The Hidden Cost of ‘Cheap’ Molds: A 5-Year Total Cost Analysis

You know that feeling when you get what seems like a great deal, only to find that months later you have actually spent twice as much on fixing things? Yeah, that’s what I hear almost every other week from product developers who went offshore for tooling when they could save a couple thousand dollars initially.

Let me say up front that I’m not going to slag international manufacturing. There are some offshore mold makers that make incredible work. But when you are comparing quotes and that Chinese or Vietnamese tooling price comes back 40% of what your domestic vendor quoted, there is usually a reason. And the reason for that tends to be something that will make your accountant cringe and your production schedule explode.

Here’s the general approach to the process. You’re designing a new product — let’s say a consumer electronics housing. Your local tool shop estimates a multi-cavity injection mold will cost you $45,000. Then you get a foreign quotation for $18,000. Same specs, same material, same everything. On paper, you just saved $27,000. Your CFO does the happy dance. You feel like you are a procurement genius.

Fast forward six months. The mold arrives. First run of production is carried out. Parts come out with flash. Gate marks are not in their proper place. One of the ejector pins is stuck. The cooling passages are out of balance so you get warpage on anything with a wall thickness of more than 2mm. Suddenly that $27,000 savings is not looking so impressive when you’re staring at 5,000 parts that no one is using and a launch date that’s slipping faster than your project manager’s sanity.

the Real Numbers

Let’s actually do a comparison–and I mean real numbers from a case study I did last year. Medium-sized Manufacturer of Kitchen Appliance Parts. They were looking for tooling for a product that had a five-year life cycle and a forecasted volume of 500,000 units.

The domestic quote came in at $52,000. Overseas quote: $21,000. Initial savings: $31,000. Seems like a no-brainer, right?

Here’s a description of what actually happened during those five years:

The mold had to make three trips abroad to be corrected. Each one was accompanied by shipping the tool back to Asia, waiting for the revision cycle, shipping the tool back, and doing new sampling. Total cost for corrections: $14,500.
Total Downtime Cost (in lost production windows, delayed revenue): About $48,000.
Then there was the constant quality problem. The mold simply never ran as smoothly as it should have. Cycle times were about 8% higher than spec due to the fact that the cooling was off-spec. Over half a million parts, which amounts to a further 267 hours of press time. At $85 per hour for their equipment, that’s $22,695 in additional production costs.
Scrap rates were 3.2% compared to 1.1% they were seeing on their other domestic tools. On a part that cost $0.47 in materials, that additional 2.1% scrap cost $4,935 over the life of the product.

The domestic tool? Zero correction trips. Cycle time was 3% better than quoted. Scrap rate of 0.9%. When they needed a minor change in year three to support a design change, their tool maker got them back into production within 11 days. Revision quote from overseas was made available with 7 weeks lead time.

Total cost comparison:

Overseas: $21,000 (Initial) + $14,500 (corrections) + $48,000 (downtime) + $22,695 (extra production) + $4,935 (scrap) = $111,130
Domestic: $52,000 (initial) + $2,800 (year three modification) + $0 (corrections) = $54,800

The mold was not cheap and cost them more than double. And honestly? These numbers don’t even factor in the stress, the emergency meetings, the customer complaints of late shipments, or engineering hours spent digging out workarounds to issues that should never have been necessary in the first place.

The Quality Gap

Look up, cheap overseas tooling is not cheap because people in other countries are less competent. Some of the best mold manufacturers in the world are located in Asia. The difference in price is mainly related to three aspects: material quality, process rigidity and engineering depth.

That $21,000 mold? It is most likely using a H13 tool steel from the softer end of the hardness spec. The EDM work might be rougher. The polishing by hand may be very little. The mold base parts may be off-the-shelf catalog items instead of precision-ground custom plates. All these options help to reduce costs. They also diminish tool life, part quality and cycle consistency.

The engineering component is also gigantic. A local mold maker that charges $52,000 for a mold probably has included 60-80 hours of engineering time in that estimate. They are doing a mold flow analysis. They are optimizing the locations of the gates. They are modeling cool circuits to remove hot spots. They’re thinking in terms of maintenance access. The cheaper shop? Probably at the order of 15 hours engineering time. They’re building on your print, but they’re not solving problems you don’t even know you’re going to have.

The Communication

There’s an expense on every invoice that doesn’t show you the 12 hour difference in time zones, but costs you real money.

When you have a domestic tool maker you can call them at 10 in the morning with a question and have an answer by noon. If you want to see something in real life, you’re able to drive to their shop. Your production staff can form a relationship with their production staff. Problems are resolved in a short phone call rather than a series of e-mails dragged over three days.

With overseas tooling, there is a greater time delay between communication cycles. You can’t just walk into their store and point to the problem, and more documentation is required for every problem. Every change order requires more detail drawings because they have too little context in common. This friction has a cost. It can’t easily be measured, but it’s real.

I observed one company spending three weeks trying to describe a cosmetic problem through email and photographs that was fixed in 45 minutes when they finally got their domestic supplier on a video call.

When Cheap Tooling Makes Sense

That’s not to say that overseas tooling is always the wrong decision. There are valid situations in which this makes total sense.

Short product lives when you are only processing 50,000 parts? The quality difference may not be enough to warrant the price premium. So if you’re going to prototype tooling that you’re just going to throw away after proving out the design, do that. Go cheap.
Products where the cosmetics can’t matter and you have loose tolerances? Save your money.

The issues come when inexpensive tooling strategies are used for high volume, quality critical, long life-cycle products. That’s where the hidden costs cut like a chainsaw and eat up any initial savings and then some.

The Maintenance

One of the things that people don’t typically consider when getting quotes is the cost of maintaining the system for five years.

Well, good molds are engineered molds that are meant to be maintained. The steel is sufficiently hard so that it can be polished and repaired. Parts are standardized so you can easily get replacement parts. The mold is well documented so any competent shop can work on it.

Lower cost molds omitting these details are common. On the other hand, the steel may be too soft to polish more than once or twice. Part suppliers are proprietary meaning you can only go to the original manufacturer for parts. Lack of documentation makes even simple repairs archaeology projects.

One client of mine had a cheap mould which cracked in year four. Their overseas supplier quoted them $8,900 to repair it and it would take 14 weeks. A small shop examined it and told me that they could repair it for $3,200 within three weeks, but the steel was of such poor quality that they could not guarantee how long the repair would last. The company eventually abolished the machine and built a new machine in their country. So much for any savings you had to begin with.

How It Affects Product Development

Another cost is even harder to quantify, but is the impact on product development velocity.

When your tooling supplier is responsive, knowledgeable and invested in your success, they become a true partner. They can help you to create parts that are easier to manufacture. They can recommend design changes that will save you money or increase quality. They can iterate changes quickly when you need to iterate.

When your supplier is simply trying to achieve a price point you lose that partnership. You have to do design optimization on your own. Changes take forever. You can’t iterate quickly. This is a much bigger deal than people seem to appreciate, particularly in competitive markets where getting to market early is a key differentiator between successful and unsuccessful product launches.

Smart Money

Companies that have approached this have an approach based on tiers. They have domestic suppliers they trust to provide production tooling for their core products–anything high-volume, quality-critical, or long-lifecycle. They may rely on overseas shops for prototype tooling, backup tools or low-volume specialty parts where the risk/benefit equation changes.

They also have an eye on the mid-market. There are domestic shops that aren’t exactly the top of the top in the field, but provide good work for good prices. And there are overseas suppliers that have made their reputations on quality not merely low-cost. Often these middle ways just make more sense than either extreme.

The Bottom Line

What about the $30,000 you save on initial tooling costs? It’s tempting. I get it. But if you’re introducing a product that you intend to be producing for years to come, with quality standards that actually matter, and volumes that make production efficiency important, that upfront savings is likely costing you money.

Add up all of the hidden costs-corrections, downtime, scrap, slow cycle times, communication friction, maintenance headaches, and lost development velocity-and the math does not even come close. Investing in a good mold allows you to avoid all that downstream suffering, and a good mold from a good supplier costs more now just so they can save you more later.

I am not saying that you should always get the most expensive one. But I am telling you to quit viewing mold quotes as if they were the same commodity, differing from one another only in price. They’re not. Since you’re not purchasing a hunk of steel. You’re purchasing engineering knowledge, material, process control, communication effectiveness, and continued relationship.

Determine the true cost of ownership. Factor in your volumes, your quality requirements, your timeline pressures and your tolerance for production hiccups. Sometimes the cheap mold actually is the correct choice. But in most cases, the costly mold is actually the bargain.

Your future self standing on the production floor seeing perfect parts come out of a well-built tool running like clockwork will thank you for spending the extra money upfront. Trust me on this one.