Pricing a Six Month Delay against an Early Commitment
Pricing a six month delay against early commitment balances unabsorbed overhead drag against bridge production costs and liquidated damage penalties.
Custom Tooling
Meaning
Unique manufacturing equipment enables the production of specific components that cannot be made with general purpose machines. Designing custom tooling involves creating molds and dies or fixtures tailored to the exact geometry of a single part. It represents a significant upfront cost that must be amortized over the life of the product line.
High precision machining ensures that these items maintain their shape over thousands of compression or injection cycles.
Asset Deployment
Preparing for high volume runs requires early investment in hard items that resist wear during metal or plastic forming. Because custom tooling is product specific, it loses its functional value as soon as the design version updates or the model reaches end of life status. Durable materials like hardened steel extend the usage time before rework becomes necessary.
Production Timing
Fabrication times for these items often sit on the critical path of the entire development schedule. Delays in custom tooling completion prevent the validation of the assembly process and stall the entry into the mass market.
Economic Boundary
Using standardized jigs works for prototypes but becomes inefficient when the hourly rate of the factory is the primary driver of cost. High initial prices for custom tooling are justified only when the volume of parts produced lowers the cost per unit below the threshold of manual labor alternatives.