Tooling cost is the one-time charge for the patterns, dies, moulds, fixtures and special gauges that a factory makes to produce your part. If you pay for the tooling, you should own it. But ownership only holds if the contract says so clearly and the tooling is marked and recorded.
Without a written agreement, disputes are common. The factory may claim the tooling as its own, refuse to release it, or use it to make parts for others.
What tooling includes
- Patterns and core boxes for sand castings.
- Wax injection dies for investment castings.
- Forging dies for closed-die forgings.
- Pressure die casting dies and plastic injection moulds.
- Press tools for stamped and formed sheet metal parts.
- Machining fixtures that hold the part during operations.
- Special gauges such as custom plug, ring or functional check gauges.
What drives tooling cost
Tooling cost depends on the size and complexity of the part, the tool material, the number of cavities and the expected tool life. A wooden pattern for a small batch is far cheaper than a hardened steel die designed for hundreds of thousands of parts. A real figure only comes from a quote on your drawing.
Some factories offer to absorb tooling into the piece price. That can help cash flow, but it often means the factory owns the tool and you are tied to it. Read should I pay for tooling upfront before you choose.
What the contract should say
- The buyer owns the tooling once it is paid for, including any replacement made later.
- Tooling is marked with the buyer's name or part number and listed in a tooling register.
- Tooling is used only for the buyer's parts, unless the buyer agrees in writing.
- The factory maintains the tooling and repairs normal wear within the agreed tool life.
- Responsibility for replacement after the agreed tool life is clearly stated.
- The buyer can remove the tooling at any time after giving notice and settling unpaid invoices.
- The factory insures or takes care of the tooling while it is on site.
Keep records
Photograph each tool when it is finished, with its marking. Keep a list of where every tool is, including any held by subcontractors such as foundries or forging shops. Many disputes start because the buyer paid the main supplier and the tool sits with a subcontractor that never signed anything.
Ask for the tooling drawings too, where possible. They help you rebuild the tool elsewhere if you ever need to. For contract wording on this and other points, see what an engineering purchase contract should include.
Next step
We help you set up tooling agreements and keep a register of what you own and where it is. Book a free sourcing review.