Cost & Quoting

What Drives Cost Per Unit in Ruggedized Defense Electronics, and How to Quote It

How to build a defensible per-unit quote for low-volume defense electronics, where fixed setup, screening, and documentation costs dominate and estimates go wrong.

Defense electronics cost per unit breaks almost every rule commercial estimators rely on. Lots run in dozens, not millions, so fixed costs never dilute. On a 100-unit LRIP lot, non-recurring engineering, fixtures, and first-article qualification are spread across 100 assemblies instead of 100,000, and setup can land above 40 percent of unit cost. A defensible quote separates four money buckets: recurring per-unit cost (material, direct touch labor, machine time), amortized fixed cost (NRE, fixturing, first-article), screening and test cost, and the documentation and compliance tail. Miss any one and the fixed-price bid goes underwater before the first unit ships.

Start with setup, because it is the largest surprise. The Low-Volume Setup Cost model assigns lot setup as lot size times per-assembly setup cost times the scope charged, then adds fixed NRE and qualification. A 100-unit lot at $45 per assembly at 80 percent scope is $3,600, plus $250 fixed NRE, for $3,850, or $38.50 per unit. Cut the lot to 25 units and the same $250 NRE alone jumps from $2.50 to $10 per unit. This is why lot size is the single most powerful lever in your quote: halving the lot roughly doubles the fixed burden each unit carries.

Coating is deceptively expensive because the labor is fixed per batch, not per board. Conformal Coating Cost is assemblies times per-board cost times coverage, plus fixed masking and qualification. On 100 boards at $45, 80 percent coverage, and $250 fixed, you get $3,600 + $250 = $3,850, or $38.50 effective per board. Masking connectors, test points, and keep-outs, then de-masking after cure, routinely costs more than the coating material itself. On a 10-board lot that same $250 fixed line adds $25 per board instead of $2.50, so quote selective-coat masking labor by connector count, not board area, and set a minimum economic lot size.

Environmental screening is a scheduling cost as much as a labor cost. Chamber hours multiply the retest allowance directly, so a low first-pass screen yield quietly inflates the bill. If a mature ESS line runs a 10 percent load-and-retest allowance and a new build runs 25 percent, the same profile consumes 15 percent more chamber time, and chamber time on contended thermal and vibration tables is billed at a premium. Price screening at the allowance your build history actually supports, not the mature-line number, and carry a separate line for the shock and vibration table time that acceptance requires. Understated screening yield is a classic margin leak.

The documentation tail is the cost estimators forget entirely. On DFARS and MIL-SPEC contracts the data package is a contractual deliverable as binding as the hardware. Program Documentation Burden converts CDRL and DD-1423 record counts into hours: 120 records at 12 per hour is 10 base hours, but first-article packages with customer redlines justify a 25 to 50 percent review and correction allowance, not 10 percent. Add Secure Configuration Workload for controlled-baseline management and access-restricted build environments. Together these can add several hours per unit of pure overhead that never touches a solder joint, and they belong in the labor line, not buried in general overhead.

Two lifetime costs must be priced into a program bid even though they land later. First, sole-source and DMSMS-flagged parts force a Long-Life Component Buffer, a lifetime or last-time buy that ties up capital: 1,200 units per day across an 85-day lead time is over 100,000 components on the shelf, financed at your carrying cost. Second, fielded systems generate returns. Model warranty and sustainment with Repair Depot Throughput and the return rate, because a 2 to 5 percent annual return rate on thousands of fielded units drives diagnostic, repair, and re-acceptance labor for years. A quote that ignores spares support wins the bid and loses the decade.

Scrap and rework compound faster in defense work than the raw yield suggests. A conformal coating defect on a mission-critical assembly is a common acceptance-test failure, and rework means de-coat, repair, re-coat, re-mask, re-inspect under UV, and re-screen, touching four cost buckets at once. If your first-pass yield through coat and screen is 92 percent, budget the reworked 8 percent at 2 to 3 times normal touch time, not one times. Build a rework allowance per process step from history, and quote it explicitly rather than hoping first-pass yield holds. Hidden rework is where the difference between quoted and actual margin usually hides.

Assemble the quote as a stack: recurring per-unit cost, plus amortized setup and NRE over the committed lot, plus coating and screening at your real allowances, plus documentation and secure-configuration hours, plus a rework reserve, plus overhead and target margin. Then lifecycle costs, the component buffer's carrying cost and forecast depot support, ride the program bid separately. State your lot-size assumption on the face of the quote, because a customer who later cuts the lot resets your entire fixed-cost amortization. A quote that shows these buckets explicitly survives audit; a single blended unit price does not.

Published 2026-07-01.