# Electronic Design House - Commissions?

#### enggricha

Joined May 17, 2014
89
Hi All

I am engaging a electronic design house to do some designs for me. I see a pattern that they recommend components increasingly from 2-3 manufacturers, even if other manufacturer parts are more relevant.

I am new to engaging outside design houses, but do design houses earn commissions from all / some vendors (Manufacturers / distributors) when they use their parts on designs? - This might even be a standard industry practice for all I know.

Thanks!

#### dl324

Joined Mar 30, 2015
15,476
do design houses earn commissions from all / some vendors (Manufacturers / distributors) when they use their parts on designs?
It would be unethical for them to do that without disclosing the relationship.

#### Papabravo

Joined Feb 24, 2006
19,617
Hi All

I am engaging a electronic design house to do some designs for me. I see a pattern that they recommend components increasingly from 2-3 manufacturers, even if other manufacturer parts are more relevant.

I am new to engaging outside design houses, but do design houses earn commissions from all / some vendors (Manufacturers / distributors) when they use their parts on designs? - This might even be a standard industry practice for all I know.

Thanks!
There could be several explanations for this. The primary one would be familiarity. They really don't get paid to spend their time sussing out new and innovative parts. They get paid to make commitments and meet schedules. The way you do that is to work with what you are familiar with. It is the only way you can quote a fixed price job. I'm sure that if you want to pay T&M with an unlimited budget they will do what ever amount of research you are willing to pay for. For small quantity manufacturing and prototype runs they don't buy enough components to come to the attention of the marketing department of a major component manufacturer. So kickbacks and incentives -- I don't think so. Maybe if you imagine that you are living in some kind of alternative fantasy universe. What you are doing is flat out expensive for a reason. Your only possible path to cost saving is to get an education and do the work yourself. Maybe if you are are souless capitalist you can hire an H1-B visa holder and pay him sub-minimum wages to do the work. That's about all I got for ya.

#### prairiemystic

Joined Jun 5, 2018
296
I worked for an electronics design house, and have used a few others.

One I worked for, basically charged the customer/inventor straight $$/hour to do the design. BUT in the contract, they owned all the IP, forcing the inventor to get them to do the manufacturing. I know it's crazy, but it was a 30+ page legal contract and most people didn't realize it was a basic rip off until they had spent 10,000's on the design they didn't even own. Worse yet is the manufacturing agreement had certain draw down quantities and dates, or else there were penalties i.e. order 100/month or else pay penalties. Just mean. Design houses do make extra money doing the manufacturing and looking after parts kitting etc. It's good to use common parts, so you can buy them in bulk and save more money. Most PCB manufacturing (stuffing) do this. Another thing to consider is any applicable regulatory or safety standards. The design you get should pass, you're paying for their skills and expertise verses training some noob engineer of theirs at your expense. If a design turns out unsafe, you should have some coverage and not take all liability. #### dl324 Joined Mar 30, 2015 15,476 I worked for an electronics design house, and have used a few others. It's good to hear from an insider. Thanks! #### Papabravo Joined Feb 24, 2006 19,617 I worked for an electronics design house, and have used a few others. One I worked for, basically charged the customer/inventor straight$$$/hour to do the design. BUT in the contract, they owned all the IP, forcing the inventor to get them to do the manufacturing. I know it's crazy, but it was a 30+ page legal contract and most people didn't realize it was a basic rip off until they had spent$10,000's on the design they didn't even own.
Worse yet is the manufacturing agreement had certain draw down quantities and dates, or else there were penalties i.e. order 100/month or else pay penalties. Just mean.
Design houses do make extra money doing the manufacturing and looking after parts kitting etc. It's good to use common parts, so you can buy them in bulk and save more money. Most PCB manufacturing (stuffing) do this.

Another thing to consider is any applicable regulatory or safety standards. The design you get should pass, you're paying for their skills and expertise verses training some noob engineer of theirs at your expense.
If a design turns out unsafe, you should have some coverage and not take all liability.
These are all good points and represent additional reasons why an entrepreneurs first experience with one represents a case of extreme sticker shock. The reaction to a quote from a reputable business will drive them to an unethical sleazebag who may "bait and switch" them straight to the poorhouse and bankruptcy court.

#### prairiemystic

Joined Jun 5, 2018
296
Many charlatans are out there. I felt bad for the inventors who were a bit naive and did not understand product development or electronics. So they could be near broke before realizing it's costing too much or taking too long to commercialize their idea- not at their fault but the designers are paycheque players and working at a turtle pace, quite happy to drag it out as much as possible.
Consider contracts that are lump sum or have some other incentive for them to finish sooner rather than later.
I would strongly advise checking references, with other customers to see how they like the design house. Are they licensed engineers with a permit to practice?
Also making sure the design house has direct experience with the item being developed. Quite a few have never done anything similar and it means they will be slow learning.

#### Deleted member 115935

Joined Dec 31, 1969
0
as most engineers , we have a limited amount of time , and we get familiar and thus confident and good with certain technologies.

An example that's easy to see, is say Xilinx v Altera / Intel FPGA's. They are similar, but to get the most out them, you need to DEEP knowledge that only comes with time, Few people are experts in both, most engineers / companies specialise in one or the other, get to know the foboyles of the chips, get to know the tools in depth, get to know the support teams, and get to know the inside story of the up and coming chips / which are coming to EOL.

So no, there is no need for them to get money , the other benefits mentioned are worth far more than money,

As for the second question implied, are you being ripped off ?

the british saying is "Caveat Emptor"

As in all walks of life, there are those that only want money. Think motor cars. You get a good relationship with the service station , and the world is happy.

#### Papabravo

Joined Feb 24, 2006
19,617
Many charlatans are out there. I felt bad for the inventors who were a bit naive and did not understand product development or electronics. So they could be near broke before realizing it's costing too much or taking too long to commercialize their idea- not at their fault but the designers are paycheque players and working at a turtle pace, quite happy to drag it out as much as possible.
Consider contracts that are lump sum or have some other incentive for them to finish sooner rather than later.
I would strongly advise checking references, with other customers to see how they like the design house. Are they licensed engineers with a permit to practice?
Also making sure the design house has direct experience with the item being developed. Quite a few have never done anything similar and it means they will be slow learning.
AFAIK Electrical Engineers are not required to be licensed.

#### Papabravo

Joined Feb 24, 2006
19,617
as most engineers , we have a limited amount of time , and we get familiar and thus confident and good with certain technologies.

An example that's easy to see, is say Xilinx v Altera / Intel FPGA's. They are similar, but to get the most out them, you need to DEEP knowledge that only comes with time, Few people are experts in both, most engineers / companies specialise in one or the other, get to know the foboyles of the chips, get to know the tools in depth, get to know the support teams, and get to know the inside story of the up and coming chips / which are coming to EOL.

So no, there is no need for them to get money , the other benefits mentioned are worth far more than money,

As for the second question implied, are you being ripped off ?

the british saying is "Caveat Emptor"

As in all walks of life, there are those that only want money. Think motor cars. You get a good relationship with the service station , and the world is happy.
foboyles?? That is not exactly a word. I think you meant "foibles". We must stop the spread of covfefe!

#### Deleted member 115935

Joined Dec 31, 1969
0
foboyles?? That is not exactly a word. I think you meant "foibles". We must stop the spread of covfefe!
Sorry, I bat above my ability, the joys of Dyslexia , spell check can flag it up as wrong, but unless it can find the right word, I still have to guess which spelling ..

But we try to help the best I can,

#### Papabravo

Joined Feb 24, 2006
19,617
Appearances are everything in communications. I'm not trying to be a PITA, just passing along a "helpful hint". I did know what you meant after all and that is at least 50% of the battle.

#### prairiemystic

Joined Jun 5, 2018
296
AFAIK Electrical Engineers are not required to be licensed.
You need a license to practice engineering, at least in North America. Australia is coming around to the need for that. Anything with a safety aspect must have a professional behind the design nowadays, instead of the "self taught genius" or layman or crook doing a design.

#### Papabravo

Joined Feb 24, 2006
19,617
You need a license to practice engineering, at least in North America. Australia is coming around to the need for that. Anything with a safety aspect must have a professional behind the design nowadays, instead of the "self taught genius" or layman or crook doing a design.
I practiced Electrical Engineering for half a century, in North America, without a license. What is the explanation for that?

#### Papabravo

Joined Feb 24, 2006
19,617
I never encountered any of my contemporaries that had licenses either. I guess we were a collection of very successful clowns. Waste your time and money if you feel the necessity.

#### prairiemystic

Joined Jun 5, 2018
296
The problem in the early 1900's with bridge and building collapses was fake engineers.
How do we know a person graduated engineering from a decent, accredited university?
How do we know a person is aware of the engineering Code of Ethics?
How do we know a person is competent with basic engineering calculations?

The license and exams has a few requirements that are difficult to fake. I've run into people purporting to be an engineer when they were just a ditch digger. Normally not a problem- until they do a design that can can hurt people.

#### Papabravo

Joined Feb 24, 2006
19,617
Michigan is at least one state that has no requirements for Electrical Engineers. You can try wish away the facts, but there they are. I did ask after graduation, found out what the situation was, and went on with my like. If there is no requirement and no benefit to me, I saw absolutely no point in pursuing it. Can you name a state that has an actual requirement?

#### prairiemystic

Joined Jun 5, 2018
296
US law is complicated, it's usually the municipality that actually does the legislation- not the state, not the Feds.
I don't have time to search and justify you being unlicensed. It's your choice.

There are states that don't even require the Electrical Code NFPA-70 or a few other common safety codes. After the fire/explosion... then that gets fixed. It's the Wild West.

Point is OP would check the credentials of the designers and management team- are they are qualified to do the work?
Licensed professionals have had their credentials verified, which greatly reduces the chance of fakes.
Would you hire Elbonian "engineers" or grads from the Bimbo College? Boeing subcontracted to them and look what happened.