I don't see how piercing a smaller hole is more expensive apart from there being less weight in the slugs for the scrap man.
I'm referring to hole tolerance not the size of the hole. When punching off from strip, you have to worry about things like strip width, drift, twist, feed speed, punch speed, tonnage, etc. It isn't just about the size of the relative punch size that we need to consider here when determining cost.
Examples:
Precise punching requires close width tolerances so the web can pass through the die guides without drifting too much and not binding.
Loose tolerances require less setup time where as closer tolerances require more time.
Closer tolerances may require pulling more punches as the tool wears.
More tool changes either requires more sharpening, or more tools.
Don't want to sharpen as much? Get better tool steel = more money.
I could go on about oils for loose, fast punching vs. slower, precise punching.
Cleaning web oilers, rapid feeder settings, etc. require different levels of maintenance, changeover, operator training and settings.
In other words, different tolerances require different process parameters, even on the same machine.
For extremely cost sensitive manufacturing, it wouldn't surprise me one bit that those slugs are returned to the manufacturer for credit. So larger holes mean less metal in the washer and they are cheaper, since the slugs are credited.
This is absolutely true. If you get paid for scrap, and at the volumes you need to be profitable in the fastener world, you need to get paid for scrap or you are throwing profits away. To tie this to my assertion about cost. The amount of scrap you make depends on well your process is defined and how well you execute that process.
We have strayed off track, sorry to derail the conversation, but it is an interesting conversation because this not only applies to the humble washer, but to the most complicated assemblies you can imagine.