How to make the customer pay more for design time

[magic]

Here is the scenario. (it's happened to me half a dozen times)

A customer makes a drawing in a cad program and Emails me the dxf file. Wants the parts cut to assemble a box... all fine and good. I quote them 100. It should take 45 (cut time) minutes and they supply the material. They assured me that the sizes are exactly correct and to 'Just cut it the way they designed it.

When I look at the sheet goods they bring, the sizes don't add-up and I 'm told that the material is a different thickness. This means that I need to adjust some sizes and reprogram, (I already programed the tool-paths the night before @ 15 minutes).

How do you explain that the extra 30 minutes of watching them walk back and forth (thinking) and me holding up the micrometer, explaining that I need to make a few changes will cost another 30 dollars... at least.

People seem to have the feeling that once the price is set... that's it, no matter how much they want to double check and have you explain what your doing while they think about changes.

Everyone now. I'll be sitting back and learning.

[ken]

Magic,

We manufacture industrial machine guarding and I quote custom guards all day long. Usually, the customer or the salesperson supplies me with a rough drawing and then it’s up to me to design the guard and price it. Once we receive the order we do our CAD/CAM work. More times than not the customer or salesperson will ask for changes at the time they place the order. It ‘always’ results in more time and material. My solution is to spell out exactly in the quote the service/material that the customer will receive for that specific price. From there, any changes require a change order. If they ask for the changes prior to placing the order, re-quote it but make sure it’s on a hard copy. Most of the time customer’s and sales folks don’t mean anything by asking for the changes but at the same time I don’t think they realize how those changes affect your profit. Once you put it in writing they always seem happy to accommodate that extra cost…at least I haven’t had a problem with it yet. Good luck…

Regards,
Ken

[myxpykalix]

The best analogy i can think of is you tell them:

These files are incorrect and if i cut them just the way they are you will have to pay for more replacement material, then pay me to rework the file, then repay me to cut the new files.

So the cost to rework the files saves you the cost of more material and more labor, so whats your choice?

Many times i tell people "I can do it fast or i can do it right, which do you want?"

[navigator7]

Yep...Jack is spot on.
A machinist mentor gave me some advice long ago I use nearly every day.

I gave him a 2" thick piece of steel about 2' x 2'.
We needed 1.5" holes 12" on center. We needed it in a hurry and I said so. I also told him it didn't need to be "too accurate".

I took off and came back a short time later. He had blued the surface, scribed the lines on a surface table and was using a loupe to make accurate punch marks. I was a little frustrated at what I thought was a waste of time.

He lowered his glasses even lower on his nose and looked at me thoughtfully and said: "You guys never have enough time to do it right but you always have plenty of time to do it over!"

I made it back to the yard with my monolith, welded a pad eye on it and swung it in the air to match up to a tower built by another company. It didn't fit! The crew gave me hell for inaccurate bolt holes but I spoke with confidence advising the tower crew......"You guys never have enough time to do it right but you always have time to do it over! ;-)

So Magic....if you ran your files and produced a pile of kindling, would you still expect to be paid?
I would.

I was reading on another thread here about vacuum sucking down mdf.....and I am just awestruck. Now, if your fixturing system imparted error into your files....you'd own the wood, your time is free and you would be expected to make it right.

Set a customer up in advance, now that you have this experience .... by forewarning them that if things are not as they say there will be a small charge to correct the problem.

Another mentor always said: "Step on his toes without ruining the shine."

[magic]

Does anyone use a worksheet with a disclaimer/fee schedule on it?

The times that I have tried to have people initial a simple Hourly Rate/engineering worksheet, they usuallyrun off. This is a really simple sheet, Name, graph paper design time & cut time fees then a space for them to initial that they understand the fees.

My contract seems easier to get signed then the worksheet and it has three pages with NCR paper and lots of clauses.

[joe]

Ken's advice seems correct to me.

With my kind of work, communication is the key. When I get the feeling a client is going to be difficult, it's time to help them find another source to do their job.

I know it's necessary to loose some jobs and customers. I make more money that way.

Last week I took a job for the new optemology clinic. After four design changes, the red flag up. I'd asked them to sit down with me in order to fine ture the art. They insisted on Email revisions. I had their deposit check in hand and returned it immediately after a nice Email letting them know I was no longer interested. I never looked back.

You gotta loose some clients.

Joe Crumley
www.normansignco.com (http://www.normansignco.com)

[GlenP]

Hey Guys, Magic make sure you ALWAYS stick to your agreement and if they change things up you charge appropriately, be fair but don't let them push you around. As soon as a customer thinks he can he will do it over and over again. Be kind and explain why you need to make your price adjustment. I usually put in sign quotes in includes a max of three design changes and for cutting jobs that if material or design changes occur additional costs may apply and will be discussed and agreed upon before proceeding. Put it in bold letters in your quotes or emails. Joe is right though you do need to loose some jobs. Don't work for nothing...your customer doesn't and you will regret it. I also find I get a better breed of customer, they respect me and I respect them. Good luck.

[john_l]

This will be a new clause in your contract. Have a contract with every job you do.

[ghostcreek]

As usual, Joe is spot on. Communication is the Key. That being said, you also have to spell everything out in a contract, Including Change Orders. I might have a leg up here due to my being a contractor and realizing there could/will be change orders. I spell this out, that there is an extra charge for any changes to an agreed upon job. I am polite, understanding and reasonable. I realize our clients don't know much about (although they say they understand!) what & how we do what we do (signs, cabinets, doors etc). It is up to us to help them through the process.
Again, as Joe Stated, you have to know when to help the client find another vendor. I have found, I can't make everyone happy, no matter how much you try. Can't be all things to all people.
John is right on- Have a contract with every Job.

[magic]

OK

Here is the "rub"

All these people are contractors in my own complex!

[wberminio]

Magic

I just took a look at your website.
Very interesting stuff.

Maybe you could have these people disappear!

[navigator7]

Ok Magic....you made me rise to this like a trout to a dry fly.

The fact you have somebody standing in front of you with wood, drawings and whatnot is great. That is America.
When you get a sense that you don't have the order...or the customer is stumbling on your numbers....whatever it is...you know the feeling....you are an order taker instead of your best salesman. You need to make a stab at converting a shopper into a buyer. People go to work every day at McDonalds and assume since you are at the counter you are there to buy something. Imagine an order taker who thought anything different?

Ask them "If I build this widget for you for X amount of dollars by such and such a time and any changes are at this rate we have a deal, right?"
(I always nod my head up and down.)
"Well lemme think about it."
Ok, what else can I do for you?" Listen intently.
Most will usually divulge some objection. That is key but don't believe it. It's Ok if you have objections.
That objection must be overcome by salesmanship but not by giving away your time or materials.
It will go something like: "If I do what you want for this price..(Whatever it is) Will you place an order with me today?
Ask for the sale!
Then, provided you still haven't made the sale .... and they aren't leaving .... and the conversation is circular....you have to tie on your best trout fly and present it like the hunters humans are.

Stop get serious. Look them straight in the eye and ask: "Ok ... tell me, what is the real issue?" (Or some variance of the question.)

Shut up. The longer the wait the greater the chance you have a deal. If you talk you are paying the customer for the privilege of working.

I swear this works every time I use it.
The important thing is both sides get what they want.

[magic]

It's always the "Don't worry, I'll take care of you"... that has me worried.

I just made a sign, spelling-out how much I charge. In the future I'll have them read it and agree or we part ways.

[scootie]

Magic,
It's not altogether how much you 'charge' but how much you 'make'. I agree, you do have to set a base rate for your services but suppose you charge $100 an hour and it takes you one hour, I do the same job at $50 per hour and it takes me two hours, the customer was 'charged' the same but you 'made' a whole lot more than I did.
Now for customers wearing you down with changes and edits and 'let's do this and let's try that' situations, it's up to you to make policy before any job is taken. We've all fell into the trap before but we're the only one's that are to blame, some customers will play that game on you and never be satisfied because you let them dictate what they 'think' they want, without them 'knowing' what they want. I have a couple small signs sitting on top of my computer station, one says "Estimates are Free, Sketches are not" the other states, "The design/artwork charge on your project includes two edits at no extra charge, All other time spent at customers request for 'trying' out different color schemes, fonts, panel shapes, ideas, concepts will be considered billable time at shop rate of $65 per hour". I have very few customers that are willing to satisfy their curosity by playing and paying for 'guess what I want'. Remember, they came to you, if they knew how to do it they would not need to be at your shop.

Larry
www.elliott-design.net (http://www.elliott-design.net)

[servant74]

Magic,
I agree with Larry, it is what you make that matters, not what you charge.

If you get a 'complete specification' up front that the customer signs off on, then right or wrong, they owe you for the entire project. Get half up front, so if they walk, you can cover some costs anyway.

If you have multiple places in your process for customer sign off, have each of those points in the process be where you are paid. And don't go into the next step if you are not paid. So fast payment speeds up projects.

These are techniques for larger projects, and may not apply to you.

You could also put a surcharge on customer 'ready to cut' files, to 'validate' files. You can tell customers it is to ensure quality for their product, and safety for you and your equipment. Then you can suggest to them that that fee is not required if you do the design, but they are charged for the design.

A friend reminds me on occasion:

There is good, fast, cheap. Choose any two.

The right answer for most is good and cheap, implying slow, or others need good and fast, implying expensive. Fast and cheap does not come out with a good product.

This is an old engineering maxim you might want to put on a plaque in your office!