Re: How do you calculate charges for contract work?

From: James Jackson (JOJ_at_Texas.net)
Date: 10/23/04 

Date: Sat, 23 Oct 2004 10:50:31 -0500

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 spread*** 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

<uvcceet@juno.com> wrote in message
news:41794404$1$ouf73$mr2ice@giganews.aros.net...
> 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
>