How to Cost a Board

How to Cost a Board
My boss has asked me to provide a cost matrix so we can quickly quote labor machine time component for the SMT board assembly. The Assembly Brothers, Phil Zarrow and Jim Hall, share their suggestions and experience with creating a cost matrix.
Board Talk
Board Talk is presented by Phil Zarrow and Jim Hall of ITM Consulting.
Process Troubleshooting, Failure Analysis, Process Audits, Process Set-up
CEM Selection/Qualification, SMT Training/Seminars, Legal Disputes
Phil Zarrow
Phil Zarrow
With over 35 years experience in PCB assembly, Phil is one of the leading experts in SMT process failure analysis. He has vast experience in SMT equipment, materials and processes.
Jim Hall
Jim Hall
A Lean Six-Sigma Master Blackbelt, Jim has a wealth of knowledge in soldering, thermal technology, equipment and process basics. He is a pioneer in the science of reflow.


And welcome to Board Talk with Jim Hall and Phil Zarrow, the Assembly Brothers, who also are consultants with ITM Consulting. Yes, we can come to your facility and work with you on your specific problems. But today we have problems that have been sent in.

Jim, today this is from S.S. He writes, we operate a small EMS company. My boss has asked me to provide a cost matrix so we can quickly quote labor machine time component for the SMT board assembly. We have multiple pick and place systems but someone suggested we focus on stencil printing as the key metric. What do you suggest? Well Jim, what do you think?

We have a second question also that I think is very similar. We are a contract manufacturer. A customer wants to pay .16 cents per component on a new assembly. Is there a benchmark price per component for assembly services? I think these two are directly related.

How do we cost a board relative beyond labor and overhead, the cost to manufacture a board in our facility? The standards that I have heard about and used are cost per component. You count the number of components on a board, you multiply it by this number, add it to the materials and then do a profit on top of that. Doing it from a specific process, such as stencil printing, I really don’t know how you would do that. Count the number of apertures.

That is a good point. I never thought of that, Phil. The second metric, that I am familiar with, was developed by Motorola back when they were building their own cell phones. They did it on a cost per lead basis. So, a chip capacitor would have two leads. A BGA might have 250 leads. Maybe that is what S.S. is talking about, stencil printing. Count the apertures on your stencil. That would correspond to the number of leads.

Unless, he has backed off and he is basing this on cycle time, when he suggested the pick and place machine versus the printer. The thing is, Jim makes a great point, there are so many mitigating factors. I know back when I worked for GSS Array Technologies one of the factors was whether we were doing a no-clean process or a cleaning process.

I can tell you, this was quite a few years ago, but the cleaning process was anywhere from fifty cents to five dollars a board depending on the size of the board, the volume you are doing and everything else. These factors come into it. I do know there is some excellent software out there that is marketed for exactly that, for contract assemblers for quoting jobs.

I am not sure what basis they use, like you said based on the drive from the old Motorola pin count. I have a hunch there is a lot of things blended into this. I have heard there is some excellent quoting software out there that does some of these algorithms.

In any case though, you want to put in your actual numbers that it costs you to operate your facility. O.C. here talks about a benchmark number. You do not want to use a benchmark number because if your real costs are great than that benchmark number, you are going to lose money on every board.

Whatever metric you are going to settle on you have to establish the real cost in your facility and then divide it up by some metric per component, per lead. Those are the two that I know.

Some even get into the labor rates, where you are regionally, things along those lines.

Right, so they would be included in your total cost of operations.

We hope that points S.S. and O.C. in the right direction there. Whatever direction you’re headed, please don’t solder like my brother.

And don’t solder like my brother.

And thank you for listening to Board Talk.


The question submitter writes, "A customer wants to pay .16 cents per component on a new assembly." I would want to pay $0.0016/part, too. Where do I sign up? I will presume the decimal point should not be there. A decade ago while at a large printer company, our CM was charging 4 or 5 cents per placement, BUT $2k to set up the line. The division I was either running 2k boards/build or 50-100 depending on the product. Placement costs were great, but the $2k/build was a killer on a 50-100 board build.
Norman Berger, D&K Engineering
I used both a “per placement” cost + a semi “per process” cost + profit method.

Per placement costs where broken down to a few types where chip capacitors and resistors where at the low end because they were straight forward and rarely needed rework. Fine pitched QFPs at the other because they required tighter inspection and occasional rework. I did not do BGAs, wasn’t setup to do so.

Per process costs were just that. Single or double sided screening, PNP or T/H (both for populating boards and soldering technology), inspection complexity, cleaning processes required, any special rework modifications or coatings/markings, and finally packaging.

Profit was pretty straight forward, a given amount above the costs + operating costs.

Most importantly to note was there is a minimum cost to run a board through the assembly process. If I were to take a blank board and run it through the screen printer, the PNP, T/H, hand assembly, reflow, wave, cleaning, inspection, and finally bagging, there is a given amount of machine time and manual labor to do so and was my starting point when figuring out my cost to charge a customer. The difference in the size of this blank board had somewhat of an effect on this benchmark cost but not much. Small boards could always be panelized so that this benchmark cost could be amortized over the panel size + de-paneling costs. : )
Mark Bruno, Sentrec Electronics
Entering your project into CircuitHub is a quick way to get the cost of your circuit board assembly. It breaks down the cost of the PCB, components, and assembly. It also lets you easily create a qty/lead-time matrix.
John Novotny, Hardware Software Inc.
21 of my 30 years in Electronics Mfg has been with CMs that have used very similar methods for PCBA quoting. Without divulging proprietary processes of my current employer, here is the fundamental process:
  1. Determine standard cycle times by typical BOM items for PCBA processes (part placement in SMT, wavesoldering times per part, handsoldering times per lead, etc)
  2. Determine how the PCBA will be processed on your floor and break out parts on the BOMs by process.
  3. Calculate installation times for parts against cycle time standards
  4. Add any non-standard process times or buffer values
  5. Add in "modifier" times such as efficiencies, lot sizes, complexity, etc
  6. Determine labor rates for each process area or use a blended rate against the entire floor.
  7. Take the total hours per unit and multiply against the labor rate
  8. Add Material Costs, SG&A, Mark Up, etc to get to the assembly price.

Steps 1-7 are managed with a very detailed spreadsheet that I created 14 years ago and we update labor rates and cycle time standards/variables/formulas annually.
Andrew Williams, CSMTPE, PRIDE Industries

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