How to convince customer to buy its own products

Question

I'm an hardware developer and I design PCBs board for my customers, usually on specific orders. I mean, I don't have a "catalog" with available products. When a customer needs a circuit he asks me a quotation and makes an order.

This is the safest way to do my job. By the way, I can sell the PCBs only to the customer that ordered me the development.

Sometimes it's not so easy. I have, among others, an old customer that periodically buy few items of his own PCBs. "Own" means circuits that he ordered me to design. Due to his specific sector, he may buy only 2-3 items per year for each circuit. But I have over 30+ different circuits!

Furthermore, most of them are mounted by an assembly house. That means I cannot ask for 1-2 piece at time because:

1. the price would be unreasonable higher
2. it depends on the board, but usually there is a M.O.Q. (5..10 pcs)
3. the lead time (4-6 weeks) is not compatible with the request of my customer

So I've ended up to make order of 10 pieces hoping I can sell them to my customer in a couple of years. My customer does not accept:

• any MOQ
• lead time longer than 1-2 weeks
• any extra-cost due to urgency
• increases in cost not due to a review of the board (that must be authorized by themselves)

Years ago, this situation was acceptable because I only had 5-6 different boards. Over the time, new circuits were added and I really don't know which ones he will buy in the next months. He says he doesn't know too, because it depends on his customers.

Please note: of course I can say to my customer I cannot afford such a situation anymore. And this is what I'm going to say.

But, before, I need to solve another problem: right now I have in my lab over 30.000$ of his boards. This is simply too much for my small activity. I'm the weakest side in a discussion because I can sell these boards only to him. It's true he cannot buy the same boards from other places in few weeks (at least he needs 6 months I guess) but I'm afraid his department is going to be closed whenever there's a reasonable excuse. And this might be a valid one.

I sent him several offers with discounts, but I never received an answer.

So my question is: how to handle such a situation? Given this scenario the most important point is to recover the value of my warehouse. If this may deteriorate the cooperation, perhaps it would be worth anyway. In this situation the expenses are larger than incomes.

Because English is not my primary language, I apologize for any mistakes. I just want to explain a little better who is this customer. When I say "he/his/him" I'm talking about the customer itself. This is a department inside a large company. I have only 1-2 people that can make orders and managers "above" them are not interested about my complaints.

Answer 1

You shouldn't have put yourself in this situation in the first place.

We order PCB's from a dozen places across our product lines. We sign multiyear staggered shipment contracts when we don't want to outright pay for a really large quantity of boards. This type of deal is only offered by medium/large fab houses. We'd never expect to be able to push this deferred cost on a single freelancer.

Your contract terms weren't in your favor - you assumed risks that you should never take on, because the factors affecting those risks are outside of your control. If you are the only one with these designs in hand, your only choice is to jack up the price to justify it on your end - ie charge the customer the cost of a single board production run.

Answer 2

It may be time to "pivot" and offer a catlog of the extra PCBs. There is a market for recycled electrical components. Give your client first crack at it (since they were ordered for him originally), then create your catalog and advertise that they are for sale.

In an ideal Freelancer-worker relationship, you should be needed more than the company; this is backwards when starting out. If you are relying on this ONE company, then you are essentially an underpaid employee of the company.

If you need to keep this customer, you should look at expanding what you can do for other potential customers, and start getting more; if you are so specialized that this company is the only company you could potentially sell to, then try to get a job with them. You wouldn't be freelancing then.