A New Product - Getting a Quotation for your project
Getting a new design together is not an academic exercise. How much it costs to get there is important. Before engaging any company to design or prepare an aspect of a new product, it is reasonable to find out how much this will be. It is also relevant to probe a bit deeper for hidden or ongoing costs that are not revealed at the outset. To accept a quotation is to commence a commercial relationship that can span years. It is wise to establish a level of confidence between parties in both technical ability and capacity to carry out a task to its conclusion.
The detailed description
As described in the article on the Discovery Process, a client will describe their needs in general terms and this is echoed back as a detailed description of how the completed design will look and behave. This needs to be examined in detail by the client and if there are aspects that are unclear or wrong, then they need to seek clarification before proceeding. At the end of this project development phase, the product presented should be a very close match to the quotation document. As it is still a 'first cut', this is not a guarantee that it will be fit for the final purpose, or that further work may need to be quoted upon and performed before the product is customer ready. There is normally some latitude in final adjustment, but in general, if re-work requires more than a 5% change to the original spec, then fresh charges may apply.
Avoid verbal descriptions in either direction unless they are followed up in writing. It is important for all parties to have a detailed trail of instructions, even if this is just a series of emails and attachments.
A quotation on a project will be divided into two parts. There are the 'Once Only' costs and there are the 'Production' Costs.
Once-Only Costs
This will be a description of how much it will cost to define the project, draw the circuit diagrams, design the circuit board artwork, fabricate some prototypes and (where appropriate), write the software to be transferred to a microprocessor. Sometimes this will include cost for a second round of circuit board designs where the outcome from the first version is not likely to resolve all technical issues with a single pass. Regardless, the result should be two or more working prototypes that match the agreed upon specification. It is likely that one prototype set would be kept by the designer, to serve as a platform for further adjustments and measurements.
Generally, payment for a given stage would be invoiced and become due when it is demonstrated that the details of the specification have been fulfilled by the prototype. On larger jobs there may be a requirement for progress payments to be made as predefined benchmarks are achieved.
Production Costs
Certainly, a client will not only need to know how much a design is going to cost to prepare, it is just as important to get a fair estimate of how much the finished product would cost to manufacture. This usually has minimum order quantities and price breaks. A preferred outcome is for the first production run to be a small one. Say ten units. This will help to get the product into the field being tested by end-users. If the client discovers an unexpected issue that requires a circuit or software change, then at least there are only few units to update.
On equipment labeling, if a simple laser printed vinyl label is sufficient, then this would be included within a standard production quote. If labels are more exotic, say, hard wearing polycarbonate with viewing windows for leds & displays, these would need to be sourced from a 3rd party printing company for a separate price. (Commercial label makers will often require minimum quantities of at least a few hundred labels before accepting the order.)
A Production Cost quotation will indicate a price for say 10, 50 or 100+ units. Beyond 100 units, production costs are less likely to fall further unless key ingredients can be purchased with a significant economy of scale.
Unless specified differently, production quotes won't include the cost of formal packaging. Normally, goods supplied are likely to be bubble wrapped and placed in a common carton. Where extensive individual packaging and labeling is necessary, the cost of this packaging would be drawn from a separate packaging company quotation.
Quotation validity
Most quotations will expire three months from their date of issue. This is because shifts in the Australian Dollar are frequent and availability of critical parts vary with global demand. Key component prices can rise and fall with little warning.
Warranty terms
Unless otherwise stated, finished units will attract a 12 month warranty for parts and labor on a back-to-workshop basis. Goods returned to the Alian Elect. workshop would be returned via express post to the point of origin, with the return-postage costs also covered under the warranty terms.
Click here to return to CREATING A NEW PRODUCT
Getting a new design together is not an academic exercise. How much it costs to get there is important. Before engaging any company to design or prepare an aspect of a new product, it is reasonable to find out how much this will be. It is also relevant to probe a bit deeper for hidden or ongoing costs that are not revealed at the outset. To accept a quotation is to commence a commercial relationship that can span years. It is wise to establish a level of confidence between parties in both technical ability and capacity to carry out a task to its conclusion.
The detailed description
As described in the article on the Discovery Process, a client will describe their needs in general terms and this is echoed back as a detailed description of how the completed design will look and behave. This needs to be examined in detail by the client and if there are aspects that are unclear or wrong, then they need to seek clarification before proceeding. At the end of this project development phase, the product presented should be a very close match to the quotation document. As it is still a 'first cut', this is not a guarantee that it will be fit for the final purpose, or that further work may need to be quoted upon and performed before the product is customer ready. There is normally some latitude in final adjustment, but in general, if re-work requires more than a 5% change to the original spec, then fresh charges may apply.
Avoid verbal descriptions in either direction unless they are followed up in writing. It is important for all parties to have a detailed trail of instructions, even if this is just a series of emails and attachments.
A quotation on a project will be divided into two parts. There are the 'Once Only' costs and there are the 'Production' Costs.
Once-Only Costs
This will be a description of how much it will cost to define the project, draw the circuit diagrams, design the circuit board artwork, fabricate some prototypes and (where appropriate), write the software to be transferred to a microprocessor. Sometimes this will include cost for a second round of circuit board designs where the outcome from the first version is not likely to resolve all technical issues with a single pass. Regardless, the result should be two or more working prototypes that match the agreed upon specification. It is likely that one prototype set would be kept by the designer, to serve as a platform for further adjustments and measurements.
Generally, payment for a given stage would be invoiced and become due when it is demonstrated that the details of the specification have been fulfilled by the prototype. On larger jobs there may be a requirement for progress payments to be made as predefined benchmarks are achieved.
Production Costs
Certainly, a client will not only need to know how much a design is going to cost to prepare, it is just as important to get a fair estimate of how much the finished product would cost to manufacture. This usually has minimum order quantities and price breaks. A preferred outcome is for the first production run to be a small one. Say ten units. This will help to get the product into the field being tested by end-users. If the client discovers an unexpected issue that requires a circuit or software change, then at least there are only few units to update.
On equipment labeling, if a simple laser printed vinyl label is sufficient, then this would be included within a standard production quote. If labels are more exotic, say, hard wearing polycarbonate with viewing windows for leds & displays, these would need to be sourced from a 3rd party printing company for a separate price. (Commercial label makers will often require minimum quantities of at least a few hundred labels before accepting the order.)
A Production Cost quotation will indicate a price for say 10, 50 or 100+ units. Beyond 100 units, production costs are less likely to fall further unless key ingredients can be purchased with a significant economy of scale.
Unless specified differently, production quotes won't include the cost of formal packaging. Normally, goods supplied are likely to be bubble wrapped and placed in a common carton. Where extensive individual packaging and labeling is necessary, the cost of this packaging would be drawn from a separate packaging company quotation.
Quotation validity
Most quotations will expire three months from their date of issue. This is because shifts in the Australian Dollar are frequent and availability of critical parts vary with global demand. Key component prices can rise and fall with little warning.
Warranty terms
Unless otherwise stated, finished units will attract a 12 month warranty for parts and labor on a back-to-workshop basis. Goods returned to the Alian Elect. workshop would be returned via express post to the point of origin, with the return-postage costs also covered under the warranty terms.
Click here to return to CREATING A NEW PRODUCT
