Product Tooling: Possible To Avoid Paying for it in Full?



Getting product tooling for molded plastic parts and enclosures designed and fabricated is a large investment for most companies, often running into the tens or even hundreds of thousands of dollars.

Once you are coming to the close of the new product development stage of your project, you need to make the decision on getting product tooling made.

We are sometimes asked if there are any ways to reduce these high costs, such as not paying in full for it, and there are some approaches you might choose to take. Let’s explore them here…

 

4 approaches to avoid or reduce product tooling costs

With a focus on plastic parts, here are a few of my observations. You can skip directly to section 4 if you are looking for financing options.

 1. Produce custom vs. choose off-the-shelf parts?

The main question is, should you be creating custom parts for your product in the first place, or choosing ready-made off-the-shelf components instead?

  • Consider picking off-the-shelf parts, if they are suitable for your objectives and when it comes to the enclosure also if aesthetics are not important, as then you bypass the need to fabricate product tooling for custom parts in the first place.
  • If you do need to create custom-designed parts that require injection molding for your product, first, make extra sure the product design is OK and can be frozen (and that often involves an independent DFM review and some reliability testing) so no costly changes to tooling would be needed after it is made.

 

2. Start with soft tooling and progress to hard tooling once the products are confirmed to be fine.

Given its relatively affordable cost, you might want to start with soft steel tooling and then go for hard steel tooling after the initial molds are worn out. It allows you to go for a radical redesign if version 1 of the product runs into a lot of issues, too.
Soft tooling often used for rapid tooling prototyping is made from soft steel or aluminum. It is less costly than its more durable hard steel cousin, which provides more shots and is appropriate for large manufacturing runs. (Note: in China, aluminum tooling is not common and seldom makes sense price-wise.)
You can still expect good results from soft tooling in terms of product quality, but it will not last too long.  This will help you control costs initially while you gain a foothold in the market and your production runs hopefully increase.
But in most cases, our clients saw the price & speed difference, and the (big) difference in the number of shots, and went straight for hard tooling.
 

 

3. Optimize your tooling design

In some cases, there are also ways to optimize the tooling design, for example with “family molds” that can be used to create more than one part out of just 1 mold. 

In other cases, a soft plastic such as TPE or TPU can be replaced by silicone, and molds are much cheaper in that case.

Having said all that, you might also decide that investing in more expensive tooling is the best way to keep the total production cost & timelines down. The same part can be injected into several cavities at the same time. Or the different cavities can correspond to different shapes, as can be seen in this example.

family molded plastic parts

(Image credit: rex plastics)

 

4. Find innovative ways to finance product tooling for custom-designed parts

The big financial question is, if you go for custom-designed parts, how to finance the injection mold tooling you require? Here are some tips:

  • Some companies raise funding, pay for tooling fabrication, get the supplier to sign an enforceable tooling ownership agreement, and if it’s a large amount there is usually some form of process validation to check the completed tooling (not just making a few parts that are acceptable aesthetically and dimensionally).
  • Other companies negotiate with the supplier so the supplier bears a part of the risk.
    It can be balanced against a higher per-piece production cost – in that case you may have to negotiate hard for a very clear plan for the end of that “amortization of tooling cost”, and you have to accept that the supplier will not let you go away with their tooling if you are not happy with their performance. Their lack of performance might be in quality or on-time delivery, or it may even be in cost estimates (sometimes they re-estimate their costs and raise their price, and that’s a common risk in particular if they are a bit surprised by your quality standard), and after 1 or 2 orders you may badly want to switch to another supplier…
  • In some cases, the tooling clearly remains the supplier’s property and the buyer “rents” it through a higher unit cost. The buyer needs to be happy to be in the situation of the distributor, rather than the product owner. This is not a good option for buyers who have developed their own products and components and need to own all of the IP. And, similar to the point above, it is hard to re-negotiate the part unit cost even after you believe the tooling has been paid in full — after all, the supplier may say your high volumes were part of their decision for taking the risk in financing your company, and they were running the risk of very low sales, too.
  • I haven’t come across other arrangements when it comes to tooling. But the issue really is “how to use less capital to get the products to market”, so it’s important also to think of other approaches. For instance, getting better payment terms for production from the supplier, or getting order financing from a big buyer’s bank, or raising advance payments through crowdfunding site(s), etc.

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If you have any questions about tooling for your product, let us know. We’ll try to give you similar advice as this post contains.

We also provide these solutions to assist importers who are fabricating and using product tooling in China:

  • Mold Capability Validation Supervision (in China) – Fabricating your tooling in China? Our engineer goes on-site to oversee the fabricator’s testing so you have peace of mind that the molds reach your standards and can be shipped out safely.
    Typically used for plastic injection molds.
  • Tooling Custody & Management (In China) – Keep your tooling and IP safe by storing it safely in our warehouse between productions.
    Typically used for plastic injection molds.

 

P.S. you might also like to read and listen to the following content about tooling



#Product #Tooling #Avoid #Paying #Full

https://www.sofeast.com/knowledgebase/product-tooling-possible-to-avoid-paying-for-it-in-full/

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