Technology/volume price reference table: a must-have for PCB sourcers
Presentation of the technology/volume price reference table
A technology/volume price reference table defines, for different key technical characteristics combinations, the price range of a product. This range is expressed in price per and is considered satisfactory for each lot size.
This type of refence is useful to:
- Compare an offer to the history and evaluate its positioning,
- Analyze price evolution over time,
- Estimate prices for new PCBs without consulting suppliers.
How to calculate a PCB price reference table?
In order to build a price per sq inch reference table, sourcers must compile different suppliers’ price offers, MOQs, panel sizes, number of PCBs per panel and key technical characteristics, thus defining a price range for each lot size.
The key technical characteristics that have a significant impact on price and that must therefore be taken into consideration are:
- Number of layers,
- Surface finish,
- Outer and inner copper thickness,
- PCB thickness.
The lot size, expressed in sq inch, depends on the size of the panel and the number of PCBs per panel for a given MOQ. It is calculated as follows:
For each lot size, a minimum-maximum price range can be defined, which represents the acceptable price range. Having a price range allows to take into consideration price variations associated with other factors, for example variations due to the number of PCBs per panel and the resulting material loss which has a significant impact on costs.
Estimate the price of PCBs based on your suppliers’ quote history
Using your suppliers’ quote history, there are two methods to calculate your price reference table for a new PCB.
Method 1: Interpolation
For this first method, sourcers select a set of quotations with the same key characteristics and similar lot size to the new PCB. Based on this price set, a price per sq inch can be calculated and the PCB price can be obtained by interpolation.
Method 2: Calculation by Segment
For this method, sourcers must define segments of lot sizes that are the most frequently purchased.
- Less than 1 sq inch
- 5 to 10 sq inch
- 10 to 30 sq inch
- 30 to 50 sq inch
For each lot size, sourcers select all available quotations for similar key technical specifications and calculate the minimum, maximum and average price. The minimum and maximum can be the extreme values or calculated values based on a standard deviation.
Incoterms in the price reference table
Incoterms define how the transfer of ownership of goods occurs during an international transaction. There are many incoterms: EXW (ex works), FCA, CPT, CIP, DAT, DAP, DDP (Delivered Duty Paid) and FAS, FOB, CFR, CIF.
Incoterms other than DDP always specify the associated port or airport. Thus, prices given by different suppliers, for example FOB Hong Kong and FOB Bangkok, are not comparable because the transportation costs to deliver the products to the final destination will be different.
The price analysis must therefore be done for a specific incoterm.
However, incoterms are not a critical issue for every company. Only large companies buy directly from manufacturers in China. Companies buying PCBs in China for their factory in China are not affected by incoterms. Finally, since most PCB manufacturers are located in China, the price difference between FOB Hong Kong and FOB Shanghai is minor.
In practice, PCB sourcers widely agree on the usefulness of a technology/volume price reference, but in reality it tends to be nothing more than wishful thinking as collecting and structuring the required data is extremely tedious.