Recommendations for charging customer

Hello,

I just got a request to build and program a control panel. Overall it is a very simple project.

I’m wondering about how I should quote them in the sense of charging.

How much do your require up front, or do you require it all up front? Do you require parts+partial labor up front and the rest when done comissioning?

I appreciate any advice, thank you in advance.

I generally charge by deliverable, based on a forecast of the effort and expense to that point. Something like:

  • Retainer (aka “down payment”, for big projects only)
  • Preliminary electrical design (schematics & Bill of Material) for build approval
  • Preliminary visuals and operating sequences for approval (or just review)
  • Draft code for deployment (possibly separate milestones for PLC, HMI, SCADA)
  • Hardware shipment
  • Install support
  • Startup support
  • Final acceptance

Naturally, the size and complexity will impact the above. Combined milestones for simple projects versus long and drawn-out projects. Clients don’t like extra paperwork for little stuff. Clients don’t like paying when they don’t get something real for it.

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@pturmel how do you go about calculating down payment/retainer?

Typically 10% of the total. Give or take. There’s no hard rule. It is intended to cover the direct variable expenses to stay cash flow positive between milestones, to the extent reasonable. (Reasonable for both parties.)

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@pturmel makes sense. I know we had someone update a slc rack to a compactlogix where I currently work and he requested 80% down. Which I thought was intense.

Since this wasn’t really planned for, I was hoping to ask for the cost of the panel up front and maybe some labor. Really the panel at bare minimum. I just don’t wanna be stuck paying for a panel I have no need for. nor really planned to pay for.

But I don’t really know how appropriate that is . lol.

In my experience it all depends on the customer.
I have had 30/50/20% (30% up on order, 50% on delivery, 20% on acceptance).
And at my current customer, i get paid 35 days after delivered work time (on site plc development)

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@SKA appreciate the input. It really seems like there is no unison charging style, from what I have seen. Everyone varies so widely. So I guess it has to be more of a wing it thing with the customer.

Yes, it really depends on what works for both sides. Charging based on deliverables makes a lot of sense. You might be able to do this and cover your parts by making the first deliverable the design with billable amount high enough to cover restocking fee in the event customer cancels and you have to return the parts.

…or with inflation and lead-times lately, maybe keep the parts and resell them at a profit later :laughing:

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@witman Yeah, or I just tell him I’m a business man require that up front incase he flakes. I’m just not started enough to imagine being able to resell it. lol. which is why i have so much hesitation.

In my experience charging per deliverable can be a slippery slope. As it makes it easier for a client to complain and not pay up.

Your terms and conditions should have a cancellation clause to cover your expenses. Including restocking fees. Your proposal should have clear descriptions of your deliverables, so there won’t be any argument. Then your interactions with your customer don’t have to be so adversarial. If you don’t have T&Cs, you probably should be talking to a lawyer for that, first, before any pricing considerations.

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I think it also depends on what kind of job/work you do.
When i was employed and did delivareable stuff, like i sat at the office 90% of the time doing the work, it was often the 30/50/20% way, after SAT the last 20% was paid/could be billed, when the project met its criterias that was placed at ordering.

Im self employed theese days, and often i sit at the customers site on their computers doing work like an employed, and get to bill monthly after i have done the work. (Consultant)

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Get a signed PO (purchase order) or a signed Quote / Estimate with all of your terms on it. I have heard that this is sufficient for a lien.

I think 50% of hardware upfront is reasonable. The rest upon delivery. (of hardware, not project completion)

Then you can bill for your time / deliverables however you want. If you get stiffed on your time, well that sucks.
If you get stiffed on hardware, that’s unacceptable.

Just my take.

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Always be wary of first time clients; until you get a few jobs under your belt with a client you should be very strict about payment terms (no PO = no work).

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Im hiring someone to build the panel and I’m gonna program. What should my markup/profit margin be ?

Short answer: at least enough to cover any time and risk you’re taking on, with some padding. Probably somewhere in the range of 15-100% markup, depending on size.

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Uhm, whatever you think will make you a decent living within your market conditions and not damage your reputation. Anything more precise than that would get us in trouble with the FTC here in the U.S. (See “collusion”.) IANAL, yada, yada.

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With swedish conditions, i would charge around $80-120/hour to this kind of work

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