What Are Tooling Costs? Are Tooling Costs Important?

What are tooling costs in industrial manufacturing processes? 

Automation in almost all industries is shaping up as the new normal, which has been cardinal in enabling manufacturers to stay on par with the competition. 

But this shift has attracted another dimension to operation costs companies are now paying more attention to than before. 

What are tooling costs, and how can they affect the overall production? Be our guest in this guide; we’ll leave no stone unturned on this topic. Let us get right into it. 

What are Tooling Costs?

Tooling costs measure the depreciating value of a tool as a quotient (divided by) of the output components that the machine creates in its lifetime. 

Rather, it’s a measure of the tool’s service output over the duration of its functioning. 

From the above definition, tooling cost is not just straightforward, given that the parameter investigates the efficiency over an extensive duration.

 Nonetheless, having insights into your overall tooling costs is imperative in any tool’s efficiency and throughput report generation.  

Why is Tooling Important?

Automated soldering machine. 

Automated soldering machine. 

Here are some reasons manufacturing firms involved in trades such as PCB assembly should always aim to keep track of tooling.

  • A tool/machine is as good as its products. Therefore, monitoring the throughput rates of a tool over time can help predict the quality of the output materials. 
  • Again, its general knowledge that any tool’s overall accuracy and precision are anchored on its maintenance state at a particular duration. Hence, if a machine is in good shape, you can rest assured it will deliver at top-notch precision hence the need to track this parameter. 
  • Lastly, tooling ensures you can determine if the machinery best fits the task. The wrong choice of equipment will result in low grade and volume output and fast wear. 

What Should Tooling Cost?

A production industry setting. 

A production industry setting. 

There’s no outright way to determine the initial tooling costs, and the ratio of this aspect to the overall operational costs varies depending on the scenario in question. 

The end game is that you must spend on new tools or repair the existing ones for consistent quality. 

Estimating the unit cost also depends on a firm’s production scale. 

For instance, take a case of a company that deals with small-scale assembly of PCBs.

 In such a firm, it is possible to accurately predict the overall tooling costs.

But this becomes an issue when dealing with a large-scale production entity. 

We can still get an entire cost figure, although it requires rapid inventory keeping and analysis. 

What Factors Impact the Cost of Tooling?

Airplane assembly. 

Airplane assembly. 

Tools don’t come cheap. But what are some determinants of the variations between different companies’ tooling costs? 


What are the strength requirements of the output materials you’re designing, as these will affect the type of tool materials you can use?

 For instance, if you’re in the aerospace components industry, you’ll be dealing with hard materials, which means their costs will also be overboard. 

Part Specifications

Creating sophisticated parts that require intricate detailing in molding the individual output components means a company must invest in numerous high-end tools. 

Again, this significantly balloons the tooling costs compared to scenarios where the manufacturer wants to create simple plain designs. 

Hence, mold costs are key determinants of the overall production costs. 

Tools Quality

Manufacturers must be keen to buy tools from renowned companies for their high-quality equipment. 

This is because poor quality tools are a liability; they wear out so fast, are slow, and consequently, the quality of their products is lacking. 

Also, a company will incur many machine costs when working with low-quality tools. 

Advantages of Tooling costs

Cost impacts on any production process are immense. 

Here are some of the upsides to having the know-how of tool cost models in production. 

Machine real-time monitoring system software. 

Machine real-time monitoring system software. 

  • The only way for manufacturers in the tech assembly industry to find reliable cost estimates of component production is by factoring in the numerous tooling costs involved in the process. 
  • Also, accounting for tooling costs is critical in monitoring the rate of manufacturing high-precision parts, which can be uneconomical to create if you don’t keep the costs in check. 
  • Streamlining the production process is imperative in saving on waste in any industry. Thankfully, tooling costs are essential as they significantly help estimate the volume of raw materials necessary for any production line. 
  • Timely delivery of parts in an industry is also anchored on keeping track of the tooling costs. Knowing what particular tools you need ensures continuous production and lower production times, and the company always upholds product quality. 
  • When a company hacks the tool costs, it can easily save on additional costs, such as energy costs, as there will be an investment in more energy-efficient systems. This is also important in lowering the total cost of production and helps manufacturers set competitive prices, thus increasing profits. 
  • Lastly, any business will benefit from the insight of tooling costs, especially if competitors are not so keen on this critical aspect. They help ensure accurate predictions and fast responses to market demands. 

Limitation of Tooling Costs

Industrial equipment repair.

Industrial equipment repair.

  • Accuracy is always a problem when predicting tooling costs, especially in scenarios when dealing with complex designs.
  • Also, they are not constant and depend on many factors, meaning companies are prone to getting them wrong even under extensive assessment. 
  • Predicting the tooling costs can be an immense challenge in companies dealing with large-scale production. 

How to Improve the Investment in Tooling

  • Companies should engage the services of companies equipped with a workforce and systems to investigate production processes and identify tooling flaws and machine efficiency.
  • Also, companies should have in-house cost engineers focussed on checking the working of the tools. These can significantly assist through tooling inventory keeping.  


The adage goes that a lazy man argues with his tools. 

This is so practical in the production sense as companies that are reluctant to check on tooling costs end up incurring unaccounted losses in the long run. 

The fundamental hack is that any firm dealing with production must track all the tool use-related expenses. 

This will be imperative in improving the quality of the production systems, increasing output volumes, and boosting the company’s profitability.