Cost Which Effect Product Pricing
- Raw Material Cost
Every metal components made through ferrous and non ferrous metal alloys like Stainless Steel, Carbon Steel, Brass, Copper, Aluminum etc. Each metal grades has have it’s different composition categories according to use of product scope, like in Brass composition there are many categories lead free brass, low leaded brass, free cutting brass etc. It’s better to select proper material category to be more competitive and application use as in Brass or Steel or aluminum only if you don’t have application use or categories idea you can’t select cheapest or competitive raw material.
- Production Method
In Metal components Production there are many production methods to produce custom components according to specification or drawing, in general practices are Machining, Sheet Stamping, Forging, Casting but in these there are also classes like in machining you can adapt CNC machining which are costlier compare to Cam operated Automatic machines, there is also production techniques like Bar Machining, Single Piece Machining, Proof Machining, Forge machining, Cast machining and many more ways, these all categories are uses to produce custom metal components, you have to check your product tolerance requirements, volume of production and method of production first to get competitive pricing.
- Quality Cost
In general production rejection ratio consider 2%-3%, other than these production rejection all kind of rejection cost to product cost even you can reduce these production rejection ratio as well with some Standard SOP’s, Floor work instruction, Patrol inspection but of course in production there are few barriers for mass production like Setting rejection, tool wear, machine accident, human error, inspection criteria etc. Proper documented and monitored system to be there with periodic training according to part requirement.
- Non Valuable Cost
There are some hidden cost which effected product production pricing but not considered in product cost ultimately it’s overall cost and need to controlled like movement of material, waiting period for next operation, approval period, floor transit time, product Inspection, excess production, inventory, lack of product knowledge quality etc. You can’t eliminate these type of non valuable activities but can control and monitored throughout the process with value stream mapping or VSM.
- Packaging Cost
There are some worries over transition of parts not damaged by weather or in transit due to handling, to avoid same they do over packaging or without knowledge bad packaging which ultimately increase product cost or reject part due to improper packing.
- Lead Time Cost
This is main factor of any product costing if it’s not on time or given schedule frame it’s like butter fly effect, with one week or one month delay cost customer time frame of product launching or sequences of production, so it’s necessary to be on time always with proper production planning.
- Transit Cost
Few customer don’t have idea about transit costing as they order regular in use part every month through Air shipment only while you can plan additional 3 month with forecasting and shipment through ocean or sea this way you can save 70%-80% on transit cost which is in figure when you consider mass order.