The company I used to work for made body molding mounting clips for the automotive industry.
While the item was in production, the part cost was in pennies. Many were $0.03 to $0.10 each.
However, after production runs were done, costs skyrocketed.
So during production (of the vehicle) we would run 250,000 + per run. And we paid for the material at say 0.40 per pound (which would yield about 90 pieces per pound.
Later on, for repair part orders, we had to order $500.00 minimum on material even though we only need 30 pounds of material which would have cost us $12.00 before.
Heat treating minimum was also $500.00 minimum which used to cost us $0.30 per pound ($9.00 total).
Plating was about the same as heat treating, with a minimum of $250.00 lot charge.
And the customer would order 3 or 4 years worth of parts, tying up both warehouse space and money—both of which have a cost.
So a production part that had a $0.03 cost originally, might have a cost that $0.60 or $0.75 each for repair orders.
So that very pricy part may not be of better quality as a similar and much cheaper part. It is just more expensive to make in small quantities.
So that very pricy belt might have setups and minimum lots for a variety of processes and that would drive up the cost. It may not be any better in quality than a $24.00 belt that is similar in size but will not fit.
While the item was in production, the part cost was in pennies. Many were $0.03 to $0.10 each.
However, after production runs were done, costs skyrocketed.
So during production (of the vehicle) we would run 250,000 + per run. And we paid for the material at say 0.40 per pound (which would yield about 90 pieces per pound.
Later on, for repair part orders, we had to order $500.00 minimum on material even though we only need 30 pounds of material which would have cost us $12.00 before.
Heat treating minimum was also $500.00 minimum which used to cost us $0.30 per pound ($9.00 total).
Plating was about the same as heat treating, with a minimum of $250.00 lot charge.
And the customer would order 3 or 4 years worth of parts, tying up both warehouse space and money—both of which have a cost.
So a production part that had a $0.03 cost originally, might have a cost that $0.60 or $0.75 each for repair orders.
So that very pricy part may not be of better quality as a similar and much cheaper part. It is just more expensive to make in small quantities.
So that very pricy belt might have setups and minimum lots for a variety of processes and that would drive up the cost. It may not be any better in quality than a $24.00 belt that is similar in size but will not fit.