Customer w/ unrealistic expectations - What would you have charged for this job? - Page 1
Forum section: electronics / projects

author: Starlord
author_rank: Frequent Contributor
timestamp: November 12, 2014, 03:11:49 pm
content: .

author: nuno
author_rank: Frequent Contributor
timestamp: November 12, 2014, 04:54:16 pm
content: I can't comment on absolute sums of money as my reality is different from yours on several levels, but what trikes me most from your story is the usual mistake of not letting things written down (what is required, what will be delivered, under what conditions, how the "agreement" can end, dates, etc etc). It takes some time (some projects) to "tune" the document, but it leaves it all clear for all involved parties.

author: Starlord
author_rank: Frequent Contributor
timestamp: November 12, 2014, 05:46:30 pm
content: .

author: 8086
author_rank: Super Contributor
timestamp: November 12, 2014, 05:48:12 pm
content: Firstly, your customer sounds like just the kind of customer I would avoid, no matter the amount of money. Vague requirements, trouble paying, complaining about prices...I would have stopped doing anything with him probably before halfway through your story.Your prices seem quite low, yes. Personally I have an hourly rate for these sort of projects, then the time you spend directly correlates with the pay. If I'm really confident about how long it will take I might go for a fixed price.What I always do is make sure that the project scope and requirements are written down and agreed. Prices too, or hourly rate if the time is flexible.Whether or not the project is a one-off or for mass manufacture is a key point to get agreed up front, it's a big part of the design process decision making.Personally if I had agreed a $75 price for 150 unit minimum, that is not negotiable. Smaller quantities cost more, period, and I would have told the customer this.Also, research time is on the clock! Why research someone else's project for free? Your time has value!It's difficult sometimes to take the decision to turn work away, or risk the customer going to someone else, but for the profits you're talking about, I certainly would have. Sometimes it's just not worth it.This might all sound a bit one sided, but the key point is, if I'm working onyourproject,youare paying me for it. Sure, sometimes I will do a bit of research if I'm bored and I don't mind, but that's the exception, not the rule. If a client doesn't realise this, they aren't a client for very long. Time is money!

author: m100
author_rank: Regular Contributor
timestamp: November 12, 2014, 06:11:12 pm
content: Can't name a price, every situation country and culture is different, but If you need to put food on the table you will work for whatever the food costs.Any other situation and think of a price and timescale and add a suitable margin, could be 20% for something you already have an off the shelf solution to, but it could be 100%, maybe 1000% or more depending on how much you need the job, how deep the clients pockets are, how desperate they are for your services and what your clients and your future plans are.If they won't pay the asking rate then simply don't do the work. Above all never assume anything, always have a paper trail, confirm all telephone conversations by post/fax/email, and always be prepared to walk away.Even doing that you can still get screwed / pissed about by the most unlikely of people / organisations / companies.

author: Seekonk
author_rank: Super Contributor
timestamp: November 12, 2014, 06:41:01 pm
content: I have a cartoon of a guy at a lawyers office. The lawyer says....You have a good case, How much justice can you afford. Even when things are in ink, things go bad. Clearly this is a "hobby job". You wanted to do this as much as he did and you were far too willing to move the goalpost. Getting paid upfront solves many of these problems.

author: KM4FER
author_rank: Regular Contributor
timestamp: November 12, 2014, 06:50:17 pm
content: Oh, this is too funny. I'm not laughing at you StarLord but at the situation.See, my other hobby is making pottery, which is considered an art form by many and over the last 15 years I have heard the same thing from Artists."But the customer just doesn't understand! ( Insert foot stomp here. ) I spent many years of hard work and at great expense to learn my art form and I should be paid accordingly. ..."They say the same things you are saying and for the same reasons. And you are both right. One should be paid fairly for the work they do. However, there are always people out there who want to take advantage of you and they have become masters at manipulation in order to get the better end of the deal. Take for an example the recent disclosures between Apple Inc and the sapphire maker.In my opinion there has already been some good advice given. I will only add that if the customer holds out the carrot of there being great monetary rewards in the future make sure you put in a "failure to perform" clause in the contract which might allow you to recoup something from your losses.earl...

author: Lightages
author_rank: Unknown
timestamp: November 12, 2014, 07:16:03 pm
content: Designing a prototype on the cheap for the promise of volume is an old story unfortunately. People always think that dangling the carrot of future work is the way to get people to start work cheaply. Sorry to say, you fell for it just like everyone else does at the beginning. The "future work" always almost never pays off and you end up getting your time and reputation stolen from you. He might not be a bad guy, just naive and cheap.IMHO, I would take whatever money he can pay you for the work you have done up till now, and the parts/boards, and then walk away.

author: David_AVD
author_rank: Super Contributor
timestamp: November 12, 2014, 09:09:59 pm
content: Custom work involving artists (sculpture / music / whatever) frequently involves unrealistic expectations on the part of the client. The desire to get involved with a cool project can sway your thinking too. You're not the first and won't be the last.If you run ahead and do the R&D in your own time, be prepared to never be paid for it. It *might* lead to a great deal (for you) down the track and lead to lots of (paid) work, but it may be a dead end.These days you can buy mass produced items that are very complex and very cheap, so the client thinks a custom design should be cheap too. Their concept of mass production can be tens of units, not hundreds of thousands.I try to give people a rough idea on R&D and unit price ranges before getting too involved. That's not always possible, but can week out the obvious time wasting / unrealistic ones.It is worth using written communication as much as possible. Even if you discuss it on the phone, send an email afterwards with an overview of what you talked about to make sure you're both still on the same page.

author: AndyC_772
author_rank: Super Contributor
timestamp: November 12, 2014, 10:15:31 pm
content: I think the mistake you've made is in getting involved with manufacturing as well as design.When a customer asks me to develop a new board, I usually deliver schematics, a PCB layout and a BoM. I charge an agreed hourly rate for the time I spend on the design, and this has nothing to do with the number of boards that are ultimately manufactured.If requested, I'll introduce the customer to a contract manufacturer who can build it - but I won't personally assemble anything beyond the first working prototype, nor get involved in the business relationship between the customer and their choice of manufacturer. I normally recommend that whoever will build the production batch also does the prototypes, so it's actually quite unusual for me to build anything at all from scratch.There are several reasons for this. One is that my soldering is best described as 'functional' rather than being of the standard that someone who does it all day, every day can achieve. More importantly, though, it helps to separate out the costs and responsibilities.Manufacturing is a game that's all about price, lead time, yield, and price. Often, people who aren't familiar with the electronics business are surprised by just how strong the link between unit cost and batch size is, and the last thing I want to have to do is add my margin on top of the cost of a small run of boards which are already being perceived as expensive. I'd much rather stay out of the loop, besides providing technical support, of course.I work on the basis that, if I do a good job, customers will come back next time they need something designing. They're free to get their products made wherever they like, and I don't need to keep their CAD data hostage to get repeat business.

author: Wilksey
author_rank: Super Contributor
timestamp: November 12, 2014, 10:23:48 pm
content: In the real world people don't think you are worth as much as you make out you are purely because they want something done cheap.There are people who will take the job for whatever reason and either be happy with what they have been given and the chance to make something, these are hobbyists. Those that say "hang on a second" much like you are realising now are just another victim to societies everything for free goalpost.I do "private" work for people on and off, and I ALWAYS make sure I have down in writing what they want, or what they think they want, when they want it by and how much they are going to give me, if it was a large project, not that I have had any yet, bit I would set up milestone payments, i.e. when I reached a certain goal I would invoice for part of the work. I make it perfectly clear if it is fixed price and they change ANYTHING costs can be incurred, this is down to discretion however.If you are charging hourly / daily etc, then make sure you stick to it, if they start quibbling walk away. It's simple, as soon as they start messing around call it a day.In terms of pricing, well, only you know what you are worth! Check out local competition if there is any and compare prices / services.People have already given you good advice.The bottom line is don't take any crap and be taken advantage of else you may as well pull your pants down, bend over and say "here, have a go on this".

author: marshallh
author_rank: Unknown
timestamp: November 12, 2014, 11:23:32 pm
content: 1. You did not charge nearly enough2. You did not draft a Statement of Work detailing exactly what the deliverables were to be3. You agreed to take on the role of fabrication with no clear delineation.I'm not a formal type of guy, but it usually works out much better for both parties if they follow a more rigid process.Your client is very lucky that you have put in this much effort for him. You have no obligation to continue carrying the water for him if you choose.

author: all_repair
author_rank: Frequent Contributor
timestamp: November 12, 2014, 11:36:29 pm
content: It is a good experience.First datasheet to read for a project is about the client. First part to disqualify is a client that do not appear to have the paying capacity. And for all new part, they need to be stress- tested (telling hard truth to them) throughoutly first before they can be considered.

author: suicidaleggroll
author_rank: Super Contributor
timestamp: November 12, 2014, 11:58:43 pm
content: Quote from: Starlord on November 12, 2014, 03:11:49 pmNobody else has said it yet, so I suppose I will. What you described here is more of a proof of concept than a prototype, there's a big difference.It sounds like the two of you have been on different wavelengths from the beginning. It sounds like he expected a production-ready prototype device after the $1500, and you expected just a few orders a year that you could put together with more off the shelf parts. The scope of your work on the original prototype should have been more clearly outlined, and from the sound of it you should have communicated with each other a bit more at the start to make sure you were both on the same page. In hindsight, you probably should have done the actual board design and component selection for a production-ready device the first go-around, so when the prototype was complete he would have a full design that was ready to go into production at any time. And of course your NRE for the first prototype order would have been much higher as a result.I have always operated as AndyC_772 suggested, whether I'm working with a contractor or I am the contractor. When I'm working with a contractor, I ask for a prototype, they return a quote which includes all of the NRE necessary to develop a production-ready prototype, plus a few prototype boards and all of the documentation (schematics, board layout, Gerbers, any necessary software, etc.), and an estimated lead time. I pay the amount, and a few months later I get the prototype boards and documentation. From there I can either fab the boards myself using the provided docs, or with some contractors I actually go through them for future orders as well (they do additional testing that a board house wouldn't/couldn't), which works just like the first order but without the NRE cost, and there are usually a few options for different quantities. And yes, the original quote is often tens of thousands of dollars of NRE, with the expectation that when the order is complete, I have a full design ready to go into production at a moment's notice.When I'm the contractor I operate the same way. Big lump sum of NRE for the initial prototype development plus a few prototypes, and then future orders are a simple case of price vs quantity.There is the occasional order where they don't want a production-ready prototype at first, they just want a rough proof of concept (as you put together for the original $1500), but in those cases I made DAMN sure they know that the device I deliver is NOT production ready, and there will be another big NRE investment required to make it so. From the sound of it this piece of the dialog was missing the first go-around, which caused a tornado of miscommunications and unexpected development costs and lead times from there forward.

author: Corporate666
author_rank: Unknown
timestamp: November 13, 2014, 12:24:45 am
content: Starlord,I was laughing reading your post - not at you, at your customer. I don't know how old you are, but perhaps you remember that Pet Shop boys song"I've got the brains.. you've got the brawn... let's make lots of money". Well, the client you are working with is as known to people in the manufacturing world as the day is long. Their mantra is "you take the risk... you spend the cash.... I'll make lots of money".Firstly, the mistakes are largely yours in managing this client, but it's mistakes we all make at some point in our life. I suggest having some sort of information letter of understanding that you send to any client after the initial contact outlining your understanding of what was agreed to. Furthermore, it is *essential* that you add some stuff to any quotes you put together - firstly that work does't begin until money is paid. Second, that pricing is contingent upon quantity. It MUST be in writing otherwise people will 'forget'. If the guy only wants quoted on 150pcs, that's fine... you just make sure at the bottom of the quote it says "this quote is reflects the above listed quantity. Smaller quantities require a requote" or some such.Second, you are working too cheap. You shouldn't be looking at this in terms of wages and what your equivalent annual salary is. Rather, you need to look at it in terms of a business. A business that wants to pay you $75k a year needs to be taking in at least $100k+ a year, realistically quite a bit more. If you are just starting and don't feel you can command this rate, it's Ok to start our lower - but make SURE you are getting paid for each hour you work and keep your rate in mind. It's easy to wind up working for minimum wage or less.Third, not all business is good business. Bad business is worse than no business at all... if you have 100 hours into this guys project (and it sounds like you have more), and you have been paid $3,250 in total, plus you have spend $2,000 for prototype parts, shipping, PCB's and such... well, you would have been better off going to work at Home Depot for $15/hr and not have to deal with any of this. Not to mention you could have spent the 100+ hours you spend working for this chump instead finding better clients.My company designs and manufactures lighting - we also do all our own in-house CNC machining, engineering, 3D modeling and such. When we go to trade shows, I always get a few guys approach me wanting us to help them make their dream come true. This past year I had a well known designer want us to build a few prototypes of new LED lights. One was a 16" cube frame with a cylinder on top - all made from solid aluminum, drilled out so the wires could run internally, custom machined so LED strips could go in the metal and be filled with plastic, and the whole thing chrome plated. It would be a few hundred in materials, a few hundred for chroming/assembly and probably 100 hours of design/engineering. He wanted a price right at the show and kept pressing - so I guesstimated it would be a couple thousand at least for the first article and probably a few hundred each in 100pcs quantities, but that was a total guess and we'd be happy to quote it. His eyes got big like saucers and he thought that was really high. I asked what he was planning to sell these lights for and he said $1,500-2k each and expected to 'easily' sell around 100 a year. So this guy is 'sure' he can do $150k to $200k a year in sales but won't spend $2k on a first article? $2k was beyond cheap for a first article, maybe just break even price. But it's fine - he identified himself as a customer I don't want.Another (sorry, getting long) story... guys approaches me - has a 'famous celebrity' client who wants a ceiling covered in little LED lights that will be programmable with various patterns. Here's the kicker... each of those little lights will be a small metal fixture with an actual real diamond inside to reflect/refract the light. The client was going to be spending several hundred thousand on the diamonds, and they needed a holder that incorporated the LED and such. Again, wanted an off-the-cuff price (the unserious ones ALWAYS wants a price after 5 minutes of discussion). I suggested if we were talking thousands of these units, it would be perhaps $30-50 per unit assuming a couple thousand units, plus at LEAST $20k for the control system. That doesn't include installation or programming. Course I was getting beat up on the price incessantly for the next few weeks over the course of many emails... and I stuck to my guns.. I can't give you an accurate price until we make a few, and that's going to cost you a few thousand for the protypes - AFTER you ship me a couple samples of these diamonds for measurement. Of course, it never went anywhere... but if the client is spending hundreds of thousands on the diamonds alone, the designer can't drop a few grand on a prototype?The root cause is often the same. The people have already made commitments to others while having absolutely no idea what it will cost... then they come to you looking for a quote and it needs to fit with their 'pulled from the ass' estimate they have committed to.Frankly, that is bad business to get involved with such people. Set a hurdle that a client must clear in order to be taken seriously. In your case, you should have sent the client a letter of understanding after initial free consultation (no more than 1/2 hour), set a deliverable and describe it and give a price. He wants the deliverable, he can pay for it.Oh, and any client who ever wants you to itemize costs so they know what you're making - see ya, goodbye! Nothing screams "I am broke and think I am an important customer" than that.

author: T3sl4co1l
author_rank: Super Contributor
timestamp: November 13, 2014, 04:50:00 am
content: Quote from: Corporate666 on November 13, 2014, 12:24:45 amFYI, itemized expenses are somewhere between SOP and required if asked. I normally put items on my invoices, e.g., labor, proto boards, parts. I don't need to break it down to every last cent, but I keep the records that allow me to do so if necessary (e.g., time log of labor).Tim

author: Corporate666
author_rank: Unknown
timestamp: November 13, 2014, 05:59:52 am
content: Quote from: T3sl4co1l on November 13, 2014, 04:50:00 amFor time and materials projects, definitely.For fixed price, absolutely never.Unless I'm reading it wrong, this project seems to be the latter... the OP wasn't keeping track of his hours and providing statements to his client, he quoted him a price for a prototype and then a price for a production run.

author: T3sl4co1l
author_rank: Super Contributor
timestamp: November 13, 2014, 08:12:38 am
content: Yeah, fixed price is generally unwise...If you're going to do it that way, definitely itemize it as best you can, anyway: break down every step into every foreseeable time and cost, then add them all up. Then double it. And then add overhead.They don't need to see your project plan. If they ask, charge them fairly for the time it took to create it! That was effort undertaken at your expense, and it's a service all its own: they could take your project plan and have someone else implement it.If the customer doesn't like the result of this procedure, tell them to go time & materials instead, or go somewhere else.Tim

author: janengelbrecht
author_rank: Regular Contributor
timestamp: November 13, 2014, 08:17:12 am
content: -Get all in writing.- When calculating the costs make sure all is considered and specify that it is all based upon the written deals specifications.- Make sure you have overhead enough so all eventualities are covered.Thats just my normal approach (and i have until recently only worked with software engineeringOf course...if you are too hungry the customers can smell it and you will end up as a looser...so be sure they cant

author: hamdi.tn
author_rank: Frequent Contributor
timestamp: November 13, 2014, 08:56:20 am
content: Good experience, as many mentioned it, Get it all in writing , everything has to be clear from the start, it's ok and normal and happen all the time to have occasional change on have the product work, but for major change , the client pay for the engineering time.Custom design cost much whatever you make it in china or in US, client must understand that, and if a deal is set about a price don't change that price, and always get some of the money in advance. For cheap ass bastard get most of the money for your engineering work give him a working prototype ( set of 5 max ) give him the files and let him fight with industrial, that time he will know how this industry really work.Thankfully i work most of the time with ppl within the E industry, however i get some of those ppl who get shocked by design price, here in Tunisia design really cost cause there is no component supplier neither PCB manufacturer so it's uneasy job. I try to develop a bullshit detector for shitty pplyou will encounter many ppl who promise "future an uninterrupted flow of project" most of the time ... crap so be aware of thatgood luck

author: AndyC_772
author_rank: Super Contributor
timestamp: November 13, 2014, 09:26:01 am
content: Quote from: hamdi.tn on November 13, 2014, 08:56:20 amThis is another good reason not to get involved in manufacturing - or, at least, a good reason to completely segregate it from the NRE. The NRE does have to be done, and therefore incurs the associated design cost. If it has to be recouped over some number of manufactured units, then they're always going to seem expensive.The key thing to note is that it's not the same as a company designing a product in-house. In this case, they're incurring the development costs and taking the risk that the product won't sell, and they have a responsibility to balance them properly and make a commercial decision about whether or not to proceed. If you're not charging for NRE, but are told you can expect to make it back on volume sales, then the risk has shifted to you. Don't let this happen.It's quite reassuring to hear that we're all pretty much in agreement on how the relationship between a customer and a design engineer should work. (How often does that happen on the internet?!)To the OP: reading through your story again, it struck me that the other mistake you've made is to allow your customer's problems to implicitly become yours - the key word being 'implicitly'.For example, if someone suddenly needs a product delivering more quickly than previously estimated, that's fair enough, it's the sort of thing that happens all the time. But the difficulties associated with that don't automatically propagate along the supply chain.We all do our best to help out a customer in a crisis, it's good business. That doesn't mean we have to deliver additional work or shorter lead times for free, though. Personally I address this by offering a standard hourly rate for stuff that's delivered in a reasonable time scale that I know I can meet on a routine basis, and a higher rate for fast turnaround. The higher rate applies if I believe a job is likely to mean working evenings and weekends, or risks affecting the quality of service I can offer to other customers.More often than not, when a customer asks for something to be done quickly, they're happy to accept the price premium. As a matter of personal preference, I'd actually rather have the extra time. Speaking of which, I really should get off the 'net and start soldering... tight deadline, and all that!

author: Psi
author_rank: Super Contributor
timestamp: November 13, 2014, 11:03:03 am
content: Yeah, the mistake was that the OP didnt write down the following things at the start of the project and get it all accepted by the client.1) Assumptions (the biggest being that the design was to be low volume high price)2) Project scope3) Payment milestones (a nice clear definition for what exactly the client is paying the OP for)If you have a clear outline of those 3 things its very hard for a client to argue.I beat MikesElectricStuff would have a lot to say about doing work for artists.

author: philpem
author_rank: Frequent Contributor
timestamp: November 13, 2014, 01:06:45 pm
content: I've got a few words about working for artists -- the trick is finding the good onesA friend of mine builds really nice, high quality, realistic animal costumes, stuff that wouldn't look out of place on a movie set. I can't remember if she approached me or it came up in conversation, but she wanted to do a costume with some animatronics. We settled on moving ears, and the discussion about cost finally came up. I wrote up a quote, she paid it, and that was that. Customers like that are the sort of customers I loveAs a side effect of that, I had a bunch of people email me asking about things like LED eye kits to retrofit onto their costumes.. after a while you can spot the mickey-takers. They're the ones who, when you say "My non-binding estimate (THIS IS NOT AN OFFICIAL QUOTE) is £x" reply with things like "That's too expensive!" or "I can get a box of LEDs on a rope from Poundland for a quid!". To those, I reply once: "Those items don't match the specification you gave me earlier, but if they'll fit your application then by all means feel free. I was under the impression you were asking me to design a new product from scratch, and quoted accordingly." Mickey-takers will not commonly reply.I did a second electronic module for another costume -- blinking LED ears. I had an LED string supplier utterly screw me over ("Yes sir, the LED string has Cree high-efficiency LEDs!"... bullshit, they were cheap amber indicator LEDs and barely visible at specified current) and ended up using some of my stock of Pyralux laminate and dry-film solder resist to etch a bunch of new LED strips. A quick trip to Farnell and my wallet was £40 lighter, my "contingency budget" is gone, the project is overbudget, but I've eaten the cost and the customer is happy. My fault for trusting a supplier I hadn't used before, and not getting samples earlier.Best war story is still the PCB assembly house (now out of business, THANK GOD) who took my money and repeatedly bumped me down the production queue when one of their "major customers" suddenly had a "massive unexpected order" and used up all the assembly house's production capacity... Never did get my money back...Psi, if I've caught the subtext in your message... I'll respond by saying not all artists are mickey takers. Plenty of them have been on the receiving end of the same arguments ("that's too expensive", "it's only some paint and canvas", ...) and the ones I've worked with won't generally argue over pricing unless you've screwed up your math somewhere...TL/DR: Find the good customers, work with them, and learn to spot mickey-takers early.Cheers,Phil.

author: 8086
author_rank: Super Contributor
timestamp: November 13, 2014, 01:51:20 pm
content: Not going to name names, but this thread reminded me of this enquiry I had a few months ago:...I'll just use my crystal ball, shall I?I think they even had a successful kickstarter!

author: Starlord
author_rank: Frequent Contributor
timestamp: November 13, 2014, 04:33:43 pm
content: .

author: Corporate666
author_rank: Unknown
timestamp: November 13, 2014, 07:06:55 pm
content: If the guy had the money to order 100, he wouldn't be ordering 10 and trying to squeeze you on the price. He either doesn't have the money, or he feels that you are screwing him on the price. Either way, it's not likely that he's going to be ordering 100 of these things on an ongoing and regular basis.By pushing off your profit to the production phase, you've essentially financed the NRE costs for him, which if you couldn't afford not to take the job was the worst thing you could have done.It also seems pretty clear he's looking to end the relationship and go somewhere else (by asking for the original files). I wouldn't be surprised if one of the first units he gets/got from you goes out for bid to others to replicate it. And with over 30% markup on parts, it's likely someone will undercut you, especially since they won't have near the same NRE costs.The fact that he balked at paying NRE fees when he was willing to pay NRE fees for an injection mold indicates a failure of the sales process. If he had balked at the $5-10k NRE fee from an injection molding company, would they have just made the mold on the promise of future huge orders? Of course not... you shouldn't have either.Also, designing and making an injection mold is "a few hours of programming a CNC machine and a couple of days to manufacture" just as your project was "connecting a few wires and spending a couple of hours ordering parts". There is a lot more to it than that.

author: Starlord
author_rank: Frequent Contributor
timestamp: November 13, 2014, 08:49:32 pm
content: .

author: SirNick
author_rank: Frequent Contributor
timestamp: November 13, 2014, 09:23:59 pm
content: It's all about expectations. Maybe this guy has done prior work with materials manufacturers, but hasn't had to order custom electronics before. Next time around, he'll have an idea what it costs and it won't be such a shock to budget for it.Remember when you first learned that a diode had a voltage drop when conducting? Can't speak for all of us, but I kept thinking, "man that's unconscionable to drop half a volt or more! There's gotta be something I'm missing." Nope, I just didn't have a clue what was normal.Anyway, you know the answer to this. You have to provide realistic quotes up-front that let the customer know what they're getting themselves into. If they can't afford (or can't stomach) the expense, they'll move on. Or they'll wince, take a breath, get over it, and proceed. You can't blame the poor guy for trying to squeeze value out of you. We all do the same by shopping around for parts and fab houses, and likewise tend to get huffy when there are sudden expenses and delays we hadn't anticipated. If he has the means and knows where you stand, the ball's in his court.

author: jlmoon
author_rank: Unknown
timestamp: November 13, 2014, 10:43:13 pm
content: Design & Development of a project of this sorts.. .. $125.00 / hour - Minimum 40 hours just to start, 50% money up front... for first prototype. 150 boards, whole new contract based on a percentage of board shop price plus board shop price & materials. All prototype hardware, firmware, software would remain intellectual property unless another contract / release was negotiated up front. Period!oh I forgot the Materials & Expendables involved in first design phase.JLM

author: hamdi.tn
author_rank: Frequent Contributor
timestamp: November 13, 2014, 11:43:38 pm
content: Quote from: 8086 on November 13, 2014, 01:51:20 pmcan't belive itQuote from: SirNick on November 13, 2014, 09:23:59 pmi like this examplei think the guy had an idea about plastic cost but not electronic, in fact you made the same mistake that he did by saying that it's nothing but couple of hour on a CNC, well every job is more complicated than an outsider can possibly imagine.Quote from: jlmoon on November 13, 2014, 10:43:13 pmI think the D&D policy you posted is more suitable for a confirmed design company that does not care if it let go an occasional, pain in the ass client like this, not really for an independent designer who live with those occasional ppl, but this does not justify over care about a client, sometime you have to say no.But by remain intellectual property, you mean that it's your right to use whatever solution you used for a particular project again with different project with different client OR that the client can't give those files to other company to use them OR the client have no access to design files , it's your mission to deliver the mass production?

author: ehughes
author_rank: Frequent Contributor
timestamp: November 13, 2014, 11:45:14 pm
content: Based upon your specs:$100USD /Hr - 120 Man Hours, Delivery of 5 prototypes and a production package he could shop around with. Half the time is for development. The other half is your cushion for dealing with the crap that comes along.But before I would quote anything I would need a written documentation from customer with:- detailed functional specification before work beings-cost target and QTYs.- basic mechanical specs at outset to guide designOnce I get specs I would provide an development estimate that states:-Re-enumerates requirements & deliverables- 50% up front for 1st time customers. non-refundable if they walk away- Billing will be done on monthly basis, net-15 terms to actual hours charged.- I would detail the estimate hours on each design task.After sending the estimate, I would require from the client a- Signed PO- 50% Down PaymentThen I would start work.Once deliverables are met, Additional software and research is billed at $100/Hour and requires another set of requirements and PO.Once you have been working with this client for awhile, you can loosen up on the "additional software and hardware" requirements for a PO.So, sounds like you paid the stupid tax for not getting some training in basic business. Remember, "trust but verify". This work can be very intricate. Ask a wage that is commensurate.Do this for awhile and build relationships. Then you can loosen up a bit. Never take a job on the promise of "Large volume, future profits, etc". That is dumb. Especially from an artist. They are poor for a reason.

author: Corporate666
author_rank: Unknown
timestamp: November 14, 2014, 03:27:59 am
content: Quote from: Starlord on November 13, 2014, 08:49:32 pm....and you can go to SparkFun and buy an Arduino, an SD card shield, a motor control shield and an RGB LED shield for $80, and get easy to use libraries for free, or probably get a high school kid to do the code for $100.The point is you can't make these relative judgments on value based on perception of what things "should" cost. That seems to be the mistake your client is making that you're objecting to. A big part of the cost of a mold is the patterning and whether it's single draw or not, and whether the part is designed for easy molding. And a big part of your project are NRE costs which include your time spend specifying parts and processes.If your customer paid those NRE costs on his molds but did not pay the NRE costs on your work, then you made a mistake in your sales process to the customer. He's obviously willing to pay NRE fees since the molding company got him to do it... and he should have paid NRE fees on your work too. From your posts, it sounds like you are hundreds of hours deep in this project and have gotten $2,500-$3,500 so far, much of which was spent on parts and boards - and the hope is that "you'll make it up on volume". But the hours spent working for free for this client would have been better off spent finding a better client.I hope he does turn around and order many batches of 100 boards at $75/ea. But if that happens, you dodged a bullet. You let a client transfer all his risk to you for nothing - no commitment, no blanket PO, no nothing. That's a sure fire way to get burned and you shouldn't be in the risk game. That's what banks are for - let him go get a credit card or a loan and let the bank take the risk. If he's unwilling to do that, what does it say about his confidence in the numbers he is promising to come through with in the future? And/or if a bank refuses to give him credit, and they are experts in risk management, what does that say about their confidence in the project?

author: SL4P
author_rank: Super Contributor
timestamp: November 14, 2014, 02:32:59 pm
content: Quote from: suicidaleggroll on November 12, 2014, 11:58:43 pmFor this reason - and it only helps, but you can always get stiffed somewhere in the process...I always divide the project up into clearly defined milestones.Exploration budget & payment planResearch & Viability of customer's ideaBallpark costing of whole project and timeline and repeatAcceptance & reworkElement testsPOC components for customer approval & understandingCollaborate on Product Spec & then Initial design expectations-- This far let's you see how much the customer is committed and understands--Youmay walk away now...!FP budget & payment planFUNCTIONAL prototype developmentAcceptance & reworkPP budget & payment planPRODUCTION prototype developmentAcceptance & rework-- The proposal and exploration budget / milestone payments only get this far--Hemay walk away now !Review and marketing analysisPRODUCTION budget & payment planAway you go...Steps can be combined - but price just gets compressed - may get slightly higher if timelines are also compressed.Also let the customer know up front - in writing - thatunwrittenvariation orders don't exist.Written variation orders will probably cost extra in time and/or money.Also let them know of limitations up front that are keeping the budget in hand...e.g. limited memory, performance goals etcIf I'm not sure of the customer's position or the budget is more than I can risk...Payment per stage is 60% up front, 30% on delivery, and balance of 10% on first beneficial use.All these terms and milestones are clearly repeated with each offer document.

author: kb0thn
author_rank: Contributor
timestamp: November 14, 2014, 05:12:11 pm
content: Quote from: Starlord on November 13, 2014, 08:49:32 pmAs they should be. They have "expensive  and stuff". And they are running a profitable business. And they have priced themselves accordingly. If a potential customer doesn't like their price, Protomold doesn't let the customer name their own price and dictate their own terms. You can do the same. It's just a learning process. In the USA, we pay for most education past high school. My first 5 years of running my business were expensive too. I recognized it as the cost of more education. I think you would do well to treat this experience as educational and try to figure out how to not let it happen again.-Jim

author: Starlord
author_rank: Frequent Contributor
timestamp: November 14, 2014, 06:19:01 pm
content: .

author: Starlord
author_rank: Frequent Contributor
timestamp: November 15, 2014, 02:50:21 am
content: .

author: Wilksey
author_rank: Super Contributor
timestamp: November 15, 2014, 10:40:27 pm
content: Eh,What can you say?! Just learn from people like this! Take note of the comments on here and put some of them into action next time, it will protect you and your customer!

author: Corporate666
author_rank: Unknown
timestamp: November 17, 2014, 10:47:16 pm
content: Quote from: Starlord on November 14, 2014, 06:19:01 pmPlease don't misunderstand - I agree with you that you sold yourself too cheaply and should be getting paid a lot more!However, I am just pointing out (and not trying to say it in a rude way) that it comes down to an error in your salesmanship... in other words, what did the mold company do that allowed them to get (a fair) large up-front payment from the customer that you couldn't get?Since there are up-front costs, I would imagine that anywhere else he went to get his electronics design done would have also charged him up-front costs. So part of your job is necessarily overcoming objections - his objection was the large up-front cost. With mold companies, they will often agree to amortize the mold over a guaranteed # of orders... so they might quote a $10k mold cost and $5/pc thereafter. However, if you commit to 1000pcs, they will do it at $15/pc and essentially "finance" the mold for you. This ultimately is what you ended up doing by charging $75/ea for the boards, netting $25 extra. But this may leave a bad taste in your customers mouth if he realizes he's paying 50% over your cost. Hopefully not, but time will tell.Anyway, sometimes you just need to be strict with customers, especially disorganized ones, because they will waffle over every detail and all of that time and indecision costs you $$.

author: rx8pilot
author_rank: Super Contributor
timestamp: November 18, 2014, 05:44:07 am
content: I have been in the end-to-end manufacturing business for a while now. When I started, I was effectively a "work-for-hire" business, looking for anyone that wanted to design something. I learned this same lesson quite a few times from a number of different angles. I undercharged, under-communicated, under-estimated, etc, etc....I had a full shop with CNC machines and expensive software that I could barely keep going. Of course over time, I learned to better manage customers and projects to avoid most tough situations like OP wrote about. I eventually added electronics to my offering to augment my mechanical designs which made my projects even more complicated. After a few years, I found that I spent more time planning to not get ripped off by 'writing EVERYTHING possible on paper and getting client approvals that would hold up in court - I was not longer designing at all. To stay "safe" was very time consuming.I ended up firing all of my clients and designing my own line of products in my industry. Now I have customers, not clients and it is way better for me. I am certainly not suggesting that everyone do the same. Only wanted to illustrate how hard it is to do engineering for hire. It is a very mysterious profession that is both creative and technical. It is very hard for even the most seasoned engineers of designers to anticipate all the details and time that will go into a project. With that said, almost all clients push hard for a hard price and a specific time table while having no understanding of what may be involved. No matter what you write down, the specs love to shift and change even with everything seemingly written down. At that point, it does not matter who is right and who is wrong - you and your client are now stressed because he/she just realized it was not the right spec in the first place and they are trying real hard to say that your design is not right.I did have some really great and smooth project with great clients. Now, customer of mine makes any design decisions, they just decide yes/no to buy. If most say no, I revise the design. If most say yes, I move into manufacturing. Miraculously, I am much happier.