“We Won't Pay for Tooling!”


At least once a week when we’re discussing a manufacturing engineering program, a new client tells us “we won’t pay for tooling or dies.” This utterance is rooted in three circumstances:

  • An inexperienced junior buyer is trying to look commanding by swaggering in front of her colleagues.
  • An inventor or entrepreneur doesn’t know what “tooling” represents in the manufacturing world. They think it’s something optional like the collision damage waiver that car rental companies try to force on you.
  • Someone got ripped off by a vendor that treated tooling (or NRE – non reoccurring engineering charges) as a profit center.

We’re forced to provide a tooling primer on the spot. It goes something like this:

  • You really want to pay for dies, fixtures, injection molds and tooling as a separate line item. When you do, you know exactly what it costs and can leverage the tooling price as well as the finished part price. When the tooling is priced “neat” you can comparison shop multiple vendors more easily.
  • You get what you pay for… Bad tools make bad parts. Vendors that hide the cost of the tooling have little incentive to procure first class dies.
  • IMGBS (It Makes Good Business Sense) I. Neither the buyer or the seller really knows exactly where the project will go during its life cycle. The supplier needs to be protected while they design the jigs, fixtures, CNC programs and tooling during the ramp up to volume production. They’ll never recover their sunk costs when selling proof of concept and pre-production samples. It’s a logical and respectful way to do business.
  • IMGBS II. You want to own the tooling – actually hold a written title to the molds. Should you have a disagreement with the supplier, change your sourcing strategy, need to retire the design, etc., it’s important for you to be able to recover the tools cleanly and quickly. Holding title lets you do this when and where you want.
  • When you own the tooling, it’s much easier to enter into a rational discussion about the number of “shots” or parts that can be formed before the tool must be refurbished or replaced. This tactic places you firmly into the production and QA mix, where you want to be.
  • If you insist on “free tooling” beware that you’re still paying for it… It’s in there, buried where you’ll never find it and it will usually cost more than tools that you pay for.


    Jack Daniels

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