Turnkey vs Consignment PCBA: Which Model Saves You Money?

The Question Every Hardware Startup Asks Me

"Should we source our own components or let you handle everything?"

I've been asked this question hundreds of times. And honestly? The answer isn't straightforward. I've seen companies save 30% by going turnkey—and I've seen others save 30% by handling consignment themselves. The difference isn't the model; it's whether the model fits their situation.

Let me break down the three main approaches so you can make the right call for your project.

Quick Comparison: The Three Models

**Hommer's Summary**: If you value your time and sanity, start with turnkey. Graduate to partial turnkey once you understand your BOM. Consignment is for experts only.

Full Turnkey: The "Just Build It" Option

What Is Full Turnkey?

You send Gerber files and a BOM. We handle *everything* else: - PCB fabrication - Component sourcing - Assembly - Testing - Shipping

You receive assembled, tested boards ready for integration. That's it.

The True Cost of Turnkey

Here's what surprises most first-time customers: turnkey often costs the same or less than consignment when you factor in hidden costs.

Let me show you a real example:

Project: 500 units of an IoT sensor board, 45 components

*Component cost assumes you get great pricing—not always the case.

Hidden reality: The customer "saving" $1.50/board with consignment spent 40 hours of engineering time sourcing parts, tracking shipments, and dealing with one vendor who shipped wrong reels. At $75/hour loaded cost, that's $3,000—or $6/board in hidden costs.

When Full Turnkey Wins

✅ Choose full turnkey when: - You're a startup or small team (time = survival) - First production run (you don't know your BOM yet) - Standard components (nothing exotic) - Volume under 5,000 units - Speed matters more than squeezing every cent

Our turnkey assembly service handles all of this for you.

When Full Turnkey Doesn't Make Sense

❌ Skip turnkey when: - You have negotiated pricing with component vendors - Your BOM includes parts only you can source - You're building 50,000+ units/year (volume leverage matters) - You have a dedicated procurement team already

Consignment: Maximum Control, Maximum Work

What Is Consignment?

You source and ship all components to us. We assemble. That's our only job.

Think of it like bringing ingredients to a restaurant and asking them to cook. They have the kitchen and skills; you bring everything else.

The Control Advantage

Consignment gives you total visibility:

For aerospace, defense, and medical—where component traceability is mandatory—consignment is often the only option.

The Hidden Costs Nobody Tells You

But control comes with responsibility. Here's what consignment actually requires:

1. Procurement Infrastructure - Purchasing staff or outsourced buyer - Vendor management system - Payment terms with distributors

2. Inventory Management - Warehouse space (or 3PL costs) - Tracking system - Insurance on your stock

3. Logistics Coordination - Kit and ship to CM precisely - Handle shortages and overages - Manage MOQ excess

4. Risk Management - You own shortage risk - You own counterfeit risk (unless you vet vendors) - You own EOL risk

Consignment Economics: The Real Math

Let's be brutally honest about when consignment makes financial sense.

Scenario: Annual production of 2,000 boards

Wait, what? Consignment costs almost double?

That's the trap. The *assembly* is cheaper, but the *total project cost* often isn't—unless you have scale or existing infrastructure.

When Consignment Actually Saves Money

Consignment wins only when:

1. **You have volume** (10,000+ units/year amortizes overhead)
2. **You have existing procurement** (incremental cost is low)
3. **You have special pricing** (distributor relationships)
4. **You have controlled components** (aerospace/defense/medical)
5. **You're vertically integrated** (you make some components)

If none of these apply, you're probably losing money with consignment.

Partial Turnkey: The Best of Both Worlds

What Is Partial Turnkey?

You source *some* components. We source the rest. You keep control where it matters; we handle the commodity stuff.

Typical split: - You provide: Expensive ICs, custom parts, long-lead items, controlled components - We provide: Passives (resistors, capacitors), connectors, standard ICs

Why Partial Turnkey Is My Favorite

This is what I recommend to most customers who've done at least one production run. Here's why:

The 80/20 of PCB Components

You focus on the 20% that represents 50%+ of your cost. We handle the 80% that's commodity.

Partial Turnkey Economics

Same project: 500 IoT sensor boards

Partial turnkey: lowest cost, moderate effort.

How to Split Your BOM

Here's my framework for deciding what to source yourself:

Source yourself if: - Component cost > $5/unit - You have distributor pricing better than ours - It's a long-lead item you want to buffer - It's a controlled/traceable component - It's custom or proprietary

Let us source if: - Component cost < $2/unit - It's a commodity part (0402 resistor, etc.) - You don't have a relationship with the vendor - MOQ is annoying (who wants 5,000 toggle switches?)

Decision Framework: Which Model Is Right For You?

The Flowchart

Question 1: Is this your first production run? - Yes → Full Turnkey (learn your BOM first) - No → Continue

Question 2: Do you have procurement staff or capability? - No → Full Turnkey - Yes → Continue

Question 3: Do you have controlled components (aerospace/medical/defense)? - Yes → Consignment or Partial Turnkey - No → Continue

Question 4: Annual volume over 10,000 units? - Yes → Consider Consignment (if you have infrastructure) - No → Partial Turnkey

Question 5: Is your BOM stable? - No → Full Turnkey (changes are easier) - Yes → Partial Turnkey (optimize costs)

By Company Type

By Project Phase

Making the Transition

From Full Turnkey to Partial Turnkey

After your first production run, you'll have: - Validated BOM - Actual component costs (from our quote) - Understanding of lead times

Steps to transition:

1. **Review your BOM cost breakdown** (we provide this)
2. **Identify top 10 cost components**
3. **Get quotes from Digi-Key, Mouser, LCSC**
4. **Compare to our pricing**
5. **Source items where you're > 15% cheaper**

Most customers find 3-5 items worth sourcing themselves—usually MCUs, key ICs, or connectors.

From Partial to Full Consignment

Only graduate to consignment when: - You have dedicated purchasing staff - You're spending >$50K/year on components - You have distributor accounts with credit terms - You have inventory management systems

Otherwise, the overhead destroys your savings.

Common Mistakes to Avoid

Mistake 1: Choosing Consignment to "Save Money"

The assembly cost is lower. The total cost usually isn't. Do the math including your time.

Mistake 2: Not Accounting for MOQ Waste

You need 500 of a specific resistor. MOQ is 5,000. That's $0.01 per unit you need, but $0.10 per unit you actually buy. We absorb this in turnkey; you eat it in consignment.

Mistake 3: Underestimating Shortage Risk

In 2021-2022, component lead times hit 52+ weeks. Customers with consignment programs scrambled. Turnkey customers? We handled it because we had buffer stock and alternatives.

Mistake 4: Ignoring Kitting Complexity

Shipping components to us sounds simple. Until you have to: - Label every reel with your PO - Match quantities exactly - Deal with split shipments - Handle our shortage notifications

For 50 components from 8 vendors? That's a part-time job.

Mistake 5: Switching Models Mid-Project

Changing from turnkey to consignment (or vice versa) mid-production is painful. Pick a model and stick with it for at least the first run.

FAQ

Can I switch models between orders?

Yes, but give us notice. Going from turnkey to consignment requires us to adjust planning. A heads-up before the quote stage helps.

What if I can't source a component?

In partial turnkey or consignment, if you can't find a part, we can help—but it delays the project. In turnkey, we handle alternatives proactively.

How do you handle component shortages in turnkey?

We maintain buffer stock for common parts. For shortages, we contact you immediately with alternatives. You approve substitutions before we proceed.

What documentation do I need for consignment?

• Packing list matching BOM exactly
• Component data sheets (for new parts)
• MSL (moisture sensitivity level) for plastics
• Date codes if shelf life matters

Do you offer kitting services?

Yes. If you source components but don't want to kit them yourself, we can receive bulk shipments and kit internally. Ask about our turnkey options.

My Honest Recommendation

After 15+ years and thousands of projects, here's my advice:

Start with full turnkey. Seriously. Even if you think you can save money with consignment, start turnkey for your first run. You'll learn: - What components actually cost - What lead times look like - Where we add value (or don't)

Then optimize. Move to partial turnkey for items where your pricing beats ours. Only go full consignment if you have the infrastructure—and the volume—to justify it.

The goal isn't to minimize the assembly invoice. It's to minimize total project cost, including your time, risk, and sanity.

Ready to discuss which model works for your project? Contact our team or get an instant PCB quote to start the conversation.

Related Reading

Choosing an assembly model is just one part of your PCBA strategy. These related guides can help:

• **[PCB Testing Methods Compared](/blog/pcb-testing-methods-comparison)** – How we verify quality at each assembly stage, and which testing suits your volume and reliability requirements.
• **[PCB Materials Guide: FR4, Aluminum & Flex](/blog/pcb-materials-comparison)** – Material selection affects both cost and assembly complexity. Understand the tradeoffs before specifying.
• **[Wire Harness & Cable Assembly Guide](/blog/wire-harness-cable-assembly-guide)** – When your project includes cables alongside PCBs, single-source manufacturing simplifies turnkey further.

References

1. [IPC-A-610](https://www.ipc.org/) - Acceptability of Electronic Assemblies
2. Supply Chain Management Best Practices, APICS

*Written by Hommer Zhao, founder of PCB Portugal. Based on supply chain strategies refined over 15+ years of working with customers across all assembly models. Last updated: December 2024.*