Diagnostic fee's are like "research" fees your lawyer charges.

The service fee can be based on actual time or, like alot of auto mechanics charge, is the average time to diagnose the problem. Using the average time, a master charges the same as the apprentice. Can you guess which one diagnoses faster, and can make more money per diagnosis? "Real time" is the auto mechanics source.

There was a time when radio and television servicing companies used Sperry Pricing Guide. If I ever dig mine out, I'll post a page.

 

@MrSoftware

I just had a few beers with insurance neighbor. He said a product like your's will have to be pushed through an underwriter. They will ask all types of questions about end use, who designed it, who will produce it, how can you identify your parts from competitors/counterfeiters, who supplies raw materials, will all raw materials be tracked to serial numbers on finished products. Will there be quality testing, what are the risks of product failures, what off label use might the product be used for, how many units per year will be produced, ....

He talked and talked and didn't take a breath while I drank three beers and the only question I asked was "where is the bottle opener."

Anyhow, a stalled vehicle is a big deal (he referenced the GM ignition key) so a risk of failure for a critical vehicle part (even if used only in emergencies), he said insurance could be high - in the range of $0.30 to $1.00 per item sold on a low volume product, no safety testing, no back-up safety features, no quality system in place, on and on and on with the difficulties of running a one-man-show. The first year, you make a forecast and then they price the policy. You let them know if volumes are much different than forecast and they make some adjustments to the annual policy price.

Some insurance companies will sell a policy that are a one-time fee to cover sales that occurred before product liability insurance was purchased. That is more or less required if your current (past) product is the same as what you plan to sell going forward.

He said, (not a recommendation but a generalization), a lot depends on your situation. If you are well off and doing this for an extra $50 here or there, stop. It is not worth it. If you are a drifters and sellng in parking lots through craigslist with no names exchanges and no labels on your product - you are kind of ok there. Or swap meets where everything is paid in cash, basically you are untraceable. If you have an online store and a product with a label on it, it becomes a big deal.

Anyhow, it sounds expensive and a real pain in the ass. I would sell the design to a parts manufacturing company and let them deal with the headaches.

 

Terrific report @GopherT And info not unlike what I have paid dearly to know in meetings with lawyers plus lots of new stuff like sources tracking. That's new. Thanks for posting and please thank your friend, too.

 

@GopherT - Thank you very much for all of that info! I don't mind $1/unit, even $2/unit, I just have to find a company that with write me a policy! lol.. I wonder if there's less risk I sell the pile of parts required to make it? Basically an assemble-it-yourself kit?

 

Did you place protection diodes so idiots can't hook it up in reverse and sue you in case it blows up.

 

There was a time when radio and television servicing companies used Sperry Pricing Guide. If I ever dig mine out, I'll post a page.

At Sears, they used a price book laid out as A,B,C,D, etc. (I wish I had made a copy of it.) The largest price code was charged, "as listed" and all codes after that were charged at half price.
A D code and 2 C codes would 1 x the D code price and 1/2 x (C+C) for the other two labor prices.

I wonder if there's less risk I sell the pile of parts required to make it? Basically an assemble-it-yourself kit?

Again, ask an insurance salesman.

 

@GopherT - Thank you very much for all of that info! I don't mind $1/unit, even $2/unit, I just have to find a company that with write me a policy! lol.. I wonder if there's less risk I sell the pile of parts required to make it? Basically an assemble-it-yourself kit?

Yes and no -- the risks are somewhat the same and somewhat different. Their contention will be that the product itself, when built according to the provided instructions, is what caused the damage/injury. The fact that it was a kit won't save you. Even if you only sold the schematic and they had to find the parts separately they can make this claim -- in fact then they can make the claim that by not providing a specific BOM you left open the potential for them to choose improper components without realizing it. They will have a harder time coming after you about defects in workmanship, but they will now be able to go after you about the quality of the assembly instructions claiming that the (incorrect) way that they constructed the unit was in accordance with a reasonable reading of the instructions.

The "kit" approach is a common attempt to avoid getting FCC compliance certification since it is unreasonable for kit manufacturers to know and test all of the possible ways that a kit might be assembled. But they have been successfully sued by customers whose kit-built items have been found in violation based on the fact that the manufacturer did not do the testing to show that the kit could even be built in an FCC-compliant manner. That's very similar to your situation -- you would be offering a kit that has not been shown, via adequate product testing and certification, to be "safe" if even if built properly.

The key is adequate insurance coverage that you know will cover you. Even an S-Corp or LLC or whatever will provide very little, if any, protection from these types of lawsuits, particularly if you are a one-person operation. Product liability lawsuits are almost always torts (as opposed to criminal or contract) suits and corporate organization is no barrier to them coming after you personally.

 

Did you place protection diodes so idiots can't hook it up in reverse and sue you in case it blows up.

It's just a capacitor and I really can't see it starting a fire, and with a 25v rating even if they connect it backwards

 

Yes and no -- the risks are somewhat the same and somewhat different.

Brilliant! How is that different from contacting a knowledgeable attorney in the state in which you are registered as a business?

John

 

At Sears, they used a price book laid out as A,B,C,D, etc. (I wish I had made a copy of it.) The largest price code was charged, "as listed" and all codes after that were charged at half price.
A D code and 2 C codes would 1 x the D code price and 1/2 x (C+C) for the other two labor prices.

Sperry pricing had about five levels of repair, based on time (minutes). Those "tough dog" TVs had like 275 minutes or so. So if your shop hourly rate worked out to a dollar a minute, you would charge 275 for labor.

 

Brilliant! How is that different from contacting a knowledgeable attorney in the state in which you are registered as a business?

John

What's your point? The best choice IS to contact either an attorney or a insurance provider in that state.

I pointed out that in some ways it might be the same and in some ways in might not. I then went on to detail ways in which it might be the same and ways in which it might be different -- something that you so carefully chose to ignore when you selected the snippet you chose to quote.

If nothing else, the TS has added to the list of points to discuss with the attorney or provider.

When I set about hiring my wife in my DBA I went in and spent time with a CPA that specialized in DBAs to get a number of questions answered regarding taxes, health insurance, retirement plans, and other benefits. I could have just gone in and sat down with him for an hour expecting him to tell me all the things I needed to know -- and it would have been a pretty unreasonable expectation to believe that he would have told me truly everything I needed to know. Instead, I explored the issues as much as I could beforehand looking at a variety of websites and, in particular, the Colorado Secretary of State's website and the IRS website. As a result, I was able to walk in with specific issues that I wanted to make sure I understood, that I had specific understandings of most of them that I wanted him to verify the correctness of and, if not, could frame specific questions that I wanted answered. Consequently, we got further in the first fifteen minutes than he said he normally would get in the full hour and, because of the level of self-education I walked in with, he was able to cover what he said normally takes three or four hours because he could jump straight to specific points of law and regulation without have to bring my up to speed on a bunch of background. In some cases that involved me saying things like, "I've read the following three things. Which, if any of them, are correct?"