Open Costing

We have, once again, a big company that wants us to sign an absurd contract, to supply them with some difficult electronics. Of course, they want to walk away owning all of our IP, free and forever. Plus about another 20 insane greedy-lawyer show-stoppers. They essentially want us to sit up and beg for the privilige of being ripped off by Big Name Inc.

One provision is called Open Costing. We would document all our costs, subject to audits. We'd be allowed 10% parts overhead, 5% G&A, and a 10% profit. We would be expected to continuously work at reducing costs, with all the savings going to Big Name.

Why don't they try to get 3M or NI or Agilent to sign something like that?

What's crazy is that...

  1. Anyone stupid enough to sign their contract is proven to be about 60 IQ points shy of being able to do the design

  1. Open Costing is really cost-plus, a clear incentive to maximize the product cost at design time.

This is funny: they sent me an agenda for a visit, and one hour was allocated for "Meet and Greed"

--

John Larkin                  Highland Technology Inc 
www.highlandtechnology.com   jlarkin at highlandtechnology dot com    

Precision electronic instrumentation
Reply to
John Larkin
Loading thread data ...

I'm surprised anyone would opt for cost plus now. Sounds like they've gotten an idiot young lawyer.

Why not reprint it exactly the same, bar one clause you change to saying you own their company, sign it and send it back :)

NT

Reply to
meow2222

Depends on how hungry the takers are, if they are desperate enough they'll sign just about anything. Luckily, in your world (and mine) there is a healthy and lasting tilt towards demand and a dearth of supply. So ... we can send'em packing if they want agreements like that.

That is the usual method with gvt contracts but you normally don't have to sign away all you know-how.

:-)

Not worth it, I'd say. That hour is better spent at Zeitgeist.

--
Regards, Joerg 

http://www.analogconsultants.com/
Reply to
Joerg

On a sunny day (Mon, 07 Jul 2014 10:30:32 -0700) it happened John Larkin wrote in :

Remember how Billy The Gates turned down IBM? He is now very rich.

Reply to
Jan Panteltje

Exactly. Let them get it somewhere else.

Oh, we'll probably do it for them. They really need it, and it's sufficiently inter-disciplinary that not many people can do it, especially quickly. But we'll waste a lot of time coming up with a reasonable agreement, given their ludicrous starting point.

Tomorrow is Meet and Greed day. Should be fun.

--

John Larkin                  Highland Technology Inc 
www.highlandtechnology.com   jlarkin at highlandtechnology dot com    

Precision electronic instrumentation
Reply to
John Larkin

One of the luxuries of supplying a unique and valuable product is that you can refuse that sort of nonsense, and usually keep the business anyway. One client loudly insisted that I do a few months' worth of work, bill once at the end, and get paid Net 90. That's better than Net Never, but not that much better.

Since they wouldn't budge, I turned the job down flat. They came back, and we settled on monthly billing and a sane payment schedule.

I'm in the middle of negotiating a contract with a semiconductor equipment house that will include both time-and-materials plus a performance-based royalty.

Cheers

Phil Hobbs

--
Dr Philip C D Hobbs 
Principal Consultant 
ElectroOptical Innovations LLC 
Optics, Electro-optics, Photonics, Analog Electronics 

160 North State Road #203 
Briarcliff Manor NY 10510 

hobbs at electrooptical dot net 
http://electrooptical.net
Reply to
Phil Hobbs

Yea it is tuff, even when your cost is expected to RISE over the life cycle. Yet they want lower cost. I dont understand the 10% profit part of it. Let them try to outsource to india , that will have them crawling back with a compromise ;)

Cheers

Reply to
Martin Riddle

formatting link

Reply to
David Platt

Yeah, why do billion-dollar companies, who need help making billions of dollars worth of gear work, want to nickel-and-dime the people who can help?

I'd be delighted to get 2% of what I save them.

Yes!

--

John Larkin                  Highland Technology Inc 
www.highlandtechnology.com   jlarkin at highlandtechnology dot com    

Precision electronic instrumentation
Reply to
John Larkin

Just tell them your attorney will not allow you to enter into such an agreement. Their attorney will understand then.

Reply to
Tom Miller

Then after they got a black eye they come back knocking. Of course, by then the price could have gone up ...

I normally never veer from my standard agreement. If a potential client doesn't like it they can't have me as a consultant.

If it's a big corp and they bring a lawyer or two I would not count on that.

--
Regards, Joerg 

http://www.analogconsultants.com/
Reply to
Joerg

nose shoot!!

send a copy to late night television, you can't write that stuff.

Reply to
RobertMacy

Wasn't it Digital Research who turned down IBM? (where are they today?) Then Bill Gates stepped in and, buying the rights to an OS from someone in his computer club, provided the OS to IBM?

Reply to
Mark Storkamp

Den mandag den 7. juli 2014 20.07.33 UTC+2 skrev Jan Panteltje:

Bill Gates didn't sign over the IP, so he could sell to others that's what made him rich

-Lasse

Reply to
Lasse Langwadt Christensen

--- Because when you can do stuff that they can't, and they need what you can do to get them what they want, it puts you in a position of power.

That threatens them, and so to keep you from growing, and becoming an even bigger threat, they'll try to cheat you into staying small.

Reply to
John Fields

I guess they figure that they may as well try. Wastes time.

--

John Larkin                  Highland Technology Inc 
www.highlandtechnology.com   jlarkin at highlandtechnology dot com    

Precision electronic instrumentation
Reply to
John Larkin

;)

Now there's a blast from the past. Mel Brooks was a genius.

Cheers

Phil Hobbs

--
Dr Philip C D Hobbs 
Principal Consultant 
ElectroOptical Innovations LLC 
Optics, Electro-optics, Photonics, Analog Electronics 

160 North State Road #203 
Briarcliff Manor NY 10510 

hobbs at electrooptical dot net 
http://electrooptical.net
Reply to
Phil Hobbs

There are people who measure someone's value as a person by how much money they make. When one of those folks gets into a position of power, they start making business decisions on the basis of whether so-and-so deserves to make that much money, rather than whether it's good for the company.

Cutting the commission of your star salesman because he makes more than the CEO is one classical example of this.

Fortunately, in the private sector that sort of thing is self-limiting, at least--the company goes belly-up. It would be nice if there were some equivalent self-correction system in the public sector, but there isn't.

Cheers

Phil Hobbs

--
Dr Philip C D Hobbs 
Principal Consultant 
ElectroOptical Innovations LLC 
Optics, Electro-optics, Photonics, Analog Electronics 

160 North State Road #203 
Briarcliff Manor NY 10510 

hobbs at electrooptical dot net 
http://electrooptical.net
Reply to
Phil Hobbs

Exactly. We just don't deserve to make money, even if we are going to save them a fortune.

I like my suppliers and consultants to make money. It's good for everybody, long-term.

Well, I'm off to the airport to do the nasty.

--

John Larkin                  Highland Technology Inc 
www.highlandtechnology.com   jlarkin at highlandtechnology dot com    

Precision electronic instrumentation
Reply to
John Larkin

in the public sector it is probably near impossible to give someone a high pay when they are worth it, because half the voters will be of the opinion that they don't deserve it

-Lasse

Reply to
Lasse Langwadt Christensen

ElectronDepot website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.