Tooling is the molds, dies, jigs, fixtures, gauges and specialized equipment used to manufacture or inspect a product. It may be a one-time investment even when production units have a separate recurring price.
How does tooling affect unit economics?
Assume tooling costs $15,000 and is expected to support 50,000 units. Straight-line allocation is $15,000 ÷ 50,000 = $0.30 per unit. At only 10,000 units, the same cost equals $1.50 per unit.
Illustrative tooling allocation
| Expected volume | Tooling cost | Allocated cost per unit |
|---|---|---|
| 10,000 units | $15,000 | $1.50 |
| 50,000 units | $15,000 | $0.30 |
| 100,000 units | $15,000 | $0.15 |
Actual economics also depend on tool life, maintenance, cavities, scrap and replacement.
Who owns the tooling?
Payment does not automatically settle ownership, custody or usage rights. The agreement should state title, markings, location, access, insurance and return.
How should tooling be accepted?
Define drawings, materials, life, maintenance and validation. Approve samples or first articles produced with the actual tool before routine production.
What happens at supplier exit?
Plan transfer, export, storage, destruction or continued support. Verify condition and records before moving critical tooling.
