Industry Documents - Manufacturing contracts, service level agreements, evaluation forms, templates

View all

Industry Documents - Manufacturing contracts, service level agreements, evaluation forms, templates

View all


Contract manufacturer (internal) cost vs OEM quoted price vs OEM target cost

By Mark Zetter

Savvy electronic OEM equipment manufacturers never give contract manufacturers a costed bill-of-materials (BOM). How you determine your lowest product landed cost (target price) is determined by obtaining accurate information about your contract manufacturing solutions provider.

This article covers achieving timely new product development (NPD) and product launch pricing (cost) with new and existing EMS and ODM partners and, includes best practices for renegotiating contractual pricing terms for your existing products already being built by your EMS and ODM partners.

Every contract manufacturing program is comprised of three primary components in terms of cost vs price:

  • EMS/ODM (actual) cost to service OEM program
  • EMS/ODM internal cost (with markups)
  • Cost quoted to OEM

But how much higher? And, how can you find out? When contract manufacturers respond to your RFQ with a quote (the price the hope you pay) they break out their costs to justify (they want you to believe) what is fair pricing for your program into a few, basic categories: materials, labor, S,G&A, finance, freight, and overhead.

But this is misleading.

Our manufacturing cost modelers help enterprise teams and corporate individuals to position your company in a manner so you are more informed about EMS/ODM actual costs when you negotiate EMS and ODM pricing and terms in your contract agreements.

How to build costing modelers for contract electronic programs

EMS and ODM suppliers want as much money from you in fees, as possible. You want to reduce your annual spend. Somewhere between these two opposing business objectives you sign on the dotted line. You can tip the scale in your favor and we show you where and how.

ACCESS CONTENT: Full content is available exclusively for logged in electronics OEM professionals, only. Registration is free. If you are an electronics OEM professional, working in an electronics OEM company, please Register or Log In.

Get a list of EMS/CM providers matching your program needs (Its free)

Venture Outsource has the largest, global database of contract electronics capabilities. This free service is for electronic OEM professionals wanting to find contract electronic service providers matching your program requirements. Speak with a Provider Advisor. Advisors will give you detailed information on providers, plus intelligence on these companies, emerging trends and best practices.

Talk to an Advisor

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:

How to Quote Electronic Equipment Projects

Provider spotlight

About Venture Outsource, LLC

Venture Outsource, LLC site content and our consulting services help electronic manufacturers plan and execute global, regional and local priorities. Our chief assets are knowledge and interactions. The business is divided into two divisions: an operating division which includes education and training, and consulting and research.

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 email or visit