Board Buying
Should PCB Buyers Pay Tooling and Testing Charges?
Automation and faster amortization should mean lower costs.
PCB manufacturers often include nonrecurring engineering (NRE) and electrical test (ET) charges in quotes, in addition to the piece price. During my training sessions for board buyers, I am frequently asked how to avoid those charges.

It’s a good question.

When I started in this industry some – ahem – 30 years ago, NRE charges were approximately $100 per conductive layer, meaning a 4-layer PCB was $400; a 6-layer PCB was $600, and so on. Back then, it took a lot of labor hours to create manufacturing files from a piece of original artwork, as nothing was as digital as it is today.

With advances in technology, releasing an order to the manufacturing floor requires a fraction of the time it once did. Sure, some board manufacturers still do some things manually, but most have adapted their front-end engineering to incorporate technological advances.

Laser direct imaging (LDI) has eliminated use of expensive and time-consuming films with strict storage requirements. In addition, liquid photoimageable (LPI) solder mask and legend applied with inkjet technology has automated much of the PCB production process.

On top of that, many of today’s fabricators outsource front-end engineering capabilities overseas at a fraction of the cost to maintain a domestic staff, especially to India. They pay a fixed cost for a service, whether they receive one new job per day or per month. This significantly reduces tooling costs and the time required to create those tools for the board supplier. Shouldn’t the PCB buyer benefit from that?

Like NRE, the process for electrical test has seen improvements in cost drivers. In the past, dedicated electrical test fixtures were the industry standard. With dedicated fixtures, electrical testing charges are based on the hole count or test points required. The charge also includes material and time required to drill holes for the fixture plates that house the spring-loaded test pins. The dedicated fixtures are manually assembled.

Dedicated fixtures, while great for high-volume production orders, require plenty of storage space. Or they must be disassembled after use, only to then be manually put together for a reorder, which requires more time.

Most PCBs shipped to the US today are comprised of high-mix, prototype-through-medium-volume production, where the time, labor and storage space required for dedicated fixtures may not make much sense.

The better solution is for manufacturers to use fixtureless testing, also called flying probe testing.

Flying probe testers are fixtureless, meaning the Gerbers received from the customer generate a test program.

Depending on the type of machine used, the printed circuit board, whether an individual piece or multiple pieces on a manufacturing panel, is secured vertically or horizontally, and the flying probes do their work. The time required depends on the machine speed and number of points needing testing. Setup time between orders is minimal, and retesting can be done quickly.

Flying probe testers once were too expensive for most fabricators. In fact, fabricators had to send their orders to outside service companies called test houses.

But that meant PCB delivery schedules and ET charges had to account for shipping time and freight to the test houses, as well as time to get orders back to the fabricator for final inspection before shipment to the customer.

Today, as test equipment costs have decreased, most PCB manufacturers have at least one flying probe on site, meaning their testing costs per part number have dropped significantly. So, testing charges passed on to buyers should also be much lower. You may be able to get ET charges waived altogether. But just like with NRE charges, your ability to do so will depend on the size, dollar value, and longevity of your orders with a particular manufacturer.

You now have far more power as a buyer to get tooling charges waived or reduced, but you must be able to ask. Here’s what you need to know:

Are you dealing with a broker? Brokers make anywhere from 20 to 40% on the purchase order total. If brokers play a major role in your PCB supplier base, always ask for the NRE to be waived.

Order size matters. Is it for five pieces or five thousand? The bigger the order, the easier it is to get the NRE waived. Any order totaling more than $10,000 in value that is an IPC-A-600 Class 2 commercial build with standard delivery time should have tooling waived. It’s a different story for military or medical builds that require special paperwork. For lesser value orders, you might be able to get the manufacturer to discount the tooling cost.

Ongoing orders rule. Most fabricators want continuous runners: orders that have multiple scheduled deliveries with very few revision changes. Those orders are sought after and are easily welcomed with tooling charges waived.

Be a big fish. Leverage your PCB spend by using a few vendors, as opposed to diluting your buying power over many manufacturers. It gives you more bargaining power. This applies regardless of the value of individual purchase orders.

Be wary of amortized tooling. It is easy for manufacturers to hide tooling costs within the piece price. It is also easy to forget – and PCB suppliers hope you do – that the tooling costs have been hidden. You shouldn’t pay for tooling indefinitely. There is a reason some PCB suppliers have attractive piece pricing with higher tooling costs and vice versa. If tooling is amortized in the piece price, note on the purchase order that the piece price must be reduced once tooling charges have been fulfilled.

Tooling and test charges are real costs assumed by the PCB buyer over the years. I believe board buyers should ask why they must pay for an electrical test fixture (or program) to prove the manufacturer built the board as designed. If it wasn’t in the Gerbers, wouldn’t a short or open on a board be the fabricator’s fault?

It might be time for the PCB industry to challenge the assumption that buyers will pay for tooling and testing. Until it does, buyers can reduce those costs by knowing how to leverage their annual PCB spend and properly navigate relationships within their PCB supply chain.

Greg Papandrew
Greg Papandrew
has more than 25 years’ experience selling PCBs directly for various fabricators and as founder of a leading distributor. He is cofounder of Better Board Buying, a purchasing training consulting firm; greg@boardbuying.com.