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'[PIC]: consultant'
2000\11\21@231905 by Tony Nixon

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Hi all,

I was supposed to take a week off after 3 years solid, but a small
company rang up and wanted me to write a new ignition controller for
them based on a PIC. I said no at first, but weakened.

Goodbye week off.

Anyway it took me four 'long' days to do the software. Its quite neat,
based on a flash chip. Draw the advance curve on a PC screen, enter some
parameters for a MAP sensor, and the PC generates the necessary PIC code
and programs it into the chip.

The company is small and expect to sell a few hundred(?) of these
devices.

Anyone know a rule of thumb for charging for something like this?

--
Best regards

Tony

mICro's
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2000\11\22@010330 by Dan Michaels

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Tony Nixon wrote:
........
>The company is small and expect to sell a few hundred(?) of these
>devices.
>
>Anyone know a rule of thumb for charging for something like this?
>

Do it the american way --> whatever the market will bear
[or is that bare?].

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2000\11\22@063916 by mike

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On Wed, 22 Nov 2000 01:03:30 -0500, you wrote:

>Tony Nixon wrote:
>........
>>The company is small and expect to sell a few hundred(?) of these
>>devices.
>>
>>Anyone know a rule of thumb for charging for something like this?
>>
>
>Do it the american way --> whatever the market will bear
>[or is that bare?].
..but if they think you are ripping them off you won't get any more
work from them - the best buisiness is repeat business - saves a lot
on advertising!

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2000\11\22@071513 by Andrew Kunz

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They ought to buy you a week off, at least.

Andy








Tony Nixon <EraseMETony.Nixonspam_OUTspamTakeThisOuTENG.MONASH.EDU.AU> on 11/21/2000 11:13:03 PM

Please respond to pic microcontroller discussion list <PICLISTspamspam_OUTMITVMA.MIT.EDU>








To:      @spam@PICLISTKILLspamspamMITVMA.MIT.EDU

cc:      (bcc: Andrew Kunz/TDI_NOTES)



Subject: [PIC]: consultant








Hi all,

I was supposed to take a week off after 3 years solid, but a small
company rang up and wanted me to write a new ignition controller for
them based on a PIC. I said no at first, but weakened.

Goodbye week off.

Anyway it took me four 'long' days to do the software. Its quite neat,
based on a flash chip. Draw the advance curve on a PC screen, enter some
parameters for a MAP sensor, and the PC generates the necessary PIC code
and programs it into the chip.

The company is small and expect to sell a few hundred(?) of these
devices.

Anyone know a rule of thumb for charging for something like this?

--
Best regards

Tony

mICro's
http://www.picnpoke.com
KILLspamsalesKILLspamspampicnpoke.com

--
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2000\11\22@084947 by Mark Hull

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Hi Tony

One way to do it is:
Final cost of product to end user should be about 6 times total component
cost.
This take into account development, manufacturing, tooling etc.
One third of final product cost is usually development cost.
2/3 of development cost is software.

So for every unit sold you should get roughly 1.33 times the component cost.

Alternatively charge by the hour, at about 2/3 of what a networking/IT
consultant charges
(or about 1/10th of what a lawyer charges !!! ;-)

Cheers
Mark
-------------------------------------------------------------------
Mark Hull
Engineering/Technical
EMS (Africa) (Pty) Ltd
PO Box 1026, Melville, 2109, South Africa
Ph +27 11 482 4470 Fax +27 11 726 2552

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2000\11\22@093507 by Olin Lathrop

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> Anyone know a rule of thumb for charging for something like this?

First rule is to get this worked out up front.  I make sure I discuss my
rates and how I expect to be paid very early on when talking to a prospect.
Most don't have a problem with what I want.  The very few that do have a
problem are inexperienced in working with consultants and/or have some sort
of money crunch.  Either way, you want to know as quickly as possible to
stop wasting time on them.  Trust me, even if these kinds of prospects
eventually agree on what you want, you DO NOT want them as customers.  In
other words, reasonable to high rates not only make you good money, but also
helps weed out some of the pain in the butt customers that are more trouble
than they are worth.

OK, so all this previous advice is too late for your current situation.  If
these guys had come to me a month ago and let me get it done when I could
fit it in, I would have charged $110/hour.  If they wanted me to drop
everything else I was doing and spend all my waking hours for the next 3
days on their project, I probably would have charged $130 to $150 per hour,
assuming I was in a position to do it at all.


*****************************************************************
Olin Lathrop, embedded systems consultant in Devens Massachusetts
(978) 772-3129, RemoveMEolinspamTakeThisOuTembedinc.com, http://www.embedinc.com

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2000\11\22@095603 by Mark Hull

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Hi Olin

The formula is a suggestion at aproximate cost of product development, not a
suggestion that the consultant earn 'royalty' type payments.
Development costs are usually written off over the first 1000 units, hence a
lump sum of aproximately 1333 times the component cost of one unit is the
guideline to softwarwe development fees.

It depends on the company and product, but the formula holds true for the
cost of software for most products.

Cheers
Mark

-------------------------------------------------------------------
Mark Hull
Engineering/Technical
EMS (Africa) (Pty) Ltd
PO Box 1026, Melville, 2109, South Africa
Ph +27 11 482 4470 Fax +27 11 726 2552

{Original Message removed}

2000\11\22@124144 by Bill Westfield

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> Anyone know a rule of thumb for charging for something like this?

Do you mean specifically "how much do I charge a customer for coding if most
of the actual hours I spent working on it were to develop a tool that they
didn't request, aren't buying, and dont get, that I expect to use in the
future for other customers?"

That's a good question, and one no one has tried to answer yet.

Somewhere between your total hours spent (times rate) and something like
       H/n + C
Where H is "tool" hours, n is the number of times you think you can use the
tool for future customers, and C is some constant based on the hours to use
the tool to generate the specific chip and the "value" of that chip.  You'd
then charge future customers the same amount...

You've got a couple bargining chips on your side - future versions of the
product for the same customer can be closer to just "C", for instance.  Or
you can consider licensing them the SW generating application as well,
either exclusively or not exclusively (don't forget to allow yourself to
charge for "support" in that case!)

BillW

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2000\11\22@125217 by Don Hyde

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That doesn't seem like a useful rule-of-thumb at all.  I'm thinking of a
recent project in which I spent at least 200 hours on a pretty small project
because I had to rewrite the whole thing 3 or 4 times in the process of
getting the component cost down to $10.  Let's see, 200 hours for $133.30...
I'm salaried but my company charges the client on an hourly basis, and the
client thought it was a bargain because projected volumes are in the
millions.

Maybe the component cost should go in the denominator of the equation?

About the only thing that works with consulting is to recover an hourly rate
for your work.  Charge extra for overtime or for a risky payment scheme such
as royalties on eventual sales.

If you have to offer a discount to get the business, you are on very risky
ground.  Not only are you losing money on that sale, but the job is keeping
you busy so you can't be out looking for better clients.

> {Original Message removed}

2000\11\22@140537 by dre Domingos F. Souza

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>About the only thing that works with consulting is to recover an hourly rate
>for your work.  Charge extra for overtime or for a risky payment scheme such
>as royalties on eventual sales.
>If you have to offer a discount to get the business, you are on very risky
>ground.  Not only are you losing money on that sale, but the job is keeping
>you busy so you can't be out looking for better clients.

       I would do this way:

       Development hour = $75
       200 hours of development = $75 x 200 = $15.000
       Cost of development (parts, prototypes, etc) = $2000
       Taxes (yep! they exist) = $ 1000
       GRAND TOTAL = $ 18.000

       Of course I'm an "amateur" developer :o) and all of these figures are just examples, but you have to consider:

       - How much units will be produced?
       - How much units WILL be sold?
       - How much is the revenue of the contractor in EACH unit sold?
       - How many (days, weeks, months, years) will the product be on the market?
       - How greedy you are? :o)
       - How greedy the contractor is?

       A pratic example: You contract me to create an USB network device (to connect 2 computers via USB). I'll spend 200 hours x $75 on the project. I'll spend $1000 to create the prototypes, have lunches, buy tools. The government takes 20% of what I earn (damm bastards!). So I have to ask you for 15k + 1K + 20% of 16.000 = 3200 = $19.200. Of course I can be greedy and ask for 1% of all sales. Or a fixed value per year of production. Or you can be greedy and don't accept my price - instead you will give me 10% of all the units sold - it's just a matter of talking, But I'd stick with the money on my pocket ;o)


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2000\11\22@174528 by rich+piclist

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> The government takes 20% of what I earn (damm bastards!).
Damn bastards, indeed. Try 43%. I'm moving to Brazil.

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2000\11\22@181037 by jamesnewton

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This thread has nothing to do with PICs. Please mark further posts on this
thread (after this one <GRIN>) with an [OT]:

And in general...

Putting this tag at the beginning of the subject line, causes the message to
be sent to people who have requested that only posts directly related to the
PIC be sent to them. Consider instead adding one of the following:

[EE]:
       This label is for topics that, while not necessarily about PICs, are of
general interest to the EE community.

[AD]:
       This label is for posts advertising a commercial product or service.

[OT]:
       This label is for posts that are completely off the topic of PICs.


I'm just pointing out that people who only want to read engineering post
about the PIC would not be able to filter out this thread by setting up the
list server or their email program to delete non-PIC subjects.

If you remember to add [EE]:, [OT]:, or [AD]: you can help retain people
(resources) on the list who don't have time or bandwidth to follow
non-[PIC]: posts.

You can post just about anything to the PIC list. Just mark the tread [OT]:
and that's enough for us. If list members don't like it... they can filter
it....

As I have advised other before, if a list member doesn't like something said
in a post they can send the "offenders" <GRIN> a private email asking them
to mark [OT]s. If they get buried, maybe they will. ..or maybe they will
drop off the list and then part of the SIGNAL will be gone forever rather
than just buried in the noise. I don't want to loose your signal and I won't
keep sending you this "reminder" email if you reply and tell me to stop.

My goal is to keep people (like Tjaart, Scott Dattalo, and others and YOU)
from leaving the list rather than have their valuable time wasted by a rash
of off topic posts that are not tagged correctly.

Thanks for taking the time to read this. If you have other questions about
how to get the most out of the PICList, please see the PICList FAQ at:
http://www.piclist.com

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2000\11\22@215218 by dre Domingos F. Souza

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>> The government takes 20% of what I earn (damm bastards!).
>Damn bastards, indeed. Try 43%. I'm moving to Brazil.

       Nah, in Brazil they take (i think) 30%, but of course, you don't need to pay :o)

       I DIDN"T SAID THAT!!! :oD


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