Tooling and NRE Amortization Quote Worksheet
Tooling and non-recurring engineering are real cash that leaves before the first good part ships. This worksheet lists each item, takes off what the customer pays directly, and spreads the remainder over the pieces you expect to sell. Export to Excel to attach to the quote file.
| Item | Type | Total cost | Customer funded (%) | Pieces to amortize over | To recover in price | Per piece | |
|---|---|---|---|---|---|---|---|
$1,800 | 3.6 | ||||||
$7,250 | 1.45 | ||||||
$2,400 | 4.8 | ||||||
$0 | 0 | ||||||
$1,200 | 2.4 |
Per piece uses each line's own amortization quantity. If lines share one quantity, the sum of per piece charges is the NRE loading to add to each unit price. Revisit if the volume forecast is not firm.
Track tooling recovery against actual volume
Optional: see how ERP data can report NRE recovery by program.
Optional. The tool and every export work without this. No spam.
How to use the worksheet
Add one row per tooling or NRE item. Enter the full cost, the percentage the customer will fund as a separate line item or tooling purchase order, and the quantity over which you intend to recover the rest. The sheet computes the unrecovered amount and the per piece charge. Add the per piece total to your unit price, or show it as a separate tooling line. Be honest about the amortization quantity: use committed volume, not the optimistic forecast.
- Include programming and first article effort, not just physical tooling
- Set funded percent to 100 for fully customer-paid items
- Use one row per item so a change is traceable
The method behind it
Amortization here is straight-line by volume: unrecovered cost divided by planned pieces. It ignores interest, which is acceptable for short programs and understated for multi-year ones. For long programs add a cost of capital factor or shorten the recovery period. Tooling owned by the customer should not be amortized into your price at all, and the contract should say who owns it, who maintains it and what happens at end of life.
Reading the result
The customer funded share tells you how much risk you carry. In the example, roughly a third of the spend is covered, so the rest depends on volume materializing. If actual volume is half the forecast, the per piece recovery doubles and you absorb the difference. Compare the per piece total against your target margin: if it is more than a few percent of price on low volumes, ask for a tooling purchase order or a minimum order quantity.
Common mistakes
Leaving out maintenance and replacement of wear items such as dies and inserts, amortizing over a forecast the customer has not committed to, and burying NRE in margin so nobody can see it when the program is repriced. In an ERP, post tooling to a capital or work-in-process account consistently, and use a separate cost element for NRE so recovery can be reported.
Frequently Asked Questions
Should NRE be a separate line or built into piece price?
A separate line is clearer and protects you if the program is cancelled, because the customer has agreed to pay it. Building it into piece price is simpler for the buyer but leaves you exposed if volume falls short.
What quantity should I amortize over?
Use committed volume or a conservative portion of the forecast. Amortizing over the optimistic forecast makes the quote look better but leaves unrecovered cost if the program underdelivers.
Who owns tooling the customer paid for?
That is a contract matter. Commonly the customer owns fully funded tooling and you hold it for their use. Put ownership, maintenance and return terms in writing. This worksheet is not legal advice.
Does this include interest on tooling spend?
No. It is straight-line by volume. For multi-year programs add a financing factor to the recovered amount, or shorten the recovery period so the carrying cost is covered.
If tooling and NRE live in several spreadsheets, we can help pull actual program spend from your ERP so recovery is tracked against what you quoted.
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