A product does not appear when the first order is placed. Before that there is engineering to do, and the cost of that engineering has a name: NRE.
What NRE means
Non-recurring engineering is the one-time cost of designing, developing and validating a product. It is paid once, not repeated for each unit produced. In a quote it is separate from the unit price.
What it usually covers
- Requirements and feasibility.
- Industrial design and structural design.
- Hardware design: schematic, layout and component choice.
- Embedded firmware.
- App and server development, when part of the scope.
- Prototypes and validation builds.
- Certification planning and support.
- Documentation and deliverables.
What is usually quoted separately
- Tooling. Moulds and fixtures, which belong to a product and its volume.
- Certification fees. Lab and regulator charges per market.
- Components and production. The unit price, which is a separate item.
Why a partner asks for it
The work happens before any product revenue exists. A written scope means both sides know what will be delivered. It also means the files and results of the phase belong to a clear process, not to a promise.
Up front or amortised
Some projects pay NRE directly. Others spread it into the unit price. Either is legitimate, but the figure should be shown on its own so you can compare partners. A quote with no visible NRE has put it somewhere else.
How to read an NRE quote
- Is the scope written, per discipline?
- Which deliverables do you receive, and when?
- Which validation builds are included?
- What is excluded, such as tooling and certification?
- Who owns the results? See who owns the design files.
At 3CBAY we agree the development and sample plan together once we understand the project, with the scope and deliverables written in the agreement. The structure of a project is described on the services page.
Planning a product? Tell us what you are building.