Tooling, Moulds and Development Costs: Who Pays and Why

In lighting, the term tooling covers anything from a stamped metal bracket to a mould for a composite base. These are one-time costs, they are frequently rolled into a unit price, and the way they are handled decides who can walk away from the relationship.

What counts as tooling

A typical new lamp design may involve several of these, with very different costs:

Paid up front or amortised

Amortising tooling into the unit price keeps the first order small and creates a hidden liability: if you move to another supplier, you have paid for tooling you do not own. Paying up front costs cash and buys control, provided the agreement says the tool belongs to you and can be removed.

Write down three things

Whatever the commercial arrangement, the agreement should state:

1. Who owns the tool, and what happens to it if the relationship ends
2. How many times the tool may be used before it needs refurbishment, and who pays
3. Whether the tool may be used to produce the product for anyone else

Tool life is a cost line

Moulds wear, and a worn mould produces flash, poor fit and eventually a visible line on the product. Ask for the expected shot count and plan a refurbishment into the programme's third year rather than treating a quality decline as a supplier failure.

Development budgets in perspective

For most wholesale programmes, development is a small share of the first year's cost and a large share of the risk. Spending on the sample and the golden reference, rather than on a broader range of new models, produces the better return almost every time.