Product Cost Calculation

Product cost calculation is a prerequisite for cost optimization in development and purchasing throughout the entire product lifecycle.

In electronic assemblies, material cost is the key cost driver (mainly electronic components). Their share of total cost is extremely high in comparison with other technologies.

Therefore, a robust cost assessment for electronic components is essential in electronics cost analysis.

For electronic component cost it is critical to know actual market prices. The mere calculation of semiconductors is only the second choice approach.

We have developed a comprehensive database and innovative tools which enable us to make robust evaluations of electronic components.

What are typical project phases?

Assumption Definition

The assumptions and premises for cost analysis are defined. These are mainly product volumes and manufacturing site, but also value chain structures and exchange rates can be defined in this step.

Bill of Material Processing

Hierarchical structures for better overview are defined and characteristics relevant for manufacturing calculation, such as placement side, highspeed / pick&place placement, are assigned to components.

Material Cost Evaluation

Here the methodology differs between electronic and mechanical components. For electronic components, costing is market-driven and is done mainly by using reference pricing. Commodity components will be costed assuming synergies, i.e. higher volumes. Mechanical parts will be calculated bottom-up with the activity-based costing method. For overheads and scrap, industry and technology-specific rates will be applied.

Production Cost Calculation

For the production cost calculation, a product-specific manufacturing process is assumed. For each production step we define the cycle time, labour and machine costs. Manufacturing overheads are assigned making use of industry and technology-specific rates. The same applies for overhead and profit rates in order to determine the base price of the product.