Advice on product design aquisition` - Page 1
Forum section: electronics / beginners

author: bright_ideas
author_rank: Contributor
timestamp: October 24, 2013, 10:07:02 pm
content: HI All,I have been following a GPS tracker inventor/designer for over 3 years now and his product seems sound and is unique in the market at the moment as it is the smallest known tacker in the world.It was apparently used as the tracker in a Nestle chocolate kitkat competition last year.He has made me an offer of only $1500 aud for the design files.I have a number of avenues where I can make this into a marketable product but I want to hear from you guys as to your thoughts and cautions etc.Thank guys and gals

author: AG6QR
author_rank: Frequent Contributor
timestamp: October 24, 2013, 10:31:02 pm
content: What's he granting you for the $1500? The unexclusive right to produce the product? Exclusive access? Or can he sell the same thing to your competitor next week? If he develops a minor revision of it, can he sell that to your competitor? Is he negotiating for a per-unit royalty in addition?How ready is the product for production? Does it meet all relevant standards for RF emissions? Any safety standards that might apply? Are there any agency approvals that will be needed? Do you need to design a weatherproof enclosure? Are all the parts readily available?$1500 isn't very expensive; it won't buy very much time of a good designer. But as to whether it's worthwhile, that depends on whether you have access to the right production, distribution, marketing and sales channels to turn that into a profit.At a minimum, have a plan for how many of these things you can sell, at what price, in your first run. Do the market research. What competitive products are out there at what prices? Why will customers prefer yours? Of course, look at how much it's going to cost to build them.And just for curiosity's sake, how does this tracker work? Does it save data to flash memory or something like that? Or does it communicate coordinates in real time? If the latter, what is the communications mechanism? Does it have regulatory approval for sale in the countries you're interested in marketing to? What sort of software support is available to make the tracking data useful to customers?

author: bright_ideas
author_rank: Contributor
timestamp: October 24, 2013, 10:49:37 pm
content: @AG6QRWow thanks for all that. REALLY good questions and info. I will drawing up a list and definitely including your questions.Thanks

author: Stonent
author_rank: Super Contributor
timestamp: October 25, 2013, 02:09:47 am
content: Talk to a lawyer before you do anything. This could come back to bite you.

author: madshaman
author_rank: Frequent Contributor
timestamp: October 25, 2013, 06:25:46 am
content: Honestly, $1500 is waaaaaay too cheap for any design, smells like Denmark to me. Two words: run away.

author: bright_ideas
author_rank: Contributor
timestamp: October 25, 2013, 08:59:41 am
content: Thanks guys for your input

author: EEVblog
author_rank: Unknown
timestamp: October 25, 2013, 09:04:44 am
content: Quote from: madshaman on October 25, 2013, 06:25:46 amThat was my first gut feeling.

author: KJDS
author_rank: Super Contributor
timestamp: October 26, 2013, 10:47:03 am
content: Quote from: EEVblog on October 25, 2013, 09:04:44 amIt's less than I charge for a one off single days work. It doesn't provide much design.

author: deth502
author_rank: Frequent Contributor
timestamp: October 26, 2013, 12:56:51 pm
content: Quote from: bright_ideas on October 24, 2013, 10:07:02 pmmy first thought reading this was that he is certainly bullshitting you, because kit kats are made by hershey's chocolate, not nestle's. but i decided to double check before spouting off and it seems that the us gets hershey kit kats and apparently the rest of the world gets nestle kit kats.

author: bright_ideas
author_rank: Contributor
timestamp: October 27, 2013, 09:29:03 am
content: Well guys...I have yet to make a decision but he sent me the Nestle gerber files etc. Not that I know how to read/interpret those so I guess I will have to get them verified.I am now waiting on some answers to the questions posted here by AG6QRWill update this as it developsThanks again all for your input

author: bright_ideas
author_rank: Contributor
timestamp: October 27, 2013, 09:50:40 am
content: Ok so here are the questions I have put together so far:Do we get exclusive right or access produce the product?If you perhaps develop a minor revision of the product, will you be able to sell it to someone else?Are you expecting to negotiate a per-unit royalty in addition?Are all components generally available and from whom?How much does it currently cost to assemble a demo unit?How much would it cost per unit using a production line?Does the unit already have regulatory approval for sale in certain countries?Do we get the source code to the software and the contact information of who coded the source code?Can we review the source code for validity?Can the unit be modified to accept prepaid air time?If so how easy is that and what would it involve?Does anyone else have the design or product already. If so who?(Please be specific so that any competition can be evaluated)

author: madshaman
author_rank: Frequent Contributor
timestamp: October 28, 2013, 05:50:14 am
content: This is just my humble opinion, but any competent EE could design for you a functional GPS tracker; they would be able to modify the design to accommodate alternate parts and better match your requirements.If there's a lucrative business opportunity here, does it matter so much if the design costs $1,500 or $100,000?Honestly, you usually get what you pay for.How do you know this person:a) has the rights to sell you this design in the first place?b) didn't just steal the design and is trying to shill it to anyone who will buy it?

author: bright_ideas
author_rank: Contributor
timestamp: October 30, 2013, 06:34:32 pm
content: HI all,@madshaman - Thanks very much for those additional thoughts I will definitely consider them.Here is the update to the questions I posed.Do we get exclusive right or access produce the product?If you can sort funds this week you can have exclusivity in australia to start. And to manufacture locally yes.If you perhaps develop a minor revision of the product, will you be able to sell it to someone else?Yes. But it will need to change something significant either in shape/size (significant) or feature. If you want complete exclusivity for this design then the fee is back to our original £4000Are you expecting to negotiate a per-unit royalty in addition?Not with the £1000. It's kind of a "here you go" offer. Unless you want our ongoing support and then yes, we'd like something small (5%)?Are all components generally available and from whom?All but the GPS antenna but you can change that for any one you want and we can advise. You don't even need to change the design files.How much does it currently cost to assemble a demo unit? In singles?About £450 enmasse down to about £35How much would it cost per unit using a production line?See above. Maybe lessDoes the unit already have regulatory approval for sale in certain countries?We can self certify for CE approval but not FCC.Do we get the source code to the software and the contact information of who coded the source code?You can get access to him and he will discuss costs for firmware changes and alterations directly with you. If you want to produce units to test then we will provide the processors loaded with the code. Unless you come to an agreement for firmware to be written direct for you.Can the unit be modified to accept prepaid air time?Yes but that will cost and will increase the size of the unit. Better to negotiate a prepaid contract yourselves with sim chips that you resell.Does anyone else have the design or product already. If so who?no one at this stage. We had pretty much given up on it and moved onto other projects.Any further feedback or thoughts as to the replies to these questions would be appreciated.Thanks everyone.

author: KJDS
author_rank: Super Contributor
timestamp: October 30, 2013, 06:36:50 pm
content: They can't self certify for CE

author: AndyC_772
author_rank: Super Contributor
timestamp: October 30, 2013, 07:24:55 pm
content: Agreed. If it contains a radio transmitter then it needs to comply with both the R&TTE and EMC directives as well as LVD, and you'll never put together an adequate technical file to back up a CE mark without evidence of formal testing.I hate to say it, but your costs are about to go up, sharply.

author: Alex
author_rank: Regular Contributor
timestamp: October 30, 2013, 07:55:33 pm
content: brightideas, may I ask how did you verify and can be so confident that it is the smallest in the world?To rephrase the question, are you confident the resources (primarily time) needed to bring this to market will not allow someone else (e.g. a multinational) to launch their even smaller product? Do you know the industry well enough to be confident a smaller version is not 2 weeks away from launch?Developing the smallest, functional tracker does not happen by accident - 3 years is a long time for a restless, specialist mind to come up with a way to make it even smaller...Abstracting the argument, I suggest you make damn sure achieving the core value proposition contains sufficient barriers to entry to buy you enough time to launch and assume control of this market.Alex.

author: KJDS
author_rank: Super Contributor
timestamp: October 30, 2013, 07:58:05 pm
content: The other key issue is how many have the already made. Anyone who has ever put a product into production knows that the first few batches cause a world of pain and if there isn't production support available then it just won't work.As for being able to change one antenna from another, I've only limited experience with these but they all seem to need their own tuning to get reasonable performance.

author: free_electron
author_rank: Super Contributor
timestamp: October 30, 2013, 08:02:42 pm
content: Quote from: KJDS on October 30, 2013, 06:36:50 pmyes they can ... China Export ..... remember ?

author: JohnnyGringo
author_rank: Regular Contributor
timestamp: October 30, 2013, 08:19:12 pm
content: Quote from: bright_ideas on October 30, 2013, 06:34:32 pmCheese. This is typical car salesman tacit. It'll be the same price or cheaper next week (unless already sold)Quote"Significant" is such a relative term. It'd be unusual if both of you had the same definition for "Significant".

author: madshaman
author_rank: Frequent Contributor
timestamp: October 31, 2013, 06:21:49 am
content: Quote from: bright_ideas on October 30, 2013, 06:34:32 pmI could be wrong, but £450 for a single unit seems suspicious to me, I can't possibly see how it would cost that much; other's opinions?

author: AndyC_772
author_rank: Super Contributor
timestamp: October 31, 2013, 07:07:29 am
content: It's about the only figure I really believe. Set-up and tooling charges could easily add up to that much even without the cost of parts & labour to actually build anything.

author: madshaman
author_rank: Frequent Contributor
timestamp: October 31, 2013, 08:22:12 am
content: I'm not sure the quote is referring to setting up a factory process for building the enclosure.I was thinking how much it would cost myself to prototype a GPS tracker on a PCB; including network connectivity. A GPRS module with GPS might cost €60 and would likely be the most expensive component.I'm sure this guy's actual design isn't as simple as I'd envision, but I wouldn't think the parts cost wouldn't be so high; even if you added to that the expense of etching a board and milling or printing an enclosure.I do agree that I'm not including paying a machinist and an EE for their time, so yeah, maybe it's not so out there.edit: don't post from your phone while riding a bajaji

author: AndyC_772
author_rank: Super Contributor
timestamp: October 31, 2013, 09:57:43 am
content: I was referring just to the fees for setting up a kit of parts in front of an operator, and providing that person with the necessary materials and instructions to build the unit.If it's built by machine then the costs for a one-off could be greater again - and that's after the initial costs such as programming the machine in the first place and manufacturing the solder paste stencil. Minimum order quantities, surplus left-over parts and shipping / handling costs all conspire to make single units hugely expensive compared to the costs of making the same product in volume.

author: Simon
author_rank: Unknown
timestamp: October 31, 2013, 10:34:11 am
content: Quote from: bright_ideas on October 27, 2013, 09:29:03 amsounds like you are in way over your head and he knows it.