Workload Dilemma

[ruffrecords]

I have been making tube consoles, lunch boxes and 19 inch rack specials for the best part of ten years now. For me it is a paid hobby. As long as I break even or have a bit left over to buy a new piece of test gear I am happy. My general rule of thumb for working out prices is to add up the cost of the major components of the BOM and add 50%. Even this is too expensive for some people and I have made at least two mixers and several 19 inch rack specials  at cost. And as anyone who has built their own mixer will tell you, it takes a lot longer than you expect.

The problem I face now is I have more work than I can cope with. Right now I have at least two years of work and several people wanting to talk about a tube mixer. I have been retired for a long time and I have no desire to turn this into a business so I have no interest in taking on staff etc.  I want to spend a good proportion of my time working on new designs because that is what I like best. Right now, the mastering EQ has fallen by the wayside because I don't have time for it.

So my question is what can I do about this? Do I just tell people the lead time is now 3 years to give myself some breathing space or do I put up my prices and do no more jobs at cost (which I quite like doing because it helps people who would otherwise be unable to afford a tube mixer). I guess I would prefer to choose customers based on need rather than depth of pocket.

Cheers

Ian

 

[gyraf]

Pricing is the hardest part of making electronics - and having too much work could indicate that you price your time too low.

The only real solution I can see is to regulate pricing until you obtain a manageable work load..

Jakob E.

 

[Script]

Not sure this is feasible for your units, but maybe sell them not 100% fully built to reduce your workload by leaving most of the easy, but for you really time-consuming assembly tasks up to customers (like mounting a face plate and the like). Could document by taking photographs of current unit. However, any documentation needs to be easy to do for you (e.g. step-numbered photographs, but no lengthy text file that comes extra with it) -- and also self-explanatory and detailed enough (maybe text written on board held into picture?) to not provoke hundreds of support enquiries later. A bit like the IKEA s(h)elf-assembly approach.

Anyone who nevertheless wants a fully finished unit, you could charge heftily to discourage. And could make exceptions at any time for preferred customers.

I used to be an expert in taking on double and even triple workloads. It's fun -- until it isn't any more. For personal health reasons, I saw myself forced to regulate via pricing.

 

[tony hunt]

I agree with Jakob. It suggests that your pricing is too low.  I like your attitude, but you of all people do not need to give so much back; you already have done so with all your project designs, data sheets and prescence across many forums.

Very rough guide for pricing: I am in construction where pricing is a component of material and labour. If we need to guestimate a part of a job, we often use 3x material cost as a base line. That is similar to how rushed chefs price menus; 3x cost of ingredients.

In your case x3 is not enough, because you know exactly where to hit the problem proverbial hammer. You can charge what you want.

 

[ruffrecords]

Thanks for the suggestions everyone. I had more than enough experience of crazy high workloads before I retired and have absolutely no desire to return to them.

I think you are all correct when you say my prices are too low, even though it is not a business. I think 3 times materials would be on the high side; at Neve back in the 70s  it was 2.5 times for custom consoles but as history has shown they barely made a profit. So, since making a profit is not required I may jump straight to 2.5 times. At the moment I am still using 1.5 times so I am not if I should go straight to 2.5 or go in a couple of stages; say 2 times to start. On the other hand I could go straight to 2.5 and use my discretion with worthy cases (in the past I have reduced price if the development pays for some new element I can reuse).

Cheers

Ian

 

[scott2000]

Very rough guide for pricing: I am in construction where pricing is a component of material and labour. If we need to guestimate a part of a job, we often use 3x material cost as a base line. That is similar to how rushed chefs price menus; 3x cost of ingredients.

I worked with a guy before and remember him telling me that his mentor would do it like.....

the costs paid out would equal 40% of what he charged for a job.......

...... I think I have that right....

Sorry to derail Ian.... This is definitely an interesting subject...

Always seems to be one of the last trade secrets anyone ever talks about, at least in some areas.......

Would be neat to see how you proceed and more thoughts on it......

 

[zamproject]

Thanks for the suggestions everyone. I had more than enough experience of crazy high workloads before I retired and have absolutely no desire to return to them.

I think you are all correct when you say my prices are too low, even though it is not a business. I think 3 times materials would be on the high side; at Neve back in the 70s  it was 2.5 times for custom consoles but as history has shown they barely made a profit. So, since making a profit is not required I may jump straight to 2.5 times. At the moment I am still using 1.5 times so I am not if I should go straight to 2.5 or go in a couple of stages; say 2 times to start. On the other hand I could go straight to 2.5 and use my discretion with worthy cases (in the past I have reduced price if the development pays for some new element I can reuse).

Cheers

Ian

Hello Ian

I come after most suggestions, and I won't say more, your conclusions is the right one I think.
Go straight to 2.5, see how the load come after the already 3 years lead, you can adjust in that time range If orders decrease too much, as adapt price for particular request.

If I where in UK I'll send you a curriculum vitae for an extra job  ;D

Best
Zam

 

[JohnRoberts]

Perhaps support a variation on an auction pricing structure where people can pay more to jump the line and get their product sooner, with updated delivery advice... This way you won't chase away sales from those willing to wait, but you can satisfy those willing and able to pay more.

Or not... Sounds like a good problem to have.  My drum tuner customers think I'm too expensive.  :'(

JR 

 

[dmp]

I would suggest tracking your hours spent on a project and break down the hours within each project based on tasks. Once you have data you'll be able to make better (more accurate) decisions. You can still decide to discount your rate. It would also tell you if you are charging enough to run a viable business (if you wanted to hire someone). 
Consider also the final value of the items.  Since your products are custom, a slightly higher price than the final value would be appropriate.
But the classic supply / demand of economics indicates higher prices are warranted.

I ran an engineering consulting business for years and fixed price proposals were always difficult. Much preferred time and materials. But clients always pushed for fixed cost. But we would track our hours and try to keep our costs under control.

 

[Gold]

You could also be  100% capricious  and only sell what you want to who you want. Make it more like ‘convince me to sell you one’. There are luthiers and others who work that way.

 

[Kingston]

You could also be  100% capricious  and only sell what you want to who you want. Make it more like ‘convince me to sell you one’. There are luthiers and others who work that way.

I like this approach.

 

[PRR]

> I want to spend a good proportion of my time working on new designs because that is what I like best.

I believe you should be chained to the design table. There are other people without your design insight but skilled at building. This place is full of people who build with thin knowledge of theory but a fine eye for the drill and iron.

I don't think you want to run a pay-roll, expand your shed, all those headaches.

The problem is working out a "who" who can work as independent party, build efficiently from a prototype, and do the fulfillment, and a money-share deal which will be reasonable to customers yet more than cover your tea-costs.

 

[12afael]

are you using your time efficiently?  if you don´t want to make it a business still can be a controlled hobby.  Can you buy parts more ready?  hire someone is complicated but can other company build some parts for you maybe?

I have seen electronics selling 4 times the price of the parts, everyday in my job. Of course there is distributors and stores but people pay for that.

Audio is a special case, if you want that sound you need to pay for it.  that is why X amp will cost XX times more than others.  In a way it is the art behind the sound.  A good artist will not ask for the double of the price the paints he use.

 

[Tubetec]

You have a very unique product ,
No one makes  fully valve mixers anymore ,
I liked Pauls thinking , at least that way ,you keep a firm control of the workload ,things cant snowball ,you dont really need to give a pricelist ,you can quote each job seperately, and adjust the price as you see fit .

In repairs over the years , you see people from all walks of life , some barely with the money to pay for your work ,some who money isnt an issue too , You could call it robbing the rich to pay for the poor , but if a person comes into me and its clear they havent a pot to piss in , there going to get a fairer price than someone who's say holding down a day job and gigging by night and has cash in their pocket. ,hopefully it all balances out right in the longer game .

If I were you , Id think about target market , and start pitching it to potential clients , but I can see the last thing you need is having to do sales rep as well ,

I'm toughing it out part time in motor and electrical rewinds just now , wages arent great , its dirty work ,but Im learning a fair bit , and I get access to copper and materials  . If things do get busy for you Id certainly be willing to stuff/solder boards or any other work you find tedious or time consuming .

 

[Gold]

Something like "This is a hobby for me. The part I enjoy most is the design phase and helping people build what they imagine. I take on a few select projects a year to build. If you are interested in having me build something let me know what you want and why you want it. If I think it will fit in with my workload I'll let you know. I can also recommend a few people who are experienced builders to work with."

 

[Recording Engineer]

Don’t it works in your case, maybe on some products, but it would seem building one at time (or however many makes sense for you) and then selling it once it’s ready on a first come-first-served basis.

 

[JohnRoberts]

If only you could find somebody who wants to learn how to build stuff.  8)

JR

 

[john12ax7]

I think raising rates and being selective of the work you take on is a good choice.  You want the day to day to be enjoyable.  I would even consider something like 3x parts or more and then negotiate down based on how much you like the work.

I also 2nd the idea of finding someone like an apprentice,  it can be a beneficial match for both sides.

 

[boji]

+1 on a trusted helper.  You oversee QC and teach them your version of assembled perfection.  Adding an apprentice would let you pass on your knowledge to the next generation as well.

 

[Script]

Or more than one 'apprentice'? One on 'Tuesdays' another on 'Thursdays'.

Meanwhile, cos your shed is too small, you can't help but go and enjoy the garden, juggling around new ideas in your mind.

There could be talent around and passing on knowledge can be fun too.

Or, as a last resort, if current  workload is simply 'crushing' , even consider reducing by calling off or indefinitely postponing delivery of units. Could contact some of your customers about it.

Either way, i think you have worked enough in your life already and there is no need to 'waste' time and effort on things you really don't  want to do...