Hardware Design and Manufacturing Costs
A guide for approximating PCB design, fabrication, and assembly costs with examples
Hardware projects cost $25k-300k for 1000 units. Every project is different, but here’s what typically drives costs and how to estimate yours.
Project Cost Overview
| Complexity | Total Project Cost | What’s Included |
|---|---|---|
| Simple IoT device | $25k-50k | Basic sensors, wireless, simple enclosure |
| Industrial controller | $60k-120k | Multiple I/O, protocols, compliance |
| Medical device | $125k-300k | Safety features, regulatory, extensive testing |
These numbers include design, components, fabrication, assembly, and testing for 1000 units.
Real Project Costs
IoT Temperature Sensor (1000 units)
WiFi, 2-year battery, plastic enclosure
- US manufacturing: $38k (9 weeks)
- China manufacturing: $32k (13 weeks)
- Savings: 16% (not the 60% they quoted)
Industrial Controller (500 units)
Multiple I/O, Ethernet, metal enclosure
- US manufacturing: $85k (15 weeks)
- Mexico manufacturing: $65k (17 weeks)
- Savings: 24% (NAFTA benefits, easier communication)
Reality check: Offshore savings are real but lower than quoted. Budget for quality trips and communication delays.
Where to Manufacture
Volume drives the decision:
- Under 500 units: Stay local. Setup costs kill offshore savings.
- 500-2,000 units: Mexico or Eastern Europe. Good savings, easier communication.
- Over 2,000 units: China becomes worth it. Fixed costs spread over volume.
Chinese manufacturing needs $15k-25k in fixed costs. At $2-4 per unit savings, you need 4,000-8,000 units to break even.
Project Cost Breakdown
Hardware projects have 5 main cost buckets:
| Cost Category | % of Total Project | Typical Cost (1000 units) |
|---|---|---|
| Design | 30-40% | $15k-75k |
| Components | 25-35% | $12k-100k |
| Assembly | 20-30% | $10k-70k |
| Testing | 5-15% | $3k-40k |
| PCB Fabrication | 5-10% | $3k-25k |
Design (30-40% of total project)
Engineering rates vary widely ($100-300/hour depending on experience, location, and tooling). Design time depends on complexity and engineer efficiency:
| Project Type | Design Hours | Total Cost Range |
|---|---|---|
| Basic IoT device | 80-200 hours | $8k-60k |
| Industrial controller | 150-400 hours | $15k-120k |
| Medical device | 300-800 hours | $30k-240k |
Factors affecting design time:
- Engineer experience and tooling efficiency
- Requirements clarity and scope creep
- Component selection and availability
- Regulatory requirements and compliance needs
PCB Fabrication (5-10% of total project)
Board costs depend on layers and volume. Simple 2-layer boards cost $3 each at 1000 units. Complex 8-layer boards cost $22 each.
Cost multipliers that hurt:
- Adding layers: 2→4 layers costs 3x more
- Fine features: <6mil traces add 30%
- Premium finishes: ENIG adds 20%
Components (25-35% of total project)
ICs dominate the BOM cost. Microprocessors and power management chips typically cost 40-60% of your component budget.
Lead time reality:
- Stock components: Normal pricing
- 8+ week lead times: 20-50% premium
- Shortage/allocation: 2-5x normal price
Choose components with multiple sources and reasonable lead times.
Assembly (20-30% of total project)
Assembly costs depend on component count and complexity:
| Project Complexity | Cost per Board (1000 units) |
|---|---|
| Simple (45 components) | $10/board |
| Medium (160 components) | $30/board |
| Complex (280 components) | $68/board |
BGAs and fine-pitch components cost more to place. Through-hole parts cost 5x more than SMT.
Testing (5-15% of total project)
Testing costs are often underestimated:
Essential testing:
- Functional test: $10k-20k total for 1000 units
- Environmental test: $5k-12k (temperature, humidity)
- EMC pre-compliance: $8k-15k (saves money vs. failing formal tests)
Prototype iterations: Budget $30k-80k total for proof-of-concept through pilot run. Each iteration takes 3-6 weeks.
Quick Cost Estimate
Rough formula: Design cost ≈ (PCB layers × $500) + (component count × $15) + complexity factor
Complexity factors:
- Simple digital: 1.0x
- Mixed signal: 1.3x
- High-speed: 1.6x
- Medical: 2.0x
Example design cost calculations:
- Consumer IoT (4L, 150 components): $3k-12k design cost
- Medical device (6L, 250 components): $8k-32k design cost
- Industrial (4L, 200 components): $4k-15k design cost
Wide ranges reflect differences in engineer rates, efficiency, and project complexity. Multiply by 2-5x for total project cost.
Common Mistakes That Blow Budgets
| Mistake | Cost Impact | How to Avoid |
|---|---|---|
| Component selection by price only | 50-100% overrun | Check availability, lead times, alternates |
| No iteration budget | 25-50% overrun | Plan for 2-3 prototype rounds |
| Rushing design phase | 200%+ overrun | Proper requirements, design reviews |
| Offshore “savings” assumptions | 30-50% overrun | Factor hidden costs, quality trips |
Manufacturing Location Decision
| Your Situation | Best Choice | Why |
|---|---|---|
| <500 units, tight timeline | US/Local | Setup costs kill offshore savings |
| 500-2k units, cost-sensitive | Mexico/Europe | Good savings, easier communication |
| >2k units, cost-critical | China/Asia | Volume justifies fixed costs |
| Regulatory/IP-sensitive | US/Local | Compliance and protection easier |
Cost Optimization Strategies
| Strategy | Potential Savings | Implementation |
|---|---|---|
| Standard packages only | 15-30% assembly | Avoid exotic packages, stick to 0603/0805 |
| Single assembly process | 10-20% assembly | All SMT or all through-hole, not mixed |
| Design for test | 20-40% testing | Include test points, boundary scan |
| Volume planning | 20-40% total | Combine multiple products in one run |
Budget Planning
| Budget Category | Add This Buffer | Why |
|---|---|---|
| Design iterations | +25% | First design rarely works perfectly |
| Manufacturing delays | +15% | Component shortages, fab delays |
| Testing and rework | +10% | Debug time, ECO changes |
Reality check: A $15k design that works beats an $8k design that needs $20k in fixes.
For firmware development costs that complement your hardware budget, see our firmware cost analysis.
Disclaimer: All costs are industry averages based on 2024 data. Every project is different - actual costs vary significantly based on specific requirements, supplier relationships, market conditions, component availability, and unique project constraints. Regional costs vary 20-60% depending on location and quality requirements.