A Bill of Materials (BOM) lists every component in your product with quantities, costs, and suppliers. The BOM is the foundation of manufacturing cost estimation, procurement planning, and margin analysis. For a medical device, the BOM typically has 50-500 line items.
BOM Cost Rollup
Unit COGS = Σ(Component Cost × Quantity) + Labor + Overhead + Yield Loss
Include all direct costs. Add 5-10% for yield loss (defective units).
Key Takeaways
- BOM = every component with cost, quantity, supplier.
- Include labor, overhead (15-20%), and yield loss (5-10%).
- Target 40-60% gross margin for hardware at scale.
- BOM cost decreases with volume — negotiate supplier discounts.