How do you calculate charges for contract work?

[[email protected]]

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

 

[James Jackson]

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

 

[Mac]

On Sat, 23 Oct 2004 10:50:31 -0500, James Jackson wrote:

[snip]

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?

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.

Do you release the CAD files to the client?

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

[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

 

[Hal Murray]

Do you release the CAD files to the client?

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)

 

[Geo]

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?

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

 

[Simon Peacock]

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

 

[[email protected]]

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?

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.

Do you release the CAD files to the client?

Again, not being the all encompassing full time pro, sometimes I do, sometimes
I don't. <g> 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

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.)

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

 

[James Jackson]

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

 

[Hal Murray]

(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.)

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

 

[James Jackson]

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

 

[[email protected]]

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

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

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..... <g> 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 <shrug>

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