Cost benchmark
Contract manufacturer pricing: NRE, unit cost and margins
A contract manufacturer quote is not one number. It is NRE, tooling, unit cost, and margin stacked on top of your bill of materials — and each layer is negotiable at a different point in the relationship.
| Line item | Low | Median | High |
|---|---|---|---|
| NRE / engineering setup | $3,000 | $15,000 | $60,000 |
| Line setup & first article | $1,500 | $6,000 | $20,000 |
| Test jig development | $2,000 | $8,000 | $30,000 |
| Assembly labor (per unit) | $2 | $9 | $35 |
| Factory margin on BOM | 8% | 15% | 30% |
| Pilot run (100–500 units) | $5,000 | $18,000 | $60,000 |
What drives the range
- Annual volume commitment — the strongest lever on unit price
- Whether you or the CM buys components (consigned versus turnkey)
- Region: China, Vietnam, Mexico and US labor rates differ 3-10x
- Payment terms — 30/70 deposits tie up cash long before shipment
- Test coverage and yield targets written into the quote
Common questions
What is NRE in a contract manufacturing quote?
Non-recurring engineering covers one-time setup: process engineering, line configuration, test jigs and first-article inspection. Budget $3,000 to $60,000 depending on product complexity — it is separate from tooling.
What margin do contract manufacturers take?
Typically 8% to 30% on top of the bill of materials plus labor and overhead, with the lower end reserved for high-volume programs. Ask for a cost-breakdown quote rather than a single unit price.
What MOQ should I expect?
Most CMs that will work with startups quote 500 to 5,000 units. Component MOQs, not assembly, usually set the real floor — a single connector or custom battery can force a 10,000-piece buy.
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