Stop Overpaying by 30%: Should-Cost Analysis That Saves $100K+ Annually
Warning: Most engineers unknowingly overpay 15-30% on injection molding costs due to poor should-cost analysis.
If you’re not using our exact benchmarking methodology, you could be wasting $100K+ annually on supplier overpricing.
Should-cost analysis establishes fair pricing benchmarks for injection molding purchases. I’ve used this framework to identify massive overpricing in supplier quotes and negotiate better terms that save clients six figures annually.
Should-cost analysis builds pricing estimates from cost fundamentals rather than relying on supplier quotes.
The approach forces understanding of actual cost drivers and identifies opportunities for cost reduction through design or specification changes.
Should-Cost Methodology Step 1: Define Requirements Document part specifications including material, volume, quality requirements, and delivery terms.
Clear requirements enable accurate cost estimation. Step 2: Estimate Material Cost Calculate theoretical material requirement and research material pricing. Step 3: Estimate Production Cost Calculate cycle time and determine appropriate machine rate.
Estimate labor and overhead allocation. Step 4: Estimate Tooling Cost Based on part complexity, estimate tooling design, fabrication, and tryout costs. Step 5: Add Margin Add appropriate margin for profit, risk, and overhead.
Industry margins range from 15-40% depending on complexity and risk.
Cost Model Components Component Estimation Method Typical Range Material Weight × price × (1 + scrap %)40-60% of production cost Machine time Cycle time × machine rate20-35% of production cost Labor Hours × rate × (1 + burden)10-20% of production cost Overhead% of labor or machine cost10-20% of production cost Tooling amortized Total NRE / volume$0.01-0.50/part Profit margin% of total cost15-40%
Benchmarking Data Sources Industry Benchmarks Published industry data provides average cost benchmarks.
Use as reference points but adjust for specific circumstances. Supplier Quotes Multiple supplier quotes provide market pricing data.
Use quotes to validate should-cost estimates and identify outliers. Historical Data Previous purchases of similar parts provide historical pricing.
Adjust for volume, complexity, and timing differences. Public Data Material prices, machine rates, and labor costs are publicly available.
Build models from fundamental data. ---
Take Immediate Action: Stop Your Next $100K Overpayment Don’t wait for your next supplier quote to lock you into another 30% overpayment. Use our should-cost analysis checklist immediately on your current projects.
Your Critical Next Step: Apply our 8-point should-cost validation checklist to your next 3 supplier quotes.
You’ll likely uncover significant overpricing before it becomes expensive reality.
Should-cost analysis builds pricing estimates from cost fundamentals rather than relying on supplier quotes.
The approach forces understanding of actual cost drivers and identifies opportunities for cost reduction through design or specification changes. Start your should-cost analysis today—before your next negotiation costs you $100K+ in unnecessary expenses.