molds Forming tools ₹50,000 - ₹5,00,000 Negotiable
Gauges Inspection equipment ₹10,000 - ₹1,00,000 Seller

2. Prototyping & Samples

This is where we move from a "theoretical" cost to a "validated" one.

Activity What it involves
Sample Run Running a small batch on the actual machines.
Validation Checking if the actual cycle times match our estimates.
Design Fixes Nudging the process if the first samples aren't perfect.
### 3. Engineering Costs
Activity Description
CAM Programming CNC program development
Process Planning Routing optimization
Documentation Work instructions
PPAP/APQP Quality documentation

Proration Logic

Formula

\text{NRE per Unit} = \frac{\text{Total NRE Cost}}{\text{Proration Quantity}}

Proration Options

Method Description Best For
Full MOQ Spread over minimum order Standard quotes
First Order Spread over first order only Repeat customers
Amortized Spread over projected annual volume Long-term contracts
Separate Line Quote as distinct line item High NRE costs

Configuration Schema

nre_costs:
  tooling:
    - name: "CNC Fixture"
      cost: 25000.00
      quantity: 1
      ownership: "seller"
      depreciation_units: 10000  # Tool life in pieces
    - name: "Inspection Gauge"
      cost: 15000.00
      quantity: 1
      ownership: "seller"

  prototyping:
    samples: 5
    cost_per_sample: 2500.00
    testing_cost: 5000.00

  engineering:
    cam_programming_hours: 8
    hourly_rate: 800.00
    documentation_cost: 3000.00

  proration:
    method: "moq"  # moq, first_order, amortized, separate
    quantity: 1000  # Spread over this many units

Calculation Example

Scenario: New Part Development

Category Item Cost
Tooling CNC Fixture ₹25,000
Tooling Inspection Gauge ₹15,000
Prototyping 5 samples @ ₹2,500 ₹12,500
Prototyping Testing ₹5,000
Engineering 8 hrs CAM @ ₹800 ₹6,400
Engineering Documentation ₹3,000
Total NRE ₹66,900

Proration Over MOQ of 1,000 units

NRE per Unit = ₹66,900 / 1,000 = ₹66.90/piece

Quote Impact by Quantity

Order Qty NRE per Unit Manufacturing Cost Total per Unit
500 ₹133.80 ₹450.00 ₹583.80
1,000 ₹66.90 ₹450.00 ₹516.90
2,000 ₹33.45 ₹450.00 ₹483.45
5,000 ₹13.38 ₹450.00 ₹463.38

Quote Display

Integrated View

Cost Breakdown (1,000 pcs @ ₹516.90)
├─ Material Cost: ₹190.00
├─ Operations Cost: ₹180.00
├─ Outside Processes: ₹50.00
├─ Overheads: ₹30.00
├─ NRE (Prorated): ₹66.90
│  ├─ Tooling: ₹40,000 ÷ 1000 = ₹40.00
│  ├─ Prototyping: ₹17,500 ÷ 1000 = ₹17.50
│  └─ Engineering: ₹9,400 ÷ 1000 = ₹9.40
└─ Total: ₹516.90

Separate Line Item View

Quotation #Q-2026-0042

LINE ITEMS:
1. Part A Manufacturing (1,000 pcs)     ₹4,50,000
2. One-time Tooling & Development       ₹   66,900
   └─ (Applicable to first order only)
                                    ─────────────
   TOTAL                                ₹5,16,900

Tooling Ownership

Scenario Ownership Quote Approach
Standard Seller retains Include in piece price
Customer-Funded Customer owns Quote separately, store for customer
Shared Split ownership Partial proration

Customer-Owned Tooling

tooling_ownership:
  items:
    - name: "Progressive Die"
      owner: "customer"
      location: "seller_premises"
      maintenance: "seller"
      cost: 250000.00
      quote_as: "separate_line"

Use Cases

UC-403A: New Part with NRE

Step Action Result
1 Enter NRE costs in dedicated section Costs captured
2 Select proration method "Spread over MOQ"
3 Enter MOQ quantity 1,000 units
4 System calculates NRE per unit ₹66.90 displayed
5 Review total cost with NRE Breakdown shown
6 Generate quote NRE visible in cost buildup

UC-403B: Repeat Order (No NRE)

Step Action Result
1 Copy existing quote NRE section copied
2 System flags: "NRE already recovered" Warning shown
3 User removes NRE from new quote NRE = ₹0
4 New quote reflects only marginal cost Lower price for repeat