Checked against the product · 2026-10-05

Product Pricing Concepts

The terms a product estimator uses, in the order they come up on a bid, and what each one means in Arcvue.

The bid

Recurring cost — cost that varies with the quantity built: material and touch labor. Priced per unit.
Non-recurring cost (NRE) — cost incurred once: preproduction engineering, first-article build and test, special tooling and test equipment, initial spoilage, training. Priced on its own CLIN by default; the proposal's Non-recurring treatment can instead spread it into the unit price (Amortized) when the solicitation asks for one all-in price. Mark a line's Cost type non-recurring so it stays out of the unit price and the option years.
First article — the first unit(s) the government tests and approves before production (FAR 9.3). Priced so it is not out of proportion to the production units.
CLIN — contract line item number. Each deliverable line, position and ODC in Arcvue carries one.
Make or buy — for each part, produce it in-house (material plus touch labor) or buy it (a supplier quote). A subcontracted fabrication is a buy.

Bill of material (BOM) — every part in one unit of the product, with quantity per parent, source, and cost. In Arcvue: the component tree under a deliverable line.
Attrition / scrap — material consumed that never ends up in the product. Entered as a percent; Arcvue adds it to the material quantity. Supported in a proposal by history or engineering judgment.
Yield — the share of units that pass a process step. A failed unit is discarded with everything in it, so Arcvue divides the quantity of the row it is on by the yield (its material and its touch labor) and the parts beneath that row inherit the larger quantity.
Price break — a lower unit price at higher order quantity. In Arcvue, a component's Quantity price tiers: each tier's Min qty counts total pieces purchased across the whole order, and the engine prices the part at the deepest tier the order reaches. A tier marked Firm through the option years holds its price; an unmarked tier escalates with the rest of the material.
Landed cost / freight-in — supplier price plus inbound freight, duty and insurance. Allowable (FAR 31.205-45); entered in Arcvue as the proposal's Freight-in (% of material) on Edit Details, which the engine applies per period and capitalizes into material. Leave it at zero when the vendor quotes delivered prices.
Lot charge / minimum buy — a supplier's fixed charge or minimum quantity. Entered in the unit cost or as an ODC line.

Touch labor — hands-on production labor per unit, from the process route sheet. Entered on a component as hours and a wage rate.
T1 / first-unit hours — the hours the first unit takes. The learning curve reduces later units.
Learning (improvement) curve — each time cumulative quantity doubles, hours fall to a fixed percent of the previous level; that percent is the slope. Arcvue applies Wright's cumulative-average curve: average hours over N units = first-unit hours × N^(log2 slope). Crawford's unit curve applies the same slope to the Nth unit instead and gives different totals; Arcvue does not offer it.
Follow-on lot — units built after an earlier lot continue down the same curve. Arcvue prices an option year as a follow-on lot: the quantity already built carries forward, so the option picks up the curve where the base year left off instead of paying first-unit hours again. Do not adjust the option-year hours by hand.
Rework — a unit repaired and sold as good, as distinct from yield, where the unit is thrown away. Priced as rework hours per reworked unit times the share of units that need it. By default rework sits off the learning curve; the proposal's Rework labor setting can make it follow the planned operation's curve. The component drawer has no rework fields, so a bid built on screen carries none.
Support labor — manufacturing engineering, quality, sustaining engineering. Priced in Arcvue as positions.

Cost pool — indirect costs that behave alike, allocated together. Defined on Accounting → Cost Pools.
Allocation base — what a pool is spread over: direct labor dollars, direct labor hours, material and subcontract dollars, total cost input, or value added. The rate is pool ÷ base.
Manufacturing overhead / engineering overhead — separate pools because factory cost and engineering cost benefit different labor. Selected per labor row in Arcvue.
Material handling (M&H) — purchasing, receiving, inspection and stores, allocated over material and subcontract dollars. A proposal-level rate in Arcvue.
G&A — company-wide cost, allocated over total cost input (all cost except G&A) or value added (total cost input less material and subcontracts) — a disclosed election under CAS 410. Arcvue applies G&A on labor cost and, for material, on the base your G&A pool declares on the accounting side: under total cost input, on the material plus its material handling; under value added, or when the pool declares no base, on the material-handling amount only.
Wrap rate — the multiplier from wage to fully burdened cost. With several overhead pools there is one per pool.
Rate snapshot — the copy of the filed rates a proposal prices at. Only Refresh rates replaces it.

Weighted guidelines — DoD's profit method (DFARS 215.404-71): performance risk plus contract-type risk, about 10% of cost on a firm-fixed-price hardware bid, less on cost-plus work.
Buildup price — burdened cost plus fee, per unit. For a cost-based firm-fixed-price bid this is the quote.
Warranty reserve — the cost of the deferred liability a warranty creates (FAR 46.7), carried as a cost element. Entered in Arcvue as the proposal's Warranty reserve (%) on Edit Details. Its Warranty basis takes the rate on burdened cost (the default: material, freight, M&H and G&A) or on the price, solved so the reserve is the stated share of the price; the fee is never applied to the reserve.
Special tooling / special test equipment — jigs, fixtures, molds, test rigs made for this contract. Allowable and charged to the contract (FAR 31.205-40); entered as ODC lines on the NRE CLIN.