Engineering Firms rip off 7

[EE00]

I work for a small company, and we decided to hire an engineering firm to help us with prototypes and designs, I need some tips on the process of how they write up there price quote and how to negotiate the price with them.
For example we know that this product will have a final cost of $3000.00 and they ask for $70,000.00 !!!!!!

If you know if any Engineering firm or websites please inform.

 

[GeoPaveTraffic]

What makes you think that the cost of doing the engineering has ANYTHING to do with the cost of the final product? The two items are completly unrelated.

If you don't like the price they gave you, find someone else to do the work.

As for how engineers price projects. The estimate how much time they expect the project to take, multiply that by the fully loaded hourly cost of the employee, then add in profit, risk (both of getting paid and liability), then adjust the cost for other unknowns.

 

[davsy]

EE00

Your logic is a bit strange, any company who does any form of product design and tries to bring it to market will have some very high initial costs. these costs are normally spread into the selling price of the unit.

It is very unusual for any company that brings a product to market that has not spent more money on the development and design than the product is actually worth. this is what return on investment is all about, you invest the money in the design and development and recoup that money in the sales price of the product. (spread over however many units are required to recoup the investment, not jus the first one like you seem to think)

How many hours work do you think they where going to do for you and what about prototyping, did that involve any machining or materials. if you employ someone to do some drawings for you then you may be looking at $50 to $75 per hour, if you then ask them to do some detailed engineering involving a PE and some simulation software, then the costs would be many hundreds of dollars per hour add to that any risk and the costs increase further.

It all depends upon the type of company that you are trying to employ and what you are asking them to do.

 

[IRstuff]

What is your basis for claiming a rip-off? What is the actual scope of the proposed effort? How many hours do they expect to require to complete the design, analysis, and drawings?

Assuming $100/hr, $70,000 is only 700 hours, which is barely 4 manmonths.

TTFN

Eng-Tips Policies FAQ731-376

 

[dbuzz]

What scope of services did you request from the engineer? Did you leave it open for the engineer to determine ('guess') your requirements?

You are the customer -- ask for what you want.

 

[JamesBarlow]

That post should be manditory reading for anyone looking to strike it out on there own.

The original poster is a perfect example of someone who has absolutely no idea about the process and just sees a simple product.

$70K to design a $3K product.

How many millions of dollars do you think it costs to design a $30,000 car.

 

[corus]

I'll design it for $1000. I have the back of my envelope ready. Cheques are accepted.
Joking aside, if you sell a product for $3000 but sell thousands of them then the price doesn't seem too bad. Of course once you have a design and wish to modify it then most of the work should have already been done and the cost will be negligible.
As James says it does cost millions sometimes to design something, though it makes you wonder why some high volume cars are still being made on exisiting designs for a high price when the design costs have long since been absorbed.

corus

 

[KENAT]

see thread768-180146 for other posts on this topic

 

[stockdam]

I'm not sure why you are asking this question?

If you knew the basics of design then you'd be able to answer the question yourself.

As for engineering companies......

Are you designing a gate for a farm or a new electric bicycle or an underwater sensor or a new toilet or what?

You need to say what the product is. It's a bit like asking somebody for the name of a good shop (what type of shop would be the answer).

 

[dbuzz]

It's like that old joke about the retired engineer:

An engineer retired after serving his company loyally for many years.

Several years later, the company was having a problem with one of their generators. They had tried everything and everyone else to get the machine fixed, but to no avail. In desperation, they called on the retired engineer, who had solved so many of their problems in the past.

The engineer accepted the brief and spent a day studying the huge machine. At the end of the day, he marked a small "x" in chalk on a particular component and stated, "This is where your problem is". The part was replaced and the machine worked perfectly again.

The engineer then submitted an invoice…for $50,000. Outraged, the company demanded an itemised statement of his fee.

The engineer submitted the following statement:
1. Chalk: $1
2. Knowing where to put it: $49,999