How do you calculate charges for contract work?

SInce anything has to be better than the ongoing disucssion of dialects and accents.......

I have occasionaly done contract schematic capture and PCB designs over the years, but now I am seeing some opportunities for even more work, which I really need, and so I am curious as to how to calculate charges, and if I am under or over selling my services.

I realize no one is going to give away trade secrets, or spill the beans about how much money they make, so I am not necessarily asking for amounts of money, but I am curious as to how others determine how much to charge for a job.

There are many different ways to go about it, but as the complexity of the design goes up, I find it harder to calculate costs since I often spend a lot of time making unique parts for the sch and pcb decals that I didn't used to have be concerned with, plus things like multiple layers can make a design much more complex that the simpler tasks I was used to doing.

If anyone is willing to share basic concepts, do you charge by the pin? How does the size and density of the board work into an estimate? By the hour, or by the job? Do you have a "basic setup" fee? Do you consider who is wanting the job, as in a large company with deep pockets, or a small, fly-by-night place trying to get by. How do you handle the occasional "oops" by the engineer after the board is done, and what about when you make mistakes?

Just curious if I am doing this right, or if there are better ways. To be honest, when I know the people I am working for, its one thing, but when they are strangers and I know nothing about the company or the product, I know that I have to establish some rules and adhere to them so they don't get to feeling I am ripping them off. One place sort of let it be known that I don't seem to charge enough. Strange but true, so I am having to revisit what I am doing.

In all honesty, the problem I have is that some days I can work like the wind, and am in the groove, and other days, concentration is not there, and for whatever reason, I am not up to speed and to charge someone for an hour's work like that, versus the other day when I was rolling along, seems rather unfair. Even at a full time, salaried job, there are good days, and bad ones. I guess I am unsure how to charge a customer for my bad days :-)

It almost seems a taboo subject. Kind of like an unspoken topic not to be broached :-) I don't expect any exact costs, or the revelation of any great secrets, but is anyone willing to share their method of quoting and bidding on jobs that involve pcb and sch design? Stories about customers who balk at the quote and how you negotiate with them?

Thanks for you time,

John

Reply to
uvcceet
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Good topic.

I am not sure how much response you will get to tihs, but I will give you some generic guidelines and my experiences...

A long time ago, when Service Bureaus were 'king'... I happened to snag one of their estimate forms. They had obviously gotten the information from somewhere - or knew their costs, etc - and it was obvious from how they were able to allow the user to generate an estimate - based upon a few factors involved.

I was a bit puzzled at how the numbers were derived, and spent many hours and cups of coffee 'reverse-engineering' how they did it.

Turns out it was not that difficult. They basically used a system that depended on an initial 'setup time' (in hours) - that every customer got dinged with (or could be waived - if it was similar to a previous job - or simple enough), and then it was determined by the number of 'pins', and the size of the PCB (length and width).

Now... granted - this was back in the earlier days - 1992 or so - when the designs may not have been as complex - or dense as they are now... but to a certain extent, I have found that the basic rules still apply.

So - what you may need to do is figure out what your basic 'setup time' is - and that would include things like getting the initial PCB configuration, to post-processing, etc.

Then decide how long it takes you to work - on average. I.E. how fast can you place Patterns, then route them, etc.

Determine the hourly rate you want to charge.

Create a spreadsheet to assist you in this - and you should be good to go. (I have created an HTML web page that I use to plug in the pertinent numbers - and it generates an estimate for me. I am able to access this web page from anywhere that I may be. Pretty handy tool.)

Oh. What I have found out - and tell the customers - about 'engineering changes' is that my estimate is good - for NO changes to the design. If the engineer makes changes to the design - even 'minor' ones - then the design drops to an 'hourly billed' rate - until I get back to the point where I was at prior to the change - and then the original estimate kicks back in. (Not sure that makes sense - but it _does_ work.)

The program that I created... seems to be basic and generic (to some) - and there have been those who have scoffed at my technique (using the number of pins and X,Y) - but when I input numbers supplied by these same folks - my methods seem to generate estimates (in a matter of seconds) very similar to their techniques that take hours to sift through.

As for Schematics... that is a bit more difficult. I usually just throw a basic... 'it will take this long' in there (It's really a percentage of the layout time)... it seems to work in most cases.

As for negotiating with clients - and trying to 'justify' my times... which to some seem unrealistic - especially when there is ALWAYS the fella who will always under-estimate a project - just to get the work (then later they tell the client - 'I need more time') - I don't know what to tell you there. I usually just *shrug* and walk away. I don't play the 'Well, I can reduce my estimate...' game. What I _will_ tell them is that if they want to ignore the estimate - and just go with an 'hourly rate' - that is, I will only bill for the hours that I work - that it may come out better for them. They usually like that idea and accept.

What _I_ want to know is... how do you get 'paid'?

Do you get a percentage of the estimate fee up-front upon acceptance of your quote? Or only after the work is done - upon delivery of the job?

Do you release the CAD files to the client?

Or just the post-processing files - like Gerbers, Drill Data, IPC-D-356A, etc.?

How do you handle clients that tell YOU when they pay - like... instead of a 'Net 30' days, they insist that they only pay 'Net 45' days? (Currently, I have no answer... other than to 'up' my fees for those that want to pay slower - to compensate me for the added burden of having to wait 15 days longer.)

Regards,

James Jackson Oztronics

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Reply to
James Jackson
[snip]

From the other end, I can tell you that this is what we do with the contract design company we sometimes work with: We give them a schematic (and netlist) and layout guidelines, and they give us estimates for layout, board fab, and assembly. IIRC, we pay a percentage up front and the balance is Net 30. We usually cut them a check (for the layout) as soon as they deliver the design files, however.

[snip]

They now give us both the gerbers and the design files. But we have been using them for years, and we have a trust relationship with them.

--Mac

Reply to
Mac

I would assume that most customers would want them so they could take the package to somebody else if you got run over by a truck, were on vacation, were too busy, or...

Any problems with giving them everything? I assume you want to make an archival copy of the whole project for your your own use so it's probably easier to to make another copy of that than it is to make a pruned copy for the customer.

The only reason I can think of for not giving them everything is that you might consider some of the library stuff to be propriatery. Up the price to cover that or get a lawyer to write a contract that says they can't use it for anything other than this board. (hard to enforce)

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Reply to
Hal Murray

Yes - if they have not paid yet. On completion they get the gerber/nc files to create the board. After payment they get the cad files to take elsewhere if they desire.

Geo

Reply to
Geo

I don't have a plethora of customers, or a very diverse base to work with, so in my own case, I have a goog, usually long, relationship with the companies I do work for, and just invoice them net 30 days after the work is done. Sometimes I do engineering design work as well as the PCB, and if the job will take more than a few weeks, I invoice them for work done every week or two, so it doesn't take me a month to get any money for the job.

The few places I have done work for that I do not know, I usually ask for 25% up front, or some amount close to that, but again, I am not finding full time work doing this, so its just a job here and a job there when I can find it.

Again, not being the all encompassing full time pro, sometimes I do, sometimes I don't. If they ask for them, I oblige. The idea of giving away library components is valid, but I do get paid for the time it takes to make them, so I figure the customer owns them, just as if I did it on a full time job for a steady employer. When I was doing portrait photography, I had the same approach, in that I was paid to create negatives, so they belong to the client if they ask for them. Probably not the brightest approach, but that is how I do things Its a grey area for sure.

That hasn't happened to me yet, but I think I would do as you say you do, increase the charges to compensate for the aggravation. Net 45 is a joke. I would be working pretty slow if that was how I got paid.

I wish I was in a position of having a lot of work, and a lot of these kinds of decisions to make, but as I said, much of what I do comes from companies I have known for years, so I am comfortable being lenient in a lot of these areas.

I do send copies of all the fab files to the client all the time along with the final invoice. If they ask, I will forward them to their favorite fab house, but I don't want to be in charge of those files once the job is done. Copies are kept here in case they blow it and lose the ones I give them, but they don't get replacements for free :-)

Thanks for the input. I am interested in how others work.

John

Reply to
uvcceet

John,

Great feedback and comments. Thanks!

"Copies are kept here in case they blow it and lose the ones I give them, but they don't get replacements for free :-)"

Interesting comment. I have one client... that feels that they have the 'right' to lose the CD-ROM with all the database and related files - and then ask for a new replacement from me... every time they are irresponsible enough to mis-place their copy. (Can we say scatter-brained?)

(The interesting side-effect is that they eventually find ALL of the CD's - and then do not know which one to use - so hand them ALL to the poor individual - whose job is to then sort them all out.)

So - how much do you charge for 'replacements'?

Regards,

James Jackson Oztronics

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Reply to
James Jackson

I put the name and date on the CD. Sharpie.

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The suespammers.org mail server is located in California.  So are all my
other mailboxes.  Please do not send unsolicited bulk e-mail or unsolicited
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Reply to
Hal Murray

Don't forget the library parts too.. they should get a copy of them if they can't be extracted from the design

On the "if they haven't paid" part... you might want to arrange sending the Gerber's to the fab house instead of the customer... I had a friendly fab who would accept my designs for a third party... It gets around the possession is 9/10's of the law rule... as they don't have possession of the artworks.

Simon

Reply to
Simon Peacock

Well, maybe I'm just dense then.

I always print out a CD label - and on that label I put the Version/Revision of the database, I.E.

Widget Rev3.1A

....and the date.

So - I guess the problem that I might have is a half dozen CDs thrust at me that all say "Widget 3.1A" - with different dates on the CDs.

I have had this particular issue with them giving me the 'latest' files for their current product.

Actually, it was a tad worse. The databases all had the same name - with different timestamps. Some 'sets' of data had more files than the others. I had to weed through each and every set of files until I got what looked like a decent set of databases to work from... and even then, I was not quite sure I had a database that matched what their product was 'built' to or not.

Again... can we say 'scatter-brained'? (I suppose a 'kinder' word would be 'lack of configuration control'.)

This is one reason I resisted the "I lost the CD, give me another one. If I lose that one, I expect you to give me yet another." approach.

So - the question of "How much do you charge for 'replacement' CDs?" is on the table.

Regards,

James Jackson Oztronics

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Reply to
James Jackson

I am a lousy businessman, so for people who are ignorant and blatanly unwilling to take care of their own software, I have charged them an hour labor to go through my archives and find their software to put on another CD. For other towards whom I have less animosity :-) I make sure to charge a bit more on their next project to cover the aggravation factor.

Losing the docs might cost them $30, plus or minus where they are on my list. I don't want to project the idea that I have a hundred customers and stick it to half of them..... Would that I did, but I am not their librarian so I try very hard to make sure they understand that once I do a project for them, I am not married to it, and it is up to them to take care of their own stuff. When I did the first handful of jobs for clients, I kept the files myself, and managed to lose them, so I quickly adopted the idea that they pay me to create something, and when I am done, I give it all to them and its their baby, not mine.

As a side note, google mail, or any of the other mail services that offer a Gig of storage is a nice place to archive docuements and files. I just email everything zipped and password protected, and then put it in the archive on Gmail. Have to have other backups as well, but there is a ton of room for stuff, and although Google could lose it or screw me, if my house gets wiped out or something, I have copies of important stuff stored on the net. No worse than a safe deposit box at the bank

The hardest part of billing that I contend with is that I often do some of the hardware design as well as the pcb layout, and designing hardware is harder to pin down time used. Sometimes, I am brilliant :-) and get it done in a hurry, and other times, I am, well,.... not so brilliant. I have not found a comfort zone yet for hourly rates based on whether I am having a good day, or a bad one, and I see no reason to penalize myself for having a brilliant rush of inspiration and getting it done faster than I thought I would.

As with most businesses, the actual work is the easiest part. Its the selling and running the business that makes it so hard, which is why I do not do as well as I probably should.

John

Reply to
uvcceet

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