Non-Recurring Engineering (NRE) costs are often treated as a sunk cost—a one-time fee to kick off a project, then forgotten. But in today’s shifting trade environment, that thinking doesn’t hold up. When companies face rising manufacturing risks, relocating production, or adjusting volume forecasts, how you structure and recover NRE can make or break your profitability.
At Titoma, we see NRE not just as a cost to manage, but as a strategic lever to stay flexible, reduce exposure, and build smarter.
What NRE Really Covers
NRE isn’t just a single line item. It includes:
- Industrial and electronic design
- Prototyping and test fixtures
- Tooling (like injection molds)
- Certification and compliance work
- Firmware and interface development
These are upfront investments—often substantial—that enable production but don’t directly appear in the unit cost. That’s why how you plan for them matters. If you need a quick refresher on the full scope of NRE, we break it down in this 2-minute explainer.
Why It Matters More Now
In the current global climate, where trade routes shift and factory footprints change, locking all your NRE into one country or one supplier can limit your options. Should you need to shift manufacturing later, you’ll likely pay NRE all over again—tooling, jigs, and firmware rarely transfer cleanly.
According to Business Money, proactively managing NRE costs through early collaboration with manufacturers and careful design decisions can substantially reduce financial risk. They highlight that strategic planning around NRE doesn’t just lower initial expenses—it can also lead to long-term savings and improved overall product quality.
That’s where smarter recovery models come in.
3 Smarter Ways to Handle NRE
1. Spread it over volume
Instead of charging everything upfront, NRE can be amortized across the first few thousand units. This makes entry easier for the client and keeps pricing predictable.
2. Roll it into per-unit pricing
Some clients prefer a fully blended cost. This allows them to write off NRE as part of COGS over time and offers more flexibility if volumes shift.
3. Share the investment
In long-term partnerships, both sides can share NRE. For example, if test fixtures can be reused across product lines, Titoma often absorbs part of the cost. That’s especially true when we expect multiple generations or families of products.
NRE Recovery Depends on Your Manufacturing Model
Working with an ODM vs. EMS provider will affect not only who pays for NRE but also how much control you retain over tooling and design files. If you’re still weighing the pros and cons between these two models, here’s a breakdown of how they impact cost recovery and design ownership.
How We Approach It at Titoma
Our engineers work across Taiwan, Colombia, and China to keep NRE costs lean and designs portable. That means:
- Reusing components and test fixtures where possible
- Modular design that supports retooling with minimal overhead
- Transparent NRE models that match client priorities—whether that’s speed, risk reduction, or cost control
If you’re budgeting a new product launch, it helps to understand how NRE fits into the broader picture. We’ve outlined a full cost breakdown for electronics development based on real-world project experience.
Final Thought
NRE isn’t just a cost. It’s a decision—one that affects flexibility, supplier control, and long-term margins. Structured right, it becomes a tool for smarter manufacturing.
Looking to reduce risk and make your product more portable?
Let’s talk about how to structure your next NRE investment.
For a quick estimate of what your NRE might look like, you can try our NRE cost calculator to get started.
