What do lot charge, NRE, FOB, first article, ROM and blanket PO mean on a quote?

Price terms

These explain why a price changes with quantity.

• Lot charge: a fee charged once per batch, whatever its size, usually by an outside finisher or for a setup. Example: a $125 anodize lot charge is $5.00 per part on 25 pieces and $1.25 on 100.
• NRE (non-recurring engineering): a one-time cost to get the job ready, such as programming, workholding, a gauge or tooling, charged once and not on repeat orders. Example: an $800 workholding setup is $4.00 per part over 200 pieces and $40.00 over 20.
• Setup: the time to get a machine ready for a job (workholding, tools, program proving). It's paid once per lot, which is why price per part falls as the lot grows. Example: 90 minutes at $95 an hour is $142.50, or $5.70 a part on 25 and $1.43 on 100.
• Price break: the unit price at a stated quantity. A quote often lists several (1, 10, 100) so the buyer can pick. Example: $84 each at 10 and $41 each at 100 means the 10-piece lot costs $840 and the 100-piece lot $4,100.
• MOQ (minimum order quantity) or minimum charge: the smallest order the shop or its supplier will take, or the least it charges for a line. Example: a $65 minimum line charge means a part costing $20 to make is still billed at $65.
• Markup and margin: markup is added on top of cost; margin is the share of the price that is profit. Example: a 30% markup on a $100 cost gives a $130 price and a 23.1% margin.

Shipping, payment and order terms

These decide who pays for freight and when money moves.

• FOB (free on board) origin: the buyer owns the goods and takes the risk once the carrier has them at the shop; the buyer usually pays freight. FOB destination: the seller carries the risk until delivery and often includes freight in the price. Example: $85 of freight on a 40 lb box is on the buyer's invoice under FOB origin and in the shop's price under FOB destination.
• Net 30: payment is due 30 days after the invoice. 2/10 net 30: take 2% off if paid within 10 days. Example: a $1,000 invoice paid on day 10 under 2/10 net 30 is $980. See the early-payment page for what that discount costs.
• PO (purchase order): the buyer's written order. Accepting it forms the agreement, along with the quote and terms it refers to. Example: a PO for 100 pieces at $41 is $4,100.
• Blanket PO and release: one purchase order for a total quantity, with deliveries called off as scheduled releases. Example: a blanket for 400 pieces released as 100 a quarter. Pricing it depends on whether the shop quotes the total or each release; see the blanket PO page.
• Lead time: the working days from order to shipment. Expedite: a charge for beating the normal lead time.

• Pricing a blanket PO
• Is 2/10 net 30 worth it?

Quality and estimate terms

These are the paperwork and the stage of a price.

• First article inspection (FAI): a full check of the first part against every characteristic on the print, with a report. It is done for a new part or a new revision, and the price is per part number, not per piece. Example: 90 minutes at a $75 inspection rate is $112.50.
• C of C (certificate of conformance): a signed statement that the parts meet the PO's requirements. Material cert (mill test report): the mill's record of a heat's chemistry and properties. Neither is a measurement of your parts.
• ROM (rough order of magnitude): a quick, non-binding estimate from limited information, to help a buyer decide whether to continue. Example: "about $800 to $1,200 for 10, to be confirmed on a full print." A ROM is not a quote, and the shop should say so on it.
• RFQ (request for quotation): the buyer's request for a price. Quote validity: how long the price holds, such as 30 days. Traveler: the sheet that follows a job through the shop.

• Pricing certs and reports
• What a shop needs to quote a part