NRE and tooling costs – What you need to know for your PCB project
NRE stands for Non-Recurring Engineering, and it refers to the investment required for a new product project. The entire cost, right from the product’s stage of just being a mere idea to when it starts getting produced on a large scale. This amount is spent as a one-off cost for the development of the new launch.
NRE costs comprise all the expenses during the pre-production and the amount spent on requirements such as molding tools, die casting tooling, fixtures and jigs, and all the other test rigs that shall help in maintaining the quality of the product while mass-producing it. This is a very crucial stage for any new launches as the pre-production has a lot to decide about the impact the product shall have on the market.
The cost factored into taking the conceptual idea of a crop to its stage of being produced and distributed on a large scale is comparatively huge as it includes all the expenses right from the worker’s wages before earning turn-offs from the project. The product shall not pay off until it is brought to the market, and for that, an investment is to be factored on all the prerequisites of it. If the launch is successful, the sales generated from it shall recover the NRE cost-efficiently.
How to reduce the NRE costs:
To reduce the NRE costs is one of the most difficult tasks for an organization during the pre-production stage. No compromise should be made in the quality of the raw materials, tools, methods used as it has a lot to do with the efficiency of the final product. However, to make things possible for the budget investors, a few strategies can be applied to lessen the NRE and tooling costs. If the pockets of the investors support high-end products, then opting for them will make nothing but profit in the long run.
There are a few ways through which it has become possible to reduce the NRE costs. So, You have to work on certain points then only you can see a minimization in the NRE costs.
Below are some parameters having the greatest effect on NRE charge:
- Always ordering from a single company: The very first parameter is very beneficial in reducing the NRE costs. Before placing any orders, you should search about companies that give discounts on NRE charges if you always order from their company. In the starting orders, you have to pay the basic NRE costs, but after a few orders, they will give you an instant discount on your NRE charges for sure. This will be possible because your name will get filled in their genuine client list to who they provide discounts in NRE charges. Moreover, trust is built between the client and the consumer; hence, the chances of deception decrease from both ends. The time wasted in always finding new places of purchase will also get saved. However, if you find a better deal with some other companies, then opting for that might be beneficial at times.
- Increase in the number of ordered quantities: The second parameter on which you have to work is to increase the ordered quantity. This is the best way to reduce NRE costs. You should never order for a single project at any time because you will bag a separate NRE charge for a particular order. You have to wait till the time you get two projects from different sides. Then you have to order for both the projects only once by requesting them to add PCBs of both sides. So that, in the end, you can save the panelization of one of the projects.
- Working on the number of layers and physical dimensions: The last parameter is about the numbers. When you create a testbed for a greater number of layers or a bigger physical dimension, you should know that it will increase your NRE charge. So, to reduce the NRE charge, you have to work on designing the smaller physical dimensions and even should reduce the number of layers so that will help you to reduce the NRE charge too.
If you use these three parameters while ordering your projects, you can make a huge reduction in NRE cost. And you can even use the saved amount in different fields where you are interested in investing and making great rewards in those fields too.
Parameters having the most impact on NRE costs:
For an electronic module, the parameters that have the greatest effect on the NRE costs which are the scope of technology, physical dimensions, size of the production panel, number of layers exclusively for a given PCB project, etc.
These are supposedly the most prominent factors or parameters that play a very important role in the NRE costs.
Things you should know about PCB NRE:
When we talk about the PCB industry, we should first understand the NRE charges and non-recurring engineering tooling costs. In the PCB industry, the NRE cost which we have to pay is divided into two different kinds of categories. We have to pay for the non-recurring engineering tooling cost and also for the programming. But these costs are not based on the main regular cost of the NRE.
Let us understand the non-recurring engineering tooling cost: The non-recurring engineering tooling cost is the cost that differs from customer to customer. Secondly, the NRE tooling gets added up along with the regular NRE cost of the customers. The non-recurring engineering tooling cost includes tools that are beneficial for orders of the customers. Their tooling includes tools like metals, press-fits, artworks, stencils, jigs, and some more tools.
The tools which are used in NRE tooling are very selective. And the expenses required for the tools are non-recurring. They are mainly used to design the products ordered by the customers. And once the design of the projects is completed, the customers are allowed to take their orders.
Why choose absolute PCB for NRE tooling:
As we see above, in the PCB industry, the NRE cost is divided into NRE tooling. But in the absolute PCB, the NRE tooling helps you to provide a greater number of tools if we compare it with the normal PCB. And when you choose an absolute PCB, you get the option of paying your NRE cost in two different ways. The breakout and amortization are the two ways that are provided to you when you choose absolute PCB.
The Break out way of paying means you have to pay the entire NRE cost before paying the cost of your order. The NRE cost of the breakout type also includes the NRE tooling cost and also the programming cost, which are used to provide a design in your orders, whereas if you pay in an amortized way, then you don’t have to pay the NRE cost before the unit cost. In this type, you have to add the NRE cost, which includes NRE tooling cost and programming cost, along with the unit cost. Most of the customers use the breakout way to pay their final cost as it is not much complicated if we compare it with the amortized way.
The work of NRE as essential for the launch of a good product is held accountable for the success and failure of the product. The cost invested should be generated by sales along with a profitable amount added to it. The quality of machinery used during the pre-production will make the product stand out in the market. If the impression falls otherwise, there will be no end to losses. Hence, the investment should be made open-heartedly on good products and prerequisites. The hiring of skillful employees, making enriched strategies, using fine tools, etc., will pay off in the future.
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