Maximizing ROI depends upon understanding prototype and production costs

Prototype Cost vs. Production Cost: What You Should Know

One of the most important KPIs used by PCB industry executives to evaluate the success of a product is ROI, or return on investment. However, this metric is only useful when it is correctly applied, which necessitates a thorough cost breakdown analysis. For new product introduction (NPI) especially, a cost breakdown analysis should include balancing prototype cost vs production cost. And that begins with understanding the most significant cost factors for each.

What Are the Most Influential Prototype Cost Factors?

The path from concept to installed PCBA is complex and consists of both sequential and cyclic stages. Invariably, for custom new production introduction, this path includes development and production. The former, often referred to as prototype development or simply prototyping, typically requires iteration.

Prototype iteration consists of three stages: design⇒build⇒test (or DBT). Optimal PCBA development for semi to highly complex boards can best be defined as the following:

Definition:

Optimal PCBA development results from successive iterations of design, board manufacturing, and testing through which the initial design evolves into a quality level prototype that meets all performance and operational objectives such that production can proceed with an acceptable yield rate.

Another significant factor when optimizing prototyping is effectively balancing cost and time with value. Essentially, this means opting for decisions or selections where the time and/or cost expenditure increases the value of the product and foregoing those that do not. For prototyping, the following factors significantly affect cost.

Prototyping Cost Factors

    CFPrototype = Cost (design) + Cost (build) + Cost (test)            (1)

  • Cost (design) consists primarily of the person-hours that your engineers and designers dedicate to the initial and recurring design improvements for prototype iterations.
  • Cost (build) are the costs for your board build, which includes materials, components, and your CM’s processes.
  • Cost (test) can range from basic functionality testing to more extensive and expensive structural regimens, including HALT and HASS, typically for aerospace and defense projects.

Subtasks for each of the cost factors listed above can also affect that factor’s overall cost. However, the best way to optimize the prototyping stage is to maximize the speed for each iteration and minimize the number of iterations required. Similarly, low and/or high-volume production is definable in terms of its major cost factors or drivers.

How to Best Control Production Cost

Volume PCBA production differs from prototyping. In fact, the elimination of redesign and further testing allows us to rewrite Eq. (1) for production into the following:

    CFProduction = Cost (build)                            (2)

As Eq. (2) clearly illustrates, all cost factors for volume production stem from the overall cost of manufacturing, which includes materials and component acquisition, operational process costs, and post-production shipping costs. Therefore, cost minimization at the best possible yield rate drives production. And NPI optimization requires achieving the best balance between prototype cost vs production cost.

Balancing Prototype Cost vs Production Cost

As shown in Eqs. (1) and (2), build or manufacturing costs are primary determinants for both prototyping and production. However, there are important differences between the two that typically result in much higher manufacturing costs for prototyping, including the following:

Understanding PCBA Complexity: Designing for Trouble Free Manufacturing

Watch Now

Build Cost Factors for Prototyping and Production

  • The cost for equipment setup per board built is much higher for prototyping.
  • Many component manufacturers and distributors have minimum purchase requirements that far exceed the number needed for prototyping.
  • Pick and place machines are critical for achieving the speed and quality that automated PCB assembly delivers. However, these machines usually require a minimum amount of tape that can result in significant overages of the components needed for your prototype boards.
  • Due to the scale of units needed, component overages are not an issue for high-volume production.

These disparities are good reasons why production is often sourced from overseas, while prototyping is done onshore. With this variation in mind, we can write NPI cost optimization as:

    Cost (NPI) = CFPrototype + CFProduction                         (3)

Eq. (3) shows that the most effective cost management occurs at minimal prototype and production cost. Now, substituting for the right side from Eqs. (1 and 2) gives us Eq. (4).

    Cost (NPI) = Cost (design) + 2 x Cost (build) + Cost (test)        (4)

This equation assumes your CM handles development and production. It’s obvious here that effectively managing or optimizing PCBA manufacturing will greatly affect your overall costs. Doing so optimizes both prototyping and production costs; however, it requires that you follow these best practices.

Best Practices for Prototype Cost vs Production Cost Management

  • Design for Sourceability
    As stipulated above, component sourcing factors such as purchase minimums can significantly increase prototype cost vs production cost on a cost-per-board basis. More important is getting components when you need them which requires avoiding common electronic component supply chain problems that are exacerbated during global shortages or other unforeseen events.
  • Design for simplicity
    Overcomplicating your design can result in additional turnaround times and costs. Opt for the lowest performance classification that meets your board’s application. Don’t choose materials and/or components when lower-cost alternatives are available, and let your CM set board specs that are not design-critical.
  • Design to maximize prototype iteration speed
    A best practice for aiding your CM is acquiring and following DFM and DFA rules and guidelines.
  • Minimize the number of prototype iterations required
    Another advantage of fast prototype iterations is minimized design cost, which can significantly impact your overall development and NPI costs.
  • Minimize wasted space on panels
    Panelization, or laying out your boards to use the maximum amount of panel space, avoids unnecessary waste which can become significant during high-volume production.

 

Tempo's Custom PCB Manufacturing Service
  • Performs entire turnkey process in as fast as 3 days.
  • Accurate quote in less than a day.
  • Emphasizes DFM to eliminate time consuming back and forth design corrections.
  • Sources components from the most reputable suppliers in the industry to reduce procurement time.
  • Performs multiple automated inspections during PCB assembly to ensure PCB quality for prototyping.
  • Provides support throughout the PCB manufacturing process beginning with design.
  • Smooth transition from prototyping to production.
  • ISO-9001, IPC-600 and IPC-610 commitment to quality certifications.

Following the aforementioned list of best practices and working with your CM will aid you in cost-effective board building. At Tempo Automation, we build high-quality boards faster than anyone in the industry. This is due to our employment of software-based equipment and digital thread manufacturing process.

And to help you get started on the best path, we furnish information for your DFM checks and enable you to easily view and download DRC files. If you’re an Altium Designer or Cadence Allegro user, you can simply add these files to your PCB design software. For Mentor Pads or other design packages, we furnish DRC information in other CAD formats and Excel.

If you are ready to have your design manufactured, try our quote tool to upload your CAD and BOM files. If you want more information on CAD files or how to incorporate your design into a CAD format, contact us.

The latest PCB news delivered to your inbox.

Search Sign In