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Assistance in determining fee structure for manufactured items

Assistance in determining fee structure for manufactured items

Assistance in determining fee structure for manufactured items

(OP)
All opinions appreciated.

I have a client that has stumbled into a market that requires structural engineering to certify load capacities for items in a fabrication shop, such as shelves, racks, etc. I need to evaluate all the existing items which will be performed on an hourly basis, simple enough. The problem is what do I charge for new items that I design which would be produced, multiple times, on an ongoing basis.

My greatest concern is consistent with so many threads on this site, liability. I’ve seen the 50% reuse fee and the 50%, 33%, so on fee structure. The latter would appear more applicable, but not quite perfect.

I had another potential project that involved engineering for a press mold. We lost the project because we wanted to be compensated for the production of multiple molds. Hence they wanted to pay once and make as many as they wanted.
My question – How are manufacturing engineers, who design tools and such, compensated. I only want to be fair, but not foolish.

Thanks

RE: Assistance in determining fee structure for manufactured items

One answer would be to divide the cost of the certification by the number of units produced, possibly scaled by some factor.

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RE: Assistance in determining fee structure for manufactured items

By the hour??

Did you seal it??

Will they require your seal on future projects??

Who has the liability insurance??

All the above enter my mind when I do "work"

RE: Assistance in determining fee structure for manufactured items

In my experience the design of tooling is a one off fee and once the design is approved it becomes the property of the customer.

In other words you are not free to sell the same design to another customer and it doesn’t matter if they produce millions of parts from it or even more than one tool or it never goes into production.

The only exceptions I know of are if you own the patent where you might get so much per part produced, or if you run the tooling where it is normal to have a build cost and a cost per part.

However that is in the UK it may be different in other parts of the world or even in other industries.

RE: Assistance in determining fee structure for manufactured items

(OP)
Thanks for the replies.

MiketheEngineer -

I am performing the initial design on an hourly basis for billing. The designs are required to be sealed. Yes, all future designs will require a seal. I have the liability insurance, but I assume they have similar insurance as well.

ajack1 -

I felt that what you stated was accurate, but does the engineer continue to be liable for the design on the one hundreth production? What if a Chartered Engineer (a PE for US readers) provided the design? Is there a carryover of liability for the additional items?

IRstuff -

This seemed reasonable or something similar, but the items are produced on an erratic frequency and quantity. Initially they may produce five, a month later they might make 10, and a week after than they may make 20, and so on. I don’t know how many they will ultimately produce.

Thanks again.

RE: Assistance in determining fee structure for manufactured items

As others have stated, you wouldn't go to a lawyer for engineering advice and you shouldn't ask engineers about legal issues.

Having said that, though, in the US, if you seal it, you are legally responsible (liable) for the design. If an error in production causes a claim down the road, then the manufacturer is responsible. That is how it should be; however, once lawyers get involved, the truth has little to do with the outcome of a case. I would definitely require a fee for each and every drawing you seal regardless of whether or not you have to redesign it. A percentage of the original fee (30-50) is reasonable in my opinion.

RE: Assistance in determining fee structure for manufactured items

SpiderM, I am not sure what you are asking here. If you design and stamp a rack as per your example then obviously the more parts that are produced the more chance one or more will fail, for whatever reason.

However if you design tooling to produce that part your liability is restricted to the tooling failing not the actual part? So even if they produce two tools the risk increase is minimal.

We do limit our liability in our terms and conditions but to be honest we have never had that challenged on a legal level and hopefully never will. But even having said that our insurance costs are based on our turnover not the end value of the products sold using our designs.

Am I missing something?

RE: Assistance in determining fee structure for manufactured items

I have a set "fee" for each design. Covers me and customer knows what to charge customer.

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