Part Cost vs SKU Cost: What OEM Teams Often Get Wrong

"What does the part cost?" and "what does the SKU cost?" sound like the same question. They are not, and treating them as interchangeable is one of the more common ways OEM teams underestimate landed product cost.

Part cost is a per-shot calculation.

Per-part cost is built from: material consumption (part weight plus runner/sprue waste, less regrind recovery where applicable), machine cycle time converted to a machine-rate cost, moulding efficiency (uptime, scrap rate, changeover loss), and a share of overhead. Get any one of these wrong — an optimistic cycle time, an ignored rejection rate — and the per-part number looks better than production will actually deliver.

SKU cost is an assembly-level roll-up, not a multiplication.

A finished SKU is rarely one moulded part. It is a bill of materials: multiple moulded components in different quantities per assembly, sometimes from different tools, cavitation counts and cycle times. Multiplying "part cost x quantity" without accounting for each component's own efficiency and rejection profile understates the true assembly cost — and that gap compounds across volume.

Where the two get conflated in practice.

A common failure mode: a team costs the highest-volume part carefully, then extrapolates a rough per-piece rate for the remaining components in the SKU "to save time." Small parts with low cavitation or higher rejection rates are exactly where that shortcut hides the most margin erosion, because their cost-per-unit is proportionally more sensitive to cycle time and scrap than the headline part.

Why this matters for Make-vs-Buy and pricing decisions.

If SKU cost is underestimated, two things happen downstream: product pricing is set too low relative to true landed cost, and a Make-vs-Buy comparison against an external quotation looks more favourable to "Make" than it actually is. Both errors are invisible until volume ramps and margin doesn't show up where the model said it would.

The VEROQEN Part Cost & SKU Calculator is built around this distinction deliberately — cost each component on its own material, cycle-time and efficiency assumptions, then roll components up into a true SKU cost, rather than treating a multi-part assembly as one averaged number.

If the tooling budget behind those parts is still open, start with How to Estimate Injection Mould Cost.