If you are not just fabricating materials off the shelf and are going to use certain manufacturing processes to make your product, it will most probably involve tooling. Tooling requires a one-time fee that varies from product to product. It involves unique molding, stamping materials, or creating customized tools, fixtures, or mechanical device used to manipulate the materials of your product as it is being made in the factory– it takes many different shapes and forms, depending on materials used, or set manufacturing processes of each factory. With more than two decades of experience as product designers who have launched over 250+ products in mass market retail, we have dealt with a diverse product range from different niches, as well as a great variety of factories from all over the world with different manufacturing processes. We will guide you through the ins and outs of tooling for your product: which products don’t, and do require tooling, types of tooling for specific materials, estimated tooling price ranges, and a lot more.
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We’re going to take a deep dive into tooling when it comes to a product you’re going to manufacture or purchase and you need tools for it. I’m going to call this the Ins and Outs of Product Tooling. Anytime you’re going to purchase a product being manufactured in any factory, it doesn’t matter if it’s in the US or wherever else around the world that the factory may be located, if you’re going to use certain manufacturing processes that are not just fabricating off the shelf material, if you’re going to be molding material, stamping material, somehow manipulating material that requires a custom mold, it’s commonly referred to as a tool. Any fixture or mechanical device that is going to be used to manipulate material and manufacture your custom part, it’s commonly referred to as tooling.
Tooling takes many different forms depending on the material and the manufacturing process. If you’ve already done business in Asia especially, they may refer to it in different ways, a mold fee. Sometimes it could be a dye or a plate if it’s printing. Basically, we’re talking about any one-time expense or charge that you’re going to get when you go to manufacture product. Anytime you’re going to need to make something special in terms of the manufacturing equipment involved in order to make your special or custom parts is referred to generically as a tool or tooling in general. Tooling takes many different forms and it depends on material and manufacturing process. Before I get into all the different kinds of tools that you might be required to make to create your product, I want to talk about things that don’t require tooling to compare that so you understand it.
Let’s say you’re going to be making a piece of furniture, let’s say it’s a table. You’re going to be importing a bedside table or maybe an end table for a living room, a series of tables. These tables are made of primarily wood material. A lot of the times when you make a product like that where the product is manufactured by taking a stock material, a certain species of wood and cutting it, you’re going to cut out of larger logs or pieces of precut wood. You’re going to be cutting out smaller pieces. You’re going to be cutting different shapes out of it and you’re going to be assembling parts together in a factory and maybe putting a stain and a finish on it, producing final product. A lot of times that will not require any special tools. The only exception to that might be if you had a certain edge shape to the edge of the table that the factory has never made before and they have to make a special knife for their machines to cut. Think of it like a drill bit but it’s not just drilling holes, but they have a different cutting a blade that they will need in order to cut the shape on the edge of that table that you want. If you’re going to make a custom shape blade, that’d be considered a tool and you might have a onetime tooling charge to create that blade in the shape that you want so they can make your part the way you want it.
Furniture is one of those kinds of products that’s been made for thousands of years in one way or another in the beginning with just hand tools. Then in the last 120 years with machine tools, electric tools coming in to be in manufacturing, there’s even more that it’s done a lot more, but you still need special cutting shapes and things. If you’re making a piece of furniture or furniture accessory, you might not need any tooling. That’s also similar if you were manufacturing any goods out of textiles. If you’re just buying off the shelf fabrics and cutting them and making clothing out of them or making blankets or beach towels or something, as long as the fabric pattern or print is available and all you’re doing is cutting and sewing, that’s fabrication of material and wouldn’t require any tooling.
You might require some tooling if you’re going to print a unique pattern on the fabric. You might need a silk screen to be made, which might be considered a tooling and they might charge you a fee to create that, if it’s custom to you or they might not. They’re not very expensive to make. It’s the same thing with weaving. If you’re going to do woven fabrics, generally all the machines that weave fabrics and custom patterns, you generally don’t have a lot of special fixtures or tooling needed to do that. They might create a computer program that’s going to weave a fabric in the right pattern, but generally you wouldn’t have any tooling charges. There are certain things you may manufacture that don’t require any special tools, but let’s talk about some of the ones where you would. I’m going to start breaking this down by materials and then get into some different applications for some of those materials and talk about the different kinds of tooling that you might have and some of the terms you might hear if you’re going to manufacturer or request quotations for things to be manufactured for you.
Let’s start with plastics. Plastics are probably the most obvious and common material that may require you to create some custom molds or tools of some kind to make your product. Then the most common process that you would hear about tooling being involved with plastics is injection molding. Injection molding machines are huge machine. They can be small also but more commonly are huge machines, the size of cars or minivans or even a small bus if it’s a big enough one. You end up making a mold and putting it into this machine so it squirts molten plastic, heated liquid plastic in at a certain pressure very quickly into your mold, fills all the negative spaces in there, and then it cools. Then they opened the mold and remove your good part and to create that mold.
It can be very expensive depending on the size of the part. They make injection molds for parts as small as less than a size of a penny in your hand and probably even smaller than that, all the way up to huge parts. You could mold an entire huge bumper for a car and not that any of you are going to be manufacturing cars, but another example, parts of furniture that are plastic and molded. Let’s say you’re making a cooler, you’re going to sell at the beach or maybe you’re going to make some other plastic set of little glasses like for Martinis and a pitcher that would be for poolside use or beach use. You’d mold those out of plastic and you’d have to create an actual mold.
Here’s the thing about molds. If you have very small parts, typically when you make a mold, you would not just mold one at a time. You would make what they call a multi-cavity mold and a cavity being a negative space. You would make a dozen or two dozen or even four dozen of a small part at one time. Other molds would be so big. Something that’s as big as a base for a chair. That type of tool, you would just make one at a time because it’s a huge mold and it wouldn’t be practical to make more than one at a time.
Tooling costs can be deceptive. You might think, “I want a mold to make one, that mold shouldn’t be very expensive. Maybe it should be a couple of hundred dollars.” The cost of running parts of such a small size on injection molding machine, setting it up and all that, and the amount they charge per hour of time for running the parts. It’s not financially viable to mold one part at a time. You have a multi cavity tool to make it practical and efficient to mold a dozen or two dozen parts at a time. Then the tool becomes more expensive to make. We see tooling prices in China being anywhere from on the low end, maybe $1,000 or $2,000 and on the high end, $10,000 to $15,000. Those would be pretty expensive mold even by China standards. In the United States, you would four to six times that cost for a comparable mold made in the US, mostly just because of US labor rates being entirely different than in Asia.
Injection molds are a wonderful thing because you can engineer design a part to be exactly what you need or want it to be functionally or statically to be your unique look. That’s going to be something that’s going to be very hard for a competitor to go directly head to head against you on Amazon or on the shelf at retail. Injection molds is one type of tool and very expensive but also can be very worth it and very efficient. Its onetime cost can help bring your cost of manufacturing each part or each product down significantly if you tool for it and mold it as opposed to making that part another way.
Another plastic mold tooling would be a vacuum form. A vacuum form is where I would think of it as a one-sided mold. An injection mold, think of it like a clamshell. You’re going to bring two pieces together and have a negative space. You’re going to mold something inside it and pull it apart to bring out the part. A vacuum form is one sided. Think of it as a mold, but it’s a positive form of what you want to make. It’s on a table that’s all heated up and has little holes in it to suck air down. They’re going to put a piece of plastic, stretch it over, heated up above with the heating element, bring it down, press it down over that form that vacuum form tool and then like an air hockey table in reverse. That has all those holes in it and it blows air up. It’s going to suck air down through the mold and pull that plastic sheet done at the top of it and mold you a piece of plastic part that way.
There are some actual end products using vacuum forming to be made, but it’s most commonly used in the packaging industry. If you notice anything that you would buy at retail especially hanging at the checkout at target or staples or even the grocery store. A lot of times a product will have a cardboard backer and then on the front of that it will have a plastic with the color blister pack. It’s very thin, clear plastic. That’s molded with the vacuum form process. They create that positive form that’s going to be of a size big enough that the product would fit inside the packaging and then when they actually package the product, they usually have the vacuum form down, put the product in it, and then put the cardboard card on it.
It’s glued to the plastic and then all of us have to use scissors or rip the thing apart to get the packaging to get the part we need. A vacuum form tool would be used to make that product and even in that case, that tool would probably have dozens of that positive form to make one in one big sheet. Whatever the sheet size of the raw plastic is, they’re going to form over it because you want to be very efficient and get the best yield of that plastic material. Have very little waste. You’re going to make a form that has multiples and multiples. They’ll form it and then they’ll cut it apart in the individual size pieces they need and assemble them into packaging. That vacuum form tooling can also be thousands of dollars depending on what you’re doing, whether it’s overseas or domestic. In order to get your product or your packaging to be exactly what you want it, that’s what it takes to do it.
Let’s talk about plastic extrusions. I’m giving you an example of some things that are made of extruded. Most common thing, plastic drinking straws are made of plastic extrusions. You would see a lot of moldings. You might notice if you’re in your Home Depot or Lowe’s, they make a lot of plastic extrusions that are used for like doors, weather stripping and things like that. We have a product we designed for a client that is a game for kids that has a lot of parts that are made with extrusions. Think of extrusions as you’re going to have a tool that’s called a die. An extrusion machine will melt plastic. There are also some that do metal. You have a plastic that is melted, it’s liquid. Then they have a screw system that pushes, creates pressure and pushes the plastic straight through a dye linearly in a straight line. Whatever shape you create, it’s going to come out that way.
If you’ve ever been in a Home Depot or Lowe’s, in the plumbing department and you see PVC pipe, that’s plastic piper, abs pipe, the black version of material they have. Their PVCs is usually white, although they have some gray and other colors too. They make those pipes through extruding them, pushing that plastic through a die that looks like a donut. It’s liquid enough that it’ll get pushed to the die, but they get the temperature just right. When it comes out of the die, then it still keeps its form as it’s cooling and it doesn’t change shape. I mentioned straws and I mentioned pipe. It doesn’t just have to be round shapes. It can be any shape you want. The interesting thing is you can make any shape you want as long as whatever it is, is a linear shape.
There are other things you can do with extrusions and a secondary operation, to cut holes in them or machine parts out of them if you want. Extrusion is a good process if the forms of geometries you create will meet your needs. One good thing of extrusions is that the dyes are not very expensive to make. You can pay a couple hundred dollars to several hundred dollars, maybe $1,000 a most for a plastic extrusion dye. They’re pretty limited in terms of how expensive they will be, because they are less complicated really is what it comes down to.
Another plastic molding process that I mentioned is a great process if you’ve got a product that the properties of the process will meet your needs is rotational molding. The way that works is you have a clam shell mold, two molds come together, but it’s a different process. The mold’s made of aluminum. Most other plastic molds would be made of steel of one kind or another. These molds are made of aluminum because aluminum has very great conductive properties. For heat to be evenly heated across the whole tool and to heat up quickly, you’d make it out of aluminum. The way rotational molds work is you don’t heat up plastic so that it’s liquid and then push it into a mold. In this case, you take the mold and part it to halves and you put powdered plastic in each side or in one side. They do testing to figure out how much is the exact right amount to put in.[Tweet “Injection molds are a wonderful thing because you can engineer design a part to be exactly what you need or want.”]
They put it in, they close up the mold, and the mold go into a frame that’s like a gyroscope and it gets turned constantly in all three axes up in the air in a big room that is an oven. Usually when you’re manufacturing a lot of parts this way, you’d have eight or twelve molds that you’ve made that you’ve put plastic in and they’re spinning around almost like an amusement park ride really is what they’re doing. If you ever go on one called the spider or something like that at the amusement park, it’s similar to that. They’re spinning around in this oven of a room that he transfers to the aluminum and then as it rotates, that powdered plastic ends up sticking to the heated sidewalls of the mold. However, much plastic you put in there dictates how thick the wall thicknesses and you make a molded part.
This is one way that a lot of products that you know and probably have in your home and use all the time are made. Typical plastic garbage cans are made this way. There are some that may be injection molded, but most of them by and large are made through rotational molding. It’s neat because they are for garbage can, they mold the bottom of the garbage can and the lid, all in one mold. They take it out of the mold and they just cut. They design it so they cut the lid off of the canned part and then they cut it in such a way that the lid fits on the can. It’s very efficient because you have very little waste in that process. You’re putting the amount of plastic into each mold that you need.
Other products that are made that way are the outsides of a lot of coolers that you might buy to take the beach or camping, things like that. Rotational molding is a neat process. The tools themselves are not as expensive. They use less metal. Injection molds have like all sorts of what they call gates and spruce and air vent holes and things in order to work properly, rotational don’t need that so that’s much simpler. The downside is in order to manufacture them efficiently, you have to make multiple tools like I was telling you about the amusement park ride and having a bunch of these on there at one time. Rotational mold tooling, even in the United States, can be only $2,000 or $3,000 for each mold. Maybe complex ones would be up to four or five and that can be, especially in the US, much cheaper than injection molding.
In China, it would reduce those costs by a factor of probably four plus a less expensive. You’ve got to make multiples of them to be manufacturing efficiently and get a good piece part costs for high volume throughput. Pros and cons? I would choose what type of plastic manufacturing process I want to use and what tooling I would need based on the properties of the product to get the best product out of it. Then that’s going to dictate the process you would use or the processes that are available to choose from and then how much your tooling would be.
Let’s move on to metal. There are a lot of different metal manufacturing processes that also required tools. Some of them are similar to the plastics, but some are different. First one, let’s take stamping. Metal stamping is going to be anything you want to make that can be made out of a piece of sheet metal, whether it’s steel or aluminum or brass, copper. Any metal material that’s made into a sheet can be formed into a part. Stamping will do a combination of forming parts from a 2D flat sheet into a three-dimensional part. It also will allow you to cut holes at the same time in them, even form other things like a fold over the edge of the sheet material so it’s not sharp, fold or bend into it to make it stronger. The most common parts that are made using a stamping that you would see in the world are your car body parts like fenders, the hood of your car that you lift up to look at the engine, the trunk lid. All those metal parts are stamped and formed through a process like that.
The stamping dyes for forming metal depends on the size of the part really and exactly what’s being done. They can be anywhere from very inexpensive to quite expensive, from hundreds of dollars to many thousands of dollars. It just depends on the size of your part. The product you want to make would dictate the type of material you need to use and the process you would choose. Let’s see, metal castings. There are lots of things that are made of cast metal. When you cast metal, you’re heating it up to a liquid form and pouring it into a mold that can survive that heat and you just keep pouring it due to gravity into there, usually. Although there are some metal parts that are die cast where it’s almost like an injection mold at that point, where you have a made of a metal that will be able to take much higher temperatures than the metal you’re going to heat up and mold into it.
Then it’s almost like injecting the liquid metal into the mold and forming a part. A lot of toys, like little toy cars and things that used to be made, a lot of those parts still are made of die cast metal, to make like the frame of a matchbox car or something, then you’d snap on other plastic parts to make the whole car. Even other things like remote control cars and things sometimes have them in there. Castings can be made from aluminum, pewter, or brass. A lot of brass castings are made especially for decorative gift, where items can be made of cast aluminum or cast brass and then functional parts. If you go through like your Lowe’s or Home Depot and you look at all the cabinet hardware that’s there for the handles that you can buy. You have a lot of die cast metal parts there and some of it is brass, some of it is zinc, lots different metals, so molds for those things to make castings.
It’s tooling and various costs. We talked about prototypes and samples in a previous Office Hour. You can certainly make prototypes and samples of things like this for a one-off sense to approve the design and even sometimes the function of a part. To go and make large volume production, you’ve got a tool for it. You’ve got to make some molds or casting, fixtures to be able to really produce them cheaply in high volume. One type of tooling that probably everybody who already imported a product or had a product manufactured for them or is considering doing it, you’ll all run across this. When it comes to packaging, you are probably going to have to create some what I would still call tooling fixtures in order to make your product in enough volume and be able to make the unit price lower.
Because almost every packaging is going to need to be printed in some form. That’s the most common thing, especially retail packaging on the shelf in stores. It can be a little different on Amazon. You can get away with a brown box and minimal printing if any. At retail, it’s an unassisted sale environment and people are walking down the aisle, looking at the product on the shelves and pretty much the packaging does the sales job for you. Very often you need a full color printed lithograph type of printing and you have to do color separations because they print usually CMYK, cyan, magenta, yellow and black. You have to make printing plates to create those prints and there’s some cost to them. It can be in the US, anywhere from $500 to maybe $1,000 or more. In China, probably a little less than that, but not as dramatically less as you might hope. Everybody needs to do some tooling for packaging.
We talked about blister packs earlier with plastics. There may be other kinds of packaging tooling you need to do. Tooling is really the fact of life in the world of product development and product purchasing in the product industry. If you’re going to make a consumer product, you’re probably going to have to, at some point, create a tool to manufacture a part or to make the right packaging that meets your needs. There are a lot of choices you can make with different materials. The number of cavities that you make, you can start small with fewer cavities, then maybe pay a little bit more per part getting off of those tools. As you can afford it, as you have higher volume needs, you can create a new tool that has more cavities and usually that will cut down your part cost and eventually your product cost quite a bit.
I have a few questions that were sent in regarding this and I want to address a couple of those. I’m glad this question was asked because this is one of the most common questions we get, especially people that are new to tooling or they need to have to order tooling. “Can I get a factory to absorb the tooling cost or the tooling fees?” It’s a good question to ask, but it’s also a tricky question to answer so bear with me here. You certainly can a lot of time get a factory to not charge you upfront for the tooling. Typically, the way it would work is when you place a purchase order, the first thing you have to pay for is any tooling, because before they can manufacture your custom part, they got to make the mold.
Usually, you pay 50% down on the mold and then 50% to complete the purchase of the mold when they give you the first part to review of it, before they go to manufacturing. One way or another, you’re definitely going to pay for that entire tool prior to manufacturing. Unless you negotiate something else and the factory absorbs that cost, essentially, they pay for the tooling. Here’s where it gets tricky. Even if they say, “We’re paying for the tooling.” You’re paying for the tooling. They may not charge you that upfront amount for it, but they have increased your product costs or your part cost by a significant amount. Usually, not pennies but dollars, so that they’re having you pay for the tool just over time. You’re not paying it all upfront.
Maybe you’re going to order a thousand pieces at a time. The tooling costs is maybe $5,000. They figure you’re going to order at least 5,000 parts at some point and maybe the increase your part cost by $1 for each one. That might seem like that’s a good deal for you because you don’t have to cough up the $5,000 and that’s just an example. It could be $10,000 or $15,000 or $20,000, whatever it is. I’ve have some products we have developed for people who have had $75,000 worth of tools, multiple tools that they had to be made to make the product. You may think, “That’s great, I don’t have to pay that tool up front,” but if you’re going to order more than 5,000 parts from this factory ever in the history from part 5,001 and beyond, you lose because you’ve agreed to this price and they’re making a bigger profit going down the road.
You want to be very careful with that. That process is referred to as amortizing the tooling. Some factories may not tell you that’s what they’re doing and they just don’t charge you any tooling, but the part cost is higher. I would always ask, “If I pay for the tooling upfront, then what is my part cost?” You get real transparency into the cost of tools versus the actual cost of manufacturing. I would try to resist having the cost of manufactured jacked up for you permanently because you’re negotiating in a deal where you don’t have to pay for a tool upfront. Just be aware of that. Whatever the costs are, believe me, no factory US or foreign factory is going to give you a deal that’s in your best interest, if the they’re not making you pay for tooling.
They’re bearing the cost of that tooling in the part cost or the product cost that they’re charging you for. Even if you do work out an arrangement where, get the quote for the part cost, separate from tooling and say, “I understand the tooling costs and the part cost,” you might be able to negotiate, can you increase the cost of the part for the first 5,000 units, 10,000 units, whatever it takes by a certain amount to pay for the tooling. Once the tooling is covered, reduced the cost to the normal cost. Sometimes you can work things out like that. It’s not very common but it has happened. That’s called amortizing the tooling over. Amortizing is also more of a financial term and sometimes that’s used by the bookkeepers on the back end when you’ve paid for tooling.
It’s an investment over time and amortizing it has also to do with how you financially account for it. I’m not talking about from that perspective. You definitely can spread the cost out of the tooling over a certain run of products if you want to. Those are harder deals to negotiate. They’re usually easier to negotiate when you’ve built a good long-term relationship with a factory and you have some sales history and they believe you’re going to be around for a while. You’ve had some success with them and they want to keep doing business with you. The other reality that I see you can negotiate is that, and this is another very important in and out of tooling. Tools don’t last forever. Tools have a life to them.
An injection mold might be good for 100,000 cycles. If you have a four-cavity tool, that would mean you’d get 400,000 parts out of the life of the tool. That’s a huge, great run for any tool. Other tools might live for 30,000 pieces or 50,000 pieces. Make sure when you are ordering tooling and you’re being quoted tooling to ask them how many parts the expected life of this tool is going to be. “How many parts can I get off it?” Then you can see what your total investment is and your cost of that tooling per part if you make that many parts of the long run. I’ve also seen deals struck and this is more common where when you work with a new factory and you’re buying a product, having a custom product made and you pay for tooling, you can negotiate that, the first tool you’re going to pay for. You ask the vendor the purchaser’s going to have this part made for you.
The factory for the future, when the tool wears out, they would buy any replacement tooling needed. I’ve seen deals like that worked out and that can work in your favor or it also cannot. You might want to make sure you were very specific about when will the new tool will be made after how many pieces, because they may try to use that tool far beyond its realistic life expectancy and the quality of that tool will not be as good toward the end of the tool’s life as they were in the beginning. Make sure you set up rules and expectations.
I had another question here of someone asking, “When I order samples, sometimes the factory wants to charge me a mold fee or some a special fee regarding tooling. Is that common? Does that make sense?” That does happen from time to time. I’ve had it happen where I was getting a sample of a product for our own business, not even for a client, getting a sample of a product from China with a custom stamped embossed logo. They had no way that they could really sample it. I had to pay what they told me was something like $300 mold fee, which would be tooling to be able to make it. The factory went and had that tool made even to produce a sample for me before I had committed to buying any large quantity and because it costs them money to do that in order to make you the right sample for you to approve and check out the quality, the fit, the finish, the whole thing.
Sometimes you have to bite the bullet and pay for a tool. This was a very light stamping die was stamping a thin aluminum sheet which is fairly flexible. It’s not very harsh on tools. $300 as a mold fee for this stamping die was pretty reasonable and we paid it. It can happen. We should all expect, especially when we’re new doing business with certain vendors, certain factory, especially overseas, that we can’t expect a factory to spend a lot of money on our behalf other than labor, like making samples and things generally. Sometimes you get samples made for free if all it is labor and some material, or they might charge you a nominal sample fee that’s pretty reasonable, but the tooling, I just think it’s unrealistic for us to expect a factory to absorb that cost when you have no commitment to buy anything from them in the future.[Tweet “Tools don’t last forever. Tools have a life to them.”]
It’s a bit of give and take meeting in the middle. Often factories are not charging what they’re real cost of making a sample is they’re just trying to recoup some of their costs and have you meet them in the middle. Sometimes it’s like, “You think you’ve got something here? We liked the idea, we’ll work it out and make you a sample, charge you a nominal fee that at least cover some of our costs,” so that you each have a little bit of skin in the game. It seems pretty reasonable to me. Anyway, that probably just spread you out with the fire hose for tooling and probably told many of you a lot more than you ever needed to know or wanted to know. I also want to make sure I’m giving you some good and comprehensive information regarding all the different kinds of tooling that are out there and where you might encounter some of that.
This Office Hours that we do on a regular basis are a forum where you can ask any questions you want to. If you have some questions for a vendor and you’re wondering if you think they’re being reasonable or you’re worried that you’re being taken advantage of, come in to these Office Hours and raise that question. People have participated live and are invited to ask questions. I don’t happen to have anybody live. I had a couple of questions that were emailed in that I addressed. You can do that as well if you can’t participate live, but as a member come participate in as many Office Hours as you can because you’ll get a lot of valuable information that is well-worth what you’re paying for it to be a member every month and you can help get some of those questions answered for you right here live and I’d be happy to do that. I’ll be back next time with another great Office Hour and figure out what that topic is. If you have a particular topic you’d like to hear, please write it and let us know and we’ll make sure we address that topic as soon as we can. Until next time, this has been Tom, your expert on Product Launch Hazzards. Thanks a lot. See you next time.