Pricing is a critical step in the mold building process that does not get the attention that it deserves. Shops use several methods, and some are more effective than others. A solid understanding of the proper way to price molds can increase revenue and profits and improve customer relations and forecasting. While no magical solution fits all companies in every market, you need to be aware of the following key considerations:
Pricing Plan
The first step in establishing the proper price for a mold is understanding your business by identifying all of the costs associated with operating the business. This includes costs associated with making the mold or molds that you are pricing and any additional costs associated with the project, such as shipping or sampling. A thorough comprehension of internal processes, capacity and the value statement that you offer are also essential.
Once you establish an accurate picture of the costs incurred and the value that you offer, it is then necessary to look outward. You should use benchmarking and competitive analysis to establish the value that other companies offer and the price that they are charging for that value. Awareness of the needs of your customers, the abilities of your vendors and the overall economic climate are important elements of which to be aware as well.
The most significant point to remember is that all of these things can change. If your current pricing model is from the 1980s, there is a good chance that it is irrelevant and potentially causing harm to your operation. Constant monitoring and re-evaluation are the only ways to ensure that the data that you are using to arrive at the price is accurate.
There are several ways to use this information to price a mold project. Regardless of which pricing approach you use, the proper price should cover the costs necessary to complete the project, reflect the value that you are offering to your customer and allow for a profit. Opportunity cost must also be a part of the equation. If you win the project that you are pricing, evaluate how that affects your shop’s capacity and its ability to win other projects or complete other molds.
Common Pricing Pitfalls
Other errors that companies make when pricing include chasing sunk or irrelevant costs, setting prices solely based on experience, setting prices solely based on competition and improperly using discounts. It is important to ensure that the revenue that you generate from building molds is sufficient to cover all of the costs associated with running the business. However, rigid pricing models that force the inclusion of factors like unused capacity run the risk of creating profitable job loss. This model could lead to more unused capacity, which forces higher prices and eventually causes a death spiral in the demand for your molds.
Pricing based solely on gut feelings, hunches or “because this is the way we have always done it” is another recipe for errors. Experience is a plus when it comes to formulating how much to charge. However, you should not base prices on statements like “this should take two months.” Instead, you should use data to review historical times for similar projects and processes. This provides support for, or potentially tests, the theory of the hunch and facilitates greater confidence in the price.
The prices that other mold builders are charging is a very important consideration. Only using industry standards or market pricing without understanding internal costs and value could lead to poor pricing. The comparison must be apples to apples. For example, consider lead time and quality. If these two factors are not the same, then the price must reflect the difference.
Discounting can be a very valuable tool when you use it properly. Offering discounts is a part of marketing, similar to social media or print advertising. It is an expense, which on its own, reduces profit. You must measure the return on investment on the discounts that you offer to win new business. Discounts can also be an important part of negotiations. However, you must match price decreases to service decreases or differences. If a customer needs a specific dollar amount, you must work with them to see what changes to design, volume purchasing, lead time, material or tolerances can be made to save money. Strictly reducing price is rarely the right thing to do, especially if you determined the original price using these other steps.
The final step in pricing is to evaluate the relationship of forecasted costs to actual costs through and after the mold-building process. If actual costs diverged from estimated costs, then research is required to identify the reason and to take corrective action. You can then use the information that you have acquired for future pricing.
Increasing revenue and reducing costs are two ways to improve profit. A robust pricing strategy can help with increasing revenue by growing incremental income per mold or by stimulating the sale of more molds. It is vital not to lose focus on reducing costs wherever possible. Often, raising the price is not the right answer. Eliminating waste and improving the process is. more molds. It is vital not to lose focus on reducing costs wherever possible. Often, raising the price is not the right answer. Eliminating waste and improving the process is.
The way of injection mold price calculation
Mold price=steel cost+design fee+manufacture cost+profit+tax+trial cost+package and transport fee
The proportion
Material cost: steel and standard spare part take 15%-30% mold price
Manufacture and profit: normally 30-50% of mold cost
Design fee:10-15% of mold cost
Trial fee: within 3% for big size mold,5% for small mold
Package and transport: real cost or 3% mold price
VAT: 5%-17% of mold price
Estimating injection molding costs requires understanding the diverse factors comprising the total expenditures. Simplifying part geometries, standardizing tooling, and optimizing processes offer significant savings over a program lifespan. Collaboration between product developers and molders, combined with emerging technologies, ensures cost-effective, quality plastic part production.
In order to understand what the injection molding cost of your project may be, you need to understand the process and factors that will affect the price of your project.
Cost of equipment
There is a range of machines used for injection molding. The cheapest option is a small desktop injection molding machine perfect for in-house projects. A small desktop injection molding machine is the most cost-effective choice for producing low volumes of parts.
If your project requires large industrial molding machines that are operated by a service provider and large manufacturers, you’re looking at spending anywhere from $50,000 to $100,000+. Unlike the small desktop injection molding machine, these larger machines require professionals who can operate, maintain, and monitor the machine.
Cost of mold
Material selection is another consideration in determining what plastic injection molds cost. Any plastic product made from fiberglass-filled material, for example, will wear down most common molds. Only a mold made from hardened tool steel can withstand injection molding with fiberglass-filled material.
For most projects, there are three main methods for making molds or tooling.
Computer numerical control (CNC) machine: we primarily focus on hardened tool steel for our CNC mold-making process, but there are a number of materials suitable for CNC machines. Various metals and plastics, foam, glass, and even wood can be used to create products using different machines. Less common materials often require specialized equipment, such as hot wire or plasma cutters. CNC machines are an ideal solution for many different production jobs. From simple to unique, one-off products that require a high degree of precision and detail, CNC machines are a great fit as the process allows for accuracy down to a fraction of a millimeter.
Electric discharge machine (EDM): EDM machines are better for very complex mold designs. By using a workpiece and a tool electrode, EDM machines can create highly accurate designs. Separating the workpiece and tool electrode is a dielectric fluid that causes recurring current discharges. These discharges are what shape the workpiece electrode to create the mold.
3D printing: 3D printing is the most cost-effective way to produce injection molds quickly. For 3D printed molds, there is much less equipment and professional labor needed. 3D printing can save you a lot of time and money. This method allows for a design to be tested and run a trial on the end-use material before actually investing in tooling for mass production.
Cost of injection molding material
Materials used in injection molding are plastics, specifically thermoplastics. There are hundreds of thermoplastics.