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Estimating Mold Cost

One of the most difcult jobs in the mold making business is to determine as accurately as possible the cost of the mold for the product for which it is to be built. The estimator should be an experienced mold designer who can visualize from the product drawing submitted (and occasionally from a sample) what kind of mold will be most suitable to produce the product economically.

8.1

Need for Estimate

Before estimating, the designer (and the person negotiating with the client for an order) should rst establish if the ``request for quotation,'' that is, to quote a price for such a mold, is serious and how the outlook is for getting the order. This is an important consideration: in the author's experience, many molders are often approached by their customers solely to nd out how much it would cost, approximately, to start a new product line; they need a mold price to determine their own costs before proceeding. In some cases, the customer approaches not only one, but possibly three or more molders for mold prices, and each of these molders may in turn approach three or more mold makers for estimates of the necessary molds. One mold maker may then get the same inquiry from several molders, for the same product. In fact, only one of all these requests for estimates can result in an order. This means that the estimator, faced with all these requests, cannot spend too much time with each one, or the cost of estimating would become excessive. In many cases, the ``boss'' of the mold shop will decide whether it is really necessary to quote at all, or he or she may decide to just give a ballpark gure and skip the formal estimating process altogether. From the author's experience, with such multiple requests, the lowest price is often based on errors in quoting; with clients who habitually select the lowest bidder, the mold maker is bound to lose money. Any smart buyer of molds, before placing an order, should consider rst the background and reputation of

8.3 No Precedents

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the mold maker and his or her expertise in building the particular type of mold requested. Only then should the price be considered. As has been said here repeatedly, only the best-suited mold for the planned production will result in the lowest product cost, which is really what the client needs. This often leads to specialization by the mold maker, which is benecial to both customers and mold makers. Requests for molds that are outside the mold maker's expertise should be declined, unless the mold maker intends to enter this new eld. If the request for quotation is considered serious, the estimator will rstin his or her mindcompare the product with other jobs of similar products and then search for precedents in personal (or the shop's) records, such as old drawings, book illustrations, or electronic les.

8.2

Precedents

If there are close similarities (precedents), the estimating process is relatively simple, because there is a good basis from which to extrapolate what will be required for the new mold. For example, the precedent can be a mold with only a few cavities for a product with a shape similar to the one for which the mold is to be estimated, for the same number or for more or fewer cavities. In this case it is up to the estimator to nd out from records, if possible, how good the mold performed in operation, and if the hours estimated to produce the mold were adequate; in other words, was the customer happy and did the shop make money with this mold? This process is easy if proper records are kept, as was suggested in Chapter 6. The estimator should consult with the people who actually made that mold to nd out if there were any problems during manufacture or testing of the mold, and then adjust for it when pricing the mold. With the absence of good records, unfortunately, this is possible only if there was little turnover in personnel in the shop.

8.3

No Precedents

If molds for a similar product have never been made before or the estimator is not familiar with the type of mold requested, there are, in general, two possibilities to be considered.

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Estimating Mold Cost

(1) The estimator will make sketches using previous experience as a mold designer and show at least one method as to how the product could best be made. These sketches will then be the basis for the estimate. (The problem with this method is that it will take much estimating time, and even so, the estimator cannot devote as much time to it as the mold designer will have after the order for this mold has been booked. It is important that any such preliminary sketches are made available to the mold designer, who then may (or may not) follow them for the nal design. From the estimator's sketches it is then fairly easy to prepare an estimate. The main problem with this method of estimating is that the estimator makes a bad mistake, typically by not seeing, underestimating, or even ignoring any difculties that may arise due to a peculiar product shape. The mold designer will then not use these sketches, but will come up with a proper mold design, which could be more (sometimes much more) expensive to build than was rst estimated. In this case, any responsible mold maker (whose reputation is at stake) will have no choice but to build this mold, even if it will result in a nancial loss. Such losses can then be written off as learning experience or as research and development expenses. (2) A good alternative is to invite the participation of the client to share in advance the cost of designing the new mold before estimating. This is often very useful if the product is completely new and the projected quantities are extremely large, or where the product is considered very complicated to mold. For a certain quoted price, the mold maker will offer to design either concepts of the mold, or a complete mold. This is also often done for a whole system, that is, not only a mold but including any product handling and postmolding operation of the product. After agreeing with the client that the proposed mold and/or the whole system will do what is needed, the mold and related equipment cost can be fairly easily estimated on the basis of this preliminary design, and there is much less risk of too low or too high an estimate. Traditionally, mold makers add an often quite high safety factor when quoting unfamiliar molds, to cover the unexpected. If the mold is fully designed, there is no need for such insurance; this will result in a lower mold and system price, which benets the client. The cost of the design paid in advance is then considered in the nal mold price. If the client decides not to proceed with the project, at least the mold maker will have the sometimes considerable design expenses paid.

8.4

Methods of Estimating

(1) One method is to actually break down each and every mold part into its estimated cost: material, the cost of the various machining steps (milling,

8.5 Mold Cost and Mold Price

95

turning, grinding, EDM, polishing, etc.), the cost of heat treating and other expenditures for nishing in house or by suppliers, the cost of standard hardware, and the costs of assembling and testing the mold. Include also the cost of any xtures or special tools required in the manufacture of the mold parts. While some of the costs are usually quite simple to establish from price lists and records, this method expects that the estimator or assistants have intimate knowledge of the machining operations involved and the operating times required for each step. Since molds consist of many different parts, this is obviously a slow, time-consuming process; however, as long as the estimator really knows the business well it can yield quite accurate estimates. (2) The method used most often is to base an estimate on experience from precedents. If, for example, the mold considered has 8 cavities and there is a suitable precedent of a 4-cavity mold, it is fairly easy to extrapolate, by calculating the cost of the new total number of stacks plus the proportional increase of the cost of the larger mold shoe. Many estimators then add a risk factor, which, depending on the difference from the precedent and the general familiarity with the type of mold, may be anywhere up to 50% (or even more) on top of the estimated cost, depending on the mold maker's practice and policies. It is best if the estimator works from a nished product drawing, with all dimensions, and where all tolerances are shown. There is usually little risk if the same mold has been built before, and much risk if there are many unknowns. This method is good if there are good records of many similar molds made over the years; there is less risk of repeating earlier mistakes. (3) ``Ballparking'' should be used with care. It requires real experience and solid background in mold making. It should also have the proviso that the quoted price is only a rough estimate and must be conrmed at a later date when all data are ready (including tolerances) and after the order is received.

8.5

Mold Cost and Mold Price

The estimator, in essence, prepares only the foreseen cost to be incurred when building the mold. The cost is the basis for quoting the actual price to the customer. There will be a standard markup on top of the estimated cost, in percentage over the cost, or whatever the company's policy is to cover overhead, expenses, risk (with this mold), and prot. Since every mold is different in size, number of cavities, complexity, and so on, it is usually difcult to create a standard price list for molds, except if many identical molds based on standard mold components are built on a regular basis.

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Estimating Mold Cost

There is another management consideration: The plastics mold business is traditionally up and down, seasonally. In times of low sales, molds may be quoted at prices lower than the costs determined by the estimator, solely to get the job, and to keep the shop busy to avoid layoffs. One unfortunate result of this method is that as soon as the shop is lled with such money-losing molds, as the business picks up again, well-paying jobs may have to wait because the shop is busy.