Tips and Free Stuff
Clients and the way
Zerksus is being misused
Plus the way matters
will be handled from now on...
The 2009 year was a busy one. The peak negative
experience came when we were robbed, at gunpoint, in middle of
September. The four robbers broke the security gate and caught us in our
driveway. The short of the long story is that they cleaned us out. Even
when their own vehicle was full they had the cheek to call and 'order'
another vehicle. They basically got away with all our computers,
backup drives (that I was busy making backups on), audio and video
equipment and jewelry. All in all about R150 000 ($20 000 USD) worth of
hardware got taken.
Since September we have had an uphill battle resetting
the office, recovering data from numerous small backups and trying to
keep afloat. All our contractors also went without work since then and I
regularly have to spend time making promises for when we are going to be
back up and running.
Now, all of the money and time lost from the above is
nowhere near the money and pain some of our clients caused us. The
robbery was just a cherry on top, probably a good thing because it made
us sit down an think. We sat down and made a list of the top clients and
ended up with a list of 15. Of these about 5 take up most of our time.
We get calls till late at night, we work 7 days a week, supply free
hardware and supply free support for it etc...
The story always start the same. A client approaches us
with literally thousands of potential orders. The initial order's
profit is normally much higher than labour costs, so that is
waivered from our side. We then end up designing and manufacturing a
prototype but we never get to pre-production, hence no cover on labour
and prototyping costs. Then the client wants some bell or whistle added
and still does not place any definite order. Around this time the price
is beaten down till the profit is so low that it is basically dangerous
to touch production with a stick. In the end we sit with an expensive
proto and a client we don't want.
We also got sucked in a few times with people that
know people. In November to December we got sucked in by people who
claimed they knew Richard Branson very well. On the Water2Fuel
side these people sucked around R45 000 for free demos which Sir Branson
never even saw. I even had this one client who came to "fetch" some
samples (>R10 000), got me to get his software sorted out so he could
invoice and have some money for Xmas. Apart from the hardware loss (now
secondhand, physically handled), fuel and time spent we have no money to
show for it. Another client also wanted to order numerous
copies of circuits. Initially he only took and paid for 2 units
where we had an agreement for an MOQ of 20. Serious loss. Then
the second batch he took 6 boards. He now requires a 3rd version. On his
project we basically invoiced unit cost but we paid for all the tooling.
The last payment barely covered the PCB costs. Another client ordered a
large batch of boards and asked for it to be delivered in batches. We
had to spend money of MOQ components but the client decided
halfway to "halt" the delivery as they did not want to mess up their
cashflow... but messing up ours is OK. We are starting legal
action next week as we have a legal order from them. Yet another client
was unhappy because we were closing for April holidays. I rushed to
finish their work before we left, invoiced BUT we still have not be
paid.... 8 months later. Another client got us started on a PPM GSM
project for which we now have R1000 per month recurring expenses. The
first batch was supposed to be 50 units (again to cover labour costs)
but near completion they only wanted 5 (which was completely off by 10
times). So far, even if we do get a 50 unit order, we will barely cover
the costs incurred so far.
We are grossly mistreated. My one friend made an
accurate comment the other day that we would have lost less money if we
just did not work at all. It seems that the more experience and
capability Zerksus seems to acquire the more people are expecting for
free. We get requests for quick software. The one request was for
software that "should not take you longer than 5 minutes". That software
took 2 days and then the client wanted to modify the hell out of it.
Again for free. When we used to do work for companies like Denel they
would understand that a circuit board started with with documents,
prototyping, schematics, PCB layout and manufacturing. These days
the "clients" are so clued up that they know it takes roughly 5 to 8
days for a prototype PCB's manufacture, .... so the obvious lead time
from meeting to demo is about 1 working week. There is no time
allowed for design documents, prototyping or the rest.
The other major mistake we make is to fall for the
large volumes clients promise us. For these large volumes we
normally waiver the design costs. The problem is that the profit we make
is sometimes less than what we would make for the design costs. The one
client kept on pushing the price down so much that the PCB assembly guy
is making more than us (for nearly no risk). If the CPU on the board
dies we lose more on that component than the profit on the board.
So, and I know our clients will probably be reading
this (if you don't get an email first), this will be the standard way we
do business from now on:
1) Initial decision: Who's IP is it?
If you approach us for a product then you will have
to decide if you want to own it or not.
The end result is simple. If you want to own the IP
then you pay for it. We will provide a detailed quote and if
you accept it (official order) then you will pay for the work
done on completion of each line on the quote/order.
If you decide you don't want to own the IP then you
will commit to a minimum order quantity of units (calculated
on lesser amount of expenses).
If you decide to own the IP then we will discuss
first right of refusal to manufacture 'your IP'. If you agree to
this we will get the first option to manufacture the units, with
If you own the IP you do not own the complete
rights to all possible products. One client was upset because I
designed a power supply for another client. The IP will be
product and market specific with a time limit.
2) Payment terms.
Contract work will be paid on-time as per
contract terms, usually 30 days from date of invoice. Work will
only start on receipt of official order.
Ad hoc "can you quickly come and help us please"
work will be payable immediately at the end of that
session. A callout fee will also be asked for each trip.
Distances further than 50km will be charged more.
We accept any normal form of monetary
payment, including cash, EFT, credit cards and cheques. We will only
accept credit cards and cheques from customers with physical
addresses (i.e. can be found) and for values of 1 day's labour or
3) Added value service.
You get what you pay for. If you buy a R49
CPU card then that is all that you get. Many clients expect me to
get in the car an physically code and program the card in their
system. Don't come with stories that if this circuit works (with me
getting it operational) that there is a market where you will buy
If you require assistance on a product then send an
email. We will help as much as humanly possible, meaning that if you
are basically stupid that we are not going to design your system for
you. Calling us to get it sorted out over the phone takes
time and will be invoiced if it takes too long.
For all consultation/development contracts the terms
of assistance will be stipulated in the contract. As soon as
assistance, beyond the contract, is required the hours will be
Don't think because a product is cheap
that it will be cheap to get it fixed/operational etc...
Don't think because a product is expensive
that the cost will cover hours upon hours of assistance.
4) Client Guarantees and pre-payments.
For products and labour exceeding 3 days (in
monetary value) we expect some form of guarantee before excepting
The guarantee will depend on the monetary
size/value. This is more applicable on smaller (financially)
clients as the larger companies normally honor official orders. This
will require the client to deposit an agreed upon amount into
an attorney managed bank account.
For prototypes, pre-production and production
orders we will require a percentage pre-payment before the
work starts. This means that no components will be ordered until the
funds are visible in our bank account. Pre-payment
percentage will be dependent on the type of design. A circuit
composed of simple components and small MOQ numbers (e.g. 40 chips
per tube) will require less pre-payment. Products with expensive
components (like GSM modems) and large MOQ numbers (e.g. power
supply chips with 2500 chips per roll) will require a much higher
pre-payment to cover the procurement cost.
5) Minimum order quantities.
Certain components will dictate
minimum order quantities. These MOQs are in a lesser way applicable
to shelf items.
We cannot build a single unit, using CNC pick and
place methods, for the cost of components plus markup. Components
have to be ordered in rolls and tubes and range from 500 to 5000
components per roll. Keep in mind that we have to carry the stock
(for our IP). Prototype units will now be more a matter of
hours spent than just the component cost.
If the product is your IP, and we manufacture, then
you have to pay directly for your components and pay us
the agreed upon markup per completed units. All excess
components will be delivered along with the units.
6) Predetermined business closure times and
We have only had 1 1/2 vacations in the last 10
years. Don't even get me started about the 1/2.
All projects and deliverables will be scheduled.
If a project moves into a holiday timeslot then it will wrap
around and only be delivered afterwards. We are also
human and we also need rest. There is this sick trend people have
pushing us hard through Xmas, with them resting, and then hitting us
hard in the beginning of January with new work (usually free stuff
they thought up during New years).
We will not work on any public holiday.
We will not work weekends. If required
Saturdays will be used but definitely not Sundays.
We will close around the 10th of December and
start around the 10th of January.
We will close for one week in April and one
week in July. The days will be published on the website.
Clients will receive emails and SMSs.
PCB designs will close by the 1st of
November as most PCB manufacturers close orders by the 15th of
November. This means that it is useless to rush complex designs just
days before these closures.
April is funny season. There are so many small
holidays during April that one week's work easily turns into 3
weeks. Expected delays will be compensated for.
Our supplier delays will be passed on
directly to you, the client. If the PCB manufacturer delays the
delivery by 1 day then the entire project moves by one day.
A work week consists of 40 hours per person.
If the planning shows more than 40 hours per week then another
person will be contracted or the project endpoint must be moved
7) Shortcuts, non-genius moves and false feelings
of knowing everything.
It is said that it takes 9 months to make a baby,
anything less is a potential abortion.
If the circuit needs to go into a plastic injected
box then we will get a proper mechanical engineer, get the proper
mould made and have it manufactured at a reputable manufacturer,
with all the cost covered. Sounds simple, but believe me I have been
situations where the client decided at 99 that he did not want the
expensive box anymore and rather would like us to make a quick
rubber mould and cast it by hand. That stunt cost me R200 000 in
2004, causing the project to look below standard, caused late
delivery but allowed my client to pocket some R150 000 in spare
Products don't fall from my brains to the table.
That would be nice. Normally it requires a lot of meetings, lots of
paperwork, prototyping, CAD work, more prototyping and many hours of
coding before a product is complete. I am sick and tired of clients
who think the product will be complete when the components and PCBs
land. I even had a client who expected full vehicle installation 2
days before the last microcontrollers landed. We will follow the
agreed upon process or not at all.
No last minute changes!!! Change costs money.
The further down the project timeline the greater the impact. The
same genius client above decided 3 days before commissioning to add
another server to his system. This required a complete overhaul of
the software causing delays and red faces. We usually adaptively
design during the process. If a component catches onto a moving
part, a potential future component might be too high (e.g. SMD
capacitors) we will pick it up way in advance and inform the client
of the "rectified" problem. A single feature change usually
upsets the entire design flow.
Some clients feel they know everything.
Recently I had a client (yes, you might see yourself in this) who
told me that he could get GSM trackers for very cheap (sub R100!!).
He did not know the difference between GSM/GPRS and GPS. So my
pricing, according to him, was way off resulting in the demand for
lower and lower prices. My feeling now is that if the
client is so smart that he does not really need me.
Assumed functionality is also a major problem
normally associated with a super smart client and very little
documentation. This is the part where the client suddenly comes up
with new requirements the day we demo the system, saying things
like: "Shouldn't the power LED flash with a 20% duty cycle, ....
like my cellphone when it is charging?". Each project will
have the proper documentation, agreed upon at time of contracting,
with proper line-by-line specifications and test documentation
...with results....and signed off. If you suddenly experience an
epiphany at demo time then the new feature will part of contract
Promising your client unrealistic specifications.
I refuse to work miracles anymore for stuff you promise your end
clients. I designed a vehicle tracking system for a client who
promised his client that this circuit will be so good that it will
even measure the fuel levels in their tanks. Not only was it
impossible (at that budget) to implement but it was also illegal to
tamper in the fuel system. They eventually convinced my client to at
least put in something nice like impact sensors and my ex partner
signed the deal, without me, locking me into a near impossible
design target with a budget of R100 per sensor (including
development). That little extra cost much more in time, money and
8) Long distance work (anything requiring a long
drive or sleepover), S&T.
If you have a project in mind then try to sort
implementation and testing so that the nearest site to us is
chosen. We are in Centurion, near Pretoria and
Johannesburg. That is, e.g., not near to the Kruger National
Park, Bloemfontein or Cape Town. If you have a tracking system in
mind then it makes more financial sense to drop the vehicle off
with me so I can develop, test it here and make sure it
works. After that we can discuss remote installation and
other procedures. I also have people here who can help, who can
drive the vehicle, auto electricians who can correctly wire and
install, PCs and other lab equipment etc to do quick
modifications... I also have my bed very close which is for my
account. As soon as I move away from my lab things get slower, more
complicated and prone to errors. It also costs, as set out below.
If you require me, or a Zerksus contractor, to work
in a remote location then you have to compensate for
If we have to use our own vehicle then the
client must pay the AA tarrifs per km. We have a cost
effective vehicle for that purpose. A contractor, driving his/her
own vehicle, might however cost more per kilometer.
If we have to sleep over then the client must pay
for suitable accommodation and food.
When sleeping over at a remote location the
minimum payment will be 8 hours per day of the agreed
tariff. This includes the travel time for that day. If
the travel time exceeds 8 hours (long flight, or drive to Cape Town)
then this will be renegotiated beforehand. Keep in mind that
billable hours are being used. Also, flying to Cape Town might seem
more luxurious, but it is a lot more productive than driving for
many hours and sleeping half a day before getting to work.
Bottom line is that we want to stop paying to go
and solve problems for free.
9) Warranties, maintenance agreement and Zerksus
We accept that Zerksus work/products must carry some
form of guarantee. It is sometimes this perceived guarantee
that is costing us a lot of money. In 2004 we had a client in
Klerksdorp (200km away from us) who would call 7am in the morning
that our system died completely. After driving all the way we would
find that it was Telkom who decided to unplug and move our server
rack mount box, but because we were initially so nice (and normally
spruced up system system and retrained the personnel) we did not
invoice. After several such trips they assumed that every callout
Zerksus normally specializes in custom systems,
and yes, sometimes installed far from home base. In the past, as
part of Zertec, the budget only allowed for one set of components.
So if something broke it required us to drive out and fix it. Our
new way of approaching this is as follows: If a system is
critical then you can to buy spare cards. This is very common
with standard IT systems to have spares and an IT person nearby, so
why not for other systems. If a component breaks you must have the
personnel to swap it out. The defective unit must then be
couriered to us where it will be inspected if within the warranty
period. If the unit is brand new and malfunctioned under normal
conditions then it will be replaced with a new unit and sent back.
If older (depends on product) the unit will be repaired and
returned. If the unit shows signs of foul play then no
replacement or repair will be done and the client has the option to
have the unit repaired and couriered at his cost. Simple. We have
never shrugged away from honoring warrantees/guarantees and have in
many cases gone far and beyond the lifetime of the product.
Maintenance agreements. Larger systems, like
access control and custom tracking systems, normally includes the
warranty and maintenance agreement (if required) in the
initial payment which covers the first year. Again, if far from home
base, it can get complicated so another company close by (or
in-house) must be trained to take over these general maintenance
jobs. After the first year things get complicated. In 2005,
after the split between Zertec and Zerksus, we spent numerous hours
maintaining all the old VMS systems (Zertec no longer had the
technical know-how). The 'tab' just grew and grew, again with no
money flowing into Zerksus, as the clients believed they paid for
unlimited maintenance. That is never going to happen again. The
terms are simple. You want maintenance then you have to pay for it.
If not normal callout fees, hourly rates and repair costs.
Having your own untrained experts work on
the system is also highly unacceptable. We have had clients,
wanting to save on a callout, who had their own people "work" on the
system to eventually utterly screwing it up beyond repair (also
known as FUBAR). We ended up being called and so shocked and willing
to fix "our" problem that we only saw in the end that it was their
"experts" who did it.
Lightning. It is the client's
responsibility to have the equipment insured against lightning
strikes. Access control installations are normally prone to
lightning damage. Remember that additional lightning protection
equipment (not part of the Zerksus equipment) is required by
most insurance companies (as these devices are certified) for them
to pay out any claims. Spotting lightning damage is very easy, even
if there is no physical visible damage, so trying to pin it on the
manufacturer is not so easy.
10) General comments.
What we want is simple. If you want us to work then
you pay us for that time and effort.
If you take a piece of hardware then you pay
for the hardware.
If you have the hardware and need help programming
it/get it going/ fault finding (all products are thoroughly tested)
then you pay us per hour.
If you need help at your site then you pay
getting there and for the time spent there.
There is nothing "quickly" or "it is easy
for you". The fact that after all these years I don't need
manuals to design or code does not mean that you don't have to pay
me anymore. If you pay the lesser qualified GP R150 per 15 minutes
then do you pay the specialized cardiologist R50 per hour because it
is so much easier for him to treat/diagnose you?
Expect excellent service if you pay. Expect nothing
if you don't.
We are not a spares shop. If you want 5000 units of
a specific component then no problem. We will organize. If you want
10 resistors and a can old Freeze spray then I will charge you for
the 2 hours that one of us has to go and stand in the queue at
As of about 3 weeks ago we have abruptly stopped
working on just about everyone's projects. It might seem crude and
unprofessional but seeing that none of those clients have paid for the
work being done (and none seem to be willing to pay even when complete)
that we decided to lose less money and just chill for one Xmas. As from
tomorrow we are taking legal action against 3 clients, so 2010 will
indeed be an interesting year.