Pricing of a mechanical component

Talking about the standard components like bolts, nuts etc, which are produced in mass, it is well known that the greater the quantity produced, the lesser will be the cost per piece.

now the cost of production per piece may be like:

(raw material cost + tooling cost + machining cost + labour )/the number of components produced

is this right ? Posted in: #Mechanical

zaveri

Talking about the standard components like bolts, nuts etc, which are produced in mass, it is well known that the greater the quantity produced, the lesser will be the cost per piece.

now the cost of production per piece may be like:

(raw material cost + tooling cost + machining cost + labour )/the number of components produced

is this right ?

I think you forget "profit" in the numerator.

Kedar Malwadkar

I think you forget "profit" in the numerator.

whatever it is , just elaborate it.

zaveri

whatever it is , just elaborate it.

I am agree with you, but just need to add profit ( it should be very small amount for bolts and nuts.)

That makes the equation
(raw material cost + tooling cost + machining cost + labour+profit )/the number of components produced

what about transportation cost?

white_hat

what about transportation cost?

Oh yes i knew i was forgetting something.

but then transportation cost , i think appears to be like : fuel cost + driver's wage + vehicle maintainance.

There is a brand cost as well. Standard companies will charge a premium (higher profit than others).

bioramani

There is a brand cost as well. Standard companies will charge a premium (higher profit than others).

but nowadays most companies who purchase standard components do not care about the brand.

Dude you keep forgetting things...! Now what about designing and testing,that is going to cost a fair amount of money.

zaveri

but nowadays most companies who purchase standard components do not care about the brand.

Manufacturing entities with ISO kind of certifications do.

white_hat

Dude you keep forgetting things...! Now what about designing and testing,that is going to cost a fair amount of money.

Standard components do not require designing.