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I've never done contract work before so I'm a bit lost here. Hopefully this is the correct place to ask such a question, if not.. let me know.

I have the experience necessary to come up with an accurate quote for the development of the electronic product in question, but I'm not sure how it should be presented (email, legal document...) or how payment should be specified. A lump payment upon completion of the design and delivery of a prototype scares me a bit. What if the customer decides to back out after all my work and investment in prototype development? I also think it would be unreasonable for me to ask for total payment up front. I was thinking of specifying partial payment up front, with the remaining payment upon approval of the delivered prototypes. Is this reasonable or standard practice? If so, what would be a reasonable up front percentage? Does anyone with experience with this type of thing have more knowledge on standard contract engineering quoting practice?

Also, If anyone knows of a good resource for information regarding the business side of things related to contract engineering, that would be greatly appreciated.

W5VO
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bt2
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    Probably a better fit for http://answers.onstartups.com/ or project management maybe, not sure , but I went ahead and put down what I do. – Kellenjb Apr 30 '11 at 19:27
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    Put a lot of thought into how you define completion, and what happens when (not if, WHEN) the requirements change. – Chris Stratton May 01 '11 at 04:34
  • This is probably off-topic, but has no home and, with the related [What should a contract Electrical Engineer Deliver once a project is complete?](http://electronics.stackexchange.com/q/4525/857) question, should cover most of the career-related questions. Avoid these in the future; ask on Meta before posting. – Kevin Vermeer Sep 21 '11 at 11:34
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    I’m voting to close this question because it's not about electrical engineering, but purchasing strategies not unique to electronics. – Lundin Jun 09 '20 at 08:42

2 Answers2

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I have always worked on 33% initially, 33% on first design milestone and 34% on a final product.

Thomas O
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  • That sounds like a pretty good system. Do you provide the quote with a bunch of legal mumbo jumbo or just in a short plain English document? – bt2 Apr 30 '11 at 19:06
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    @bt2 I just give my terms up front in simple english. If people are going to rip me off I am usually at least left with 66%. – Thomas O Apr 30 '11 at 19:47
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Pricing

I break mine down into steps or milestones, I then charge for each step based off of what the step includes. I essentially have the person pay up front for what the bare minimum of the next step would be.

So if you have a step of designing a PCB, and you think at minimum it will take 10 hours of work at $50 an hour, then ask for $500 up front. Make note that I said minimum, not expected. You can charge what you expect for that step to cost, but a lot of times it is just far too much to be asking for upfront.

If your next step is fabrication, find out how much you will be paying for parts and PCB and labor and what not, charge them for all of the "minimum" required for this step.

Once you finish with the entire project, you will have already been paid for the minimum of everything, so make your final payment be compensating for all of the minimums that you charged before.

I like this method because it keeps you safe from someone ripping you off, since you will at least have the minimum covered. It also makes the person paying feel like you aren't trying to rip them off.

Legal

If you are going to be doing this in any sort of full time sense, I would highly recommend you find a lawyer. They can help you make sure you have everything in tip top shape so that you don't get caught and end up loosing your livelihood.

If you are doing this as something just here and there then it may not be cost effective you get a lawyer. If this is the case my biggest recommendation to you is to be very clear on the work that will be performed and the amount that you will be liable for the product.

Ease of Invoicing

I tend to shy away from recommending service on this site, but I would highly recommend you go look at freshbooks.com. They let you generate estimates, track time, and send invoices. It makes life very easy if you plan on doing more and might be able to cover yourself more if you have issues arise with someone not paying.

Brian Carlton
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Kellenjb
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