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In today’s economic environment, making money on a project is getting more and more challenging. Those years when businesses like mine were practically printing money are long gone.
The Good Ol’ Days
If you are under 30 years old, you probably do not have this point of reference; it’s been one downturn after another for your entire adult life. But for us older folks, times were really good back then. So, what happened?
You happened, as well as a million others like you, or so it seems. In other words, the market is a little cramped now and much more competitive, which dilutes our profit per project. And if you’re old school and have not grown into the here and now, you will always feel the profit pinch.
There was a time when PCB designers could name their price and people would pay it, primarily because their PCB design choices were limited. This is not true anymore. Now, you can’t throw a rock without hitting a PCB designer, or at least someone who thinks he knows how to design a board.
This is the competition we all face, and it’s the reason it is so difficult to justify our prices. We’re competing with every designer sitting in a home office in his shorts, drinking coffee and eating toaster pastries, while undercutting us by as much as 50%. Customers are driven by their own profit goals, and a low-ball quote is attractive when they really don’t understand the real cost of using cut-rate resources.
So how do we make more money while saving money for our customers? After all, the only reason to be in business is to make money, and that is a two-way street. Vendor and customer relationships go both ways. We provide a service that has value so they can provide a product that has value.
OEMs use companies like mine because they don’t want the overhead of supporting an in-house design engineering department. That was not the case 15 years ago. Seemed like everyone wanted to capture the engineering in-house. However, when business slowed down, this first thing many OEMs did was push us out the door because they did not know the value of the work we did.
To read this entire article, which appeared in the March 2016 issue of The PCB Design Magazine, click here.