Should cost analysis: How contract electronics manufacturing services price OEM quotes

By Staff

Savvy OEMs can benefit knowing how contract electronics services providers determine pricing for better understanding provider quotes during the RFP/RFQ process. Performing should cost analysis for electronics services involves understanding how contract manufacturers turn what is typically considered a cost center – into a profit center. (READ: How to drive cost out of your manufacturing product portfolio)

From one electronics services case study, we share partial information below from an actual OEM program running three shifts with global program management and distribution and taking into consideration procurement and pipelining materials in-house to the contract manufacturer for SMT, PCB assembly and electro-mechanical assembly work, including configure-to-order box build, pack out and shipping.

How to reduce costs from your manufacturing portfolio
Best practices for EMS manufacturing RFQ quotes
EMS Manufacturer internal cost vs OEM quoted fees vs OEM target price

The intended benefit here is to show OEMs ways some electronics services providers justify internal costs (read: pricing) based on the contribution of OEM-program supported provider costs and salaries of functional group personnel. Various links throughout this article direct readers to relative, helpful information to provide further knowledge in that area.

Search electronic design services

In your search results you can further target other Industries and/or Services plus, you can add more geographies to your search.

This study begins with estimated revenue from the OEM program equal to $9,375,000, followed by other internal contract electronics provider cost considerations (list for reader appreciation), and detailing gross margin and other program financials for the electronics provider.



Other Materials Costs*

Freight-in (% of sales)
Inventory Reserve (% of Material)
Warranty Reserve (% of Sales)
Material Shrinkage (% of Material)

Manufacturing Direct Labor Costs
Manufacturing direct labor costs for this case study came to just under two percent.

ACCESS ARTICLE: Full content is available to logged in electronics OEM site users only. Registration is free. If you are an electronics OEM professional working in an electronics OEM company please Register or Log In.

Private message OEM peers. Access all content.

For electronic OEM professionals working in OEM companies. Connect with OEM peers and access exclusive content.

You might also like:

EMS Factory Cost vs OEM Quote vs OEM Target Price

Provider spotlight

About is the leading online destination helping electronics OEM decision makers make more informed decisions and reduce risk. We offer educational Webinars, thousands of original articles and helpful tools, a community of influencers who understand the challenges facing your company today, and a comprehensive directory of electronics provider services.

Copyright Venture Outsource, LLC. All Rights Reserved
The material on this site is for informational purposes only and is not a substitute for legal, financial or professional advice. Distribution and use of this material are governed by our User Terms Agreement and by copyright law. By using our Website you agree to site Terms and Privacy policies. For questions please contact at 1-888-860-1193 or visit