April 16, 2021

Getting To Grips With Non-Recurring Engineering (NRE) Costs

In This Episode...

Sofeast's CEO is joined by Adrian from the team and they discuss Non-Recurring Engineering (NRE) costs for manufacturers. As the name suggests, these costs are usually one-off and accrue towards the start of a new product development project and are what it takes to get your product into production. These costs are perhaps better known as R&D costs, and it's important to get to grips with them as they have a great impact on your product's sale price, as well as the feasibility of manufacturing it in the first place.

So, let's get to grips with NRE costs in this episode.


Show Notes

00:00 - Introducing the episode

01:15 - What are NRE costs? (A brief summary) - essentially NRE costs are all of the one-time expenses (investment) that you need to pay in order to get your product into production.

08:01 - Some examples of common NRE costs for the different production processes:

  • Plastic injection molding 
  • Metal parts 
  • Electronics 

14:37 - Going through some of the other processes and materials, and their costs - extrusion (plastic or aluminum), compression molding, silicone, etc.

17:11 - Why your NRE costs are probably higher than you're initially anticipating - Renaud shares an example of real Sofeast customers who believed that their NRE costs were fairly modest until they did the research.

19:24 - Do some suppliers pay the NRE costs for you? - it may be that when purchasing very standard products, or white labeling products which have already been developed, that you won't need to pay NRE costs as they have already been paid by the manufacturer who supplies them.

26:02 - Using a development or development & manufacturing agreement to protect yourself 

27:55 - Most manufacturers are more interested in mass production rather than product development, so how does this impact you during the R&D stage? 

28:55- How to gauge what the manufacturer is comfortable with doing for you - in general, the closer you are to production the more appealing a prospect you are to manufacturers...

30:57 - If you have a prototype that is fully functional, you're ready to give it to a factory and go into mass production, right? - No. This would indicate that you aren't even halfway yet! 

33:26 - NRE costs you need to consider when projecting your costs - these activities typically full under the umbrella of NRE costs.

34:40 - Typical recurring costs - for comparison, here are some of the typical recurring costs you will also need to consider when developing and manufacturing a new product.

37:50 - Wrapping up


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