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Re: Catch-22 Software Cost

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On Dec 10, 2004, at 7:36 AM, Rich Lewis wrote:

I would like this one to address the issue of capital improvements and recouping
costs and not get sidetracked.
Questions like this are why you have business advisors. The US Small Business Administration has people you can consult with for free to help you with this kind of questions. It's one that comes up with every business.

My own experience is that it's a little more complicated with software because you have to address productivity issues that very few engineers ever do. It's trivial to say that software is paid for by productivity improvements but very difficult to assess the real imponderables like the learning curve or how to make full use of the increased productivity. For example, I know I'm more productive with a Mac than I would be with a Windows machine, but I've never been able to put that into numbers. I just go with my gut on software purchases.

I have seen a couple of ROI calculations for CAD software but they were shameless snake-oil presentations (Like the GRQ plan that wasn't a pyramid scheme becasue it was based on the trapezoid in Richard Pryor's 'Breaking Loose') If there are any around (Google ROI CAD) you may be able to use the model.

I don't know anyone who charges a use fee for software any more. It used to be done in the old time-sharing days when the charges were billed by the time-sharing service, but not any more. Software use is universal--it'd be like charging for drawing board use or pencil consumption in the old days. I don't even know how you'd figure it out. I went through an exercise like it once with distributing the expense of a VAX computer among various users, but the only schemes we could come up with were awful--no way to address the fixed annual cost of the computer with variable usage-based departmental charges.

You also don't want to get too clever with add-on fees to your billing--it gives clients the feeling that they're being nickel and dimed, like the so-called 'environmental fee' or 'shop supplies' you see on oil change invoices.

Christopher Wright P.E. |"They couldn't hit an elephant at
chrisw(--nospam--at)skypoint.com    | this distance" (last words of Gen.
...................................| John Sedgwick, Spotsylvania 1864)
http://www.skypoint.com/~chrisw/


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