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Ask Slashdot: What's Your Company's Marketing-to-Engineering Ratio? 202

Posted by timothy
from the life-imitates-dilbert dept.
An anonymous reader writes "I just learned that the company I work for annually budgets ~$17,000 for non-labor engineering expenses, but budgets ~$250,000 for non-labor marketing and sales expenses. Am I just being cynical when I say that my company spends almost 15 times as much trying to convince the outside world that we make a good product, than it spends on actually making a good product? What's the marketing-to-engineering ratio at your company?"
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Ask Slashdot: What's Your Company's Marketing-to-Engineering Ratio?

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  • non labour? (Score:5, Insightful)

    by Anonymous Coward on Saturday May 04, 2013 @01:23PM (#43630031)

    you would expect a huge difference what are the overall budgets like.

    • Re: (Score:2, Interesting)

      by Dins (2538550)
      Posting to undo a bad mod. Move along...nothing to see here...
    • Re:non labour? (Score:5, Insightful)

      by icebike (68054) on Saturday May 04, 2013 @01:34PM (#43630127)

      you would expect a huge difference what are the overall budgets like.

      Yeah, that caught my eye as well. Seem like cherry picking the numbers if you ask me.

      Simply because the engineers already have all the tools, desks, materials, computers that they need to develop the the products means they don't need a big non-labor budget.

      But you don't sell stuff without advertising, travel, swag, etc. And that is an ongoing expense.

      You buy one advertising spot, you need to go out and buy another one tomorrow.
      Solve one engineering problem on your computer and you don't need a new computer to solve the next one.

      I would expect almost any company to have bigger sales costs than development costs. Especially for any product that
      has to compete in the marketplace.

      Show us the whole budget, or stop cherry picking numbers.

      • Re:non labour? (Score:4, Insightful)

        by Shavano (2541114) on Saturday May 04, 2013 @01:43PM (#43630177)

        Marketing people are skilled at making a case for why and how people should spend their money. That said, $250K for marketing materials and expenses is not much even for a small company.

        If you're in the software business, low budgets for engineering expenses are pretty normal, but $17K for the company is paltry. What if you need to expense simulator time, upgrade computers, compilers, replace monitors, storage, that kind of thing. Heck, even for one person, $17K doesn't go far. My company makes hardware, software and firmware. $17K wouldn't get us halfway through one tiny project. I'm developing a board right now that will cost $6K in materials alone, not counting the material processing charge to have it assembled.

        If there are things that you need that aren't in the budget, get them in the budget. Management only knows about the expenses you tell them about.

        • Re:non labour? (Score:5, Insightful)

          by icebike (68054) on Saturday May 04, 2013 @02:04PM (#43630297)

          That you can come up with an example that will run through that $17K in no time is totally off point and non germane.

          I know a couple medium sized electrical engineering companies I've worked with that replace computers as needed, buy a few software licenses, do very little travel mostly local, and could easily live within $17K. I know 5 man software companies that need even less non-labor capital, and haven't purchased a new computer for years, but attend one or two conferences per year.

          Its the non-labor expense ratio between marketing and development that is under discussion here. Not the chest thumping about how expensive your particular project might be.

          • That you can come up with an example that will run through that $17K in no time is totally off point and non germane.

            I disagree.

            I've encountered companies like that. I wouldn't work for a company that had such a small R&D budget unless it was very, very small.

            Some even quite large companies (i.e. multibillion turnover) don't even seem have senor engineers who can sign off on more than 5 or 6k of expenses. Their main products cost many tens of thousands a pop. I actually was going to do come sonsulting f

            • by fufufang (2603203)

              >I've encountered companies like that. I wouldn't work for a company that had such a small R&D budget unless it was very, very small.

              The OP is talking about expenses, not salaries. This is not about salary. the people at the engineering probably still get paid quite a lot, even though they are not buying new toys.

          • Re:non labour? (Score:4, Insightful)

            by AK Marc (707885) on Saturday May 04, 2013 @04:41PM (#43631197)
            I've worked in a place where the engineering budget didn't include computers. Engineering and IT were separate, and IT paid for the computers. I have no idea what the engineering department might buy that they wouldn't just bill to IT. Perhaps his problem isn't resourcing, but accounting.
            • Lab equipment (scopes, power supplies, ...), prototype builds of devices, pre-certification testing, etc. I'm in the EE/embedded side and we definitely have non-IT expenses.

            • by citizenr (871508)

              Computer hehe, thats cute.
              One oscilloscope can cost over $50K. Computers are practically free when it comes to hardware engineering.

              • by AK Marc (707885)
                Engineering means lots of things to lots of people. I worked one place with hundreds of millions of dollars in the engineering budget, and not a single oscilloscope. And the last time I actually bought an oscilloscope, it wasn't an engineering expense, it was billed to IT. It was used by both.
          • by Shavano (2541114)
            I wasn't chest thumping. I was pointing out that how much money you need for materials and other non-labor costs depends greatly on what kind of products you are developing.
        • What if the engineers were good enough that they engineered a way to make their development costs cheaper?

          Not saying that this is what is happening (without more information, I have no idea what is actually happening), but that is one of the things engineers do aim for.

      • Simply because the engineers already have all the tools, desks, materials, computers that they need to develop the the products means they don't need a big non-labor budget.

        It depends on the industry though. I have no idea what the numbers are where I work, but I would be *very* worried if we weren't spending large amounts of money on engineering hardware. I would not be surprised for the engineering budget to be in the billions, but I work for a telco (and not in the US) so it makes sense for us to be spending money on system upgrades and maintenance of the existing infrastructure.

        ... We are spending more on marketing though. Of that I have no doubt.

      • Re:non labour? (Score:4, Insightful)

        by ozydingo (922211) on Saturday May 04, 2013 @05:39PM (#43631495)
        In my mind, that only shifts the focus from "is there something wrong with this company" to "is there something wrong with this society (economy)? Doesn't it in some way make sense that relatively more resources could (theoretically) be used on solving new problems in better ways, rather than pushing existing products against somebody else's?
        • by icebike (68054)

          Doesn't it in some way make sense that relatively more resources could (theoretically) be used on solving new problems in better ways, rather than pushing existing products against somebody else's?

          Yes, by all means, lets take the engineers away from their construction work, the farmers out of the field, and the nurses off the ward, and the miners out of the mines, and put them all to work finding a better battery technology. Lets forbid advertising. But wait, who will buy our better batteries if they don't know about them?

          You can't remake society just because you think you had a good idea.

    • Re: (Score:3, Insightful)

      by beelsebob (529313)

      Indeed – what are Engineering's expenses outside labour? A few computers, that's about it. Marketting will need to fly all over the place to you know sell some shit.

      If you want to compare what your company spends on convincing everyone how awesome the stuff they make is, with how much they spend on making something awesome, include the labour costs too. I'd bet heavily that they're spending an awful lot on the people who make awesome things.

      • by Zumbs (1241138)
        You may also need software to go with those computers ;-) A MSDN subscription with Visual Studio can cost a pretty penny, especially if you go for the premium or ultimate packages. If you build hardware, some of the software tools are pretty expensive as well.
        • Re: (Score:3, Informative)

          by h2oboi89 (2881783)
          Not to mention hardware costs for prototypes if you work with anything but pure software. Due to their small run size, prototypes can get very expensive.
  • Yes (Score:4, Insightful)

    by Anonymous Coward on Saturday May 04, 2013 @01:24PM (#43630037)

    I would think engineering is mostly labor, while marketing involves quite a bit of non-labor expenses. There's your difference.

  • by Anonymous Coward on Saturday May 04, 2013 @01:25PM (#43630043)

    By excluding labour costs, you've skewed the facts. Engineers themselves are the focus of the engineering department, whereas adverts (a non-labour cost) are the focus of the marketing department.

    • by AK Marc (707885)
      Adverts? You mean blow and hookers? The marketing departments I've dealt with blow (pun intended) the money on "entertainment" and such, and actual ads were pretty low. The few ads they did buy, they generally did some manner of trade-in-kind if possible.
      • if blow and hookers convinces someone to spend half a million on products, then it was a good investment
  • by Assmasher (456699) on Saturday May 04, 2013 @01:26PM (#43630053) Journal

    ...on things other than salary.

    Depending on the market you are in, I would very much expect your non-labor expenses in Sales and Marketing to vastly outweigh your engineering non-labor costs.

    If I work at a company with 1 marketing guy/gal and 10 engineers, and I spend 1 dollar on marketing non-labor expenses and $0 on engineering non-labor expenses I would be spending an infinite amount of money more on non-marketing expenses but I'd still be clearly focused on engineering.

    • by Kjella (173770)

      I agree this must be the dumbest Ask Slashdot in a while, and that's saying something. What would marketing do with labor costs alone, have them roam the streets as wandering billboards? You need to buy online ads, newspaper ads, magazine ads, tv ads, radio ads, billboards, cinema ads, product placements, banners, flyers, folders and various marketing stunts. Meanwhile software developers mainly need a desk and a computer - which may be considered general overhead since all employees need those - and the re

    • by Austerity Empowers (669817) on Saturday May 04, 2013 @02:36PM (#43630485)

      If you have hardware engineers, you don't spend $0 on non-labor expenses. In fact the non-labor expenses will radically dwarf the labor expenses. The tools for some areas can cost as much as a headcount, in others it's a significant fraction of a headcount (and more fun, these are the ones where you need nearly 1:1 license seats/headcount). Then there's jobs you subcontract (backend/layout, custom components, tooling).

      And all that is cheap compared to factory NRE & manufacturing costs. I easily spend twice my salary per year in protoype hardware alone. When we go to production, a small run costs more than the entire labor cost of engineering in several years. Hopefully we sell and that money gets earned back of course, but the initial outlay is huge.

      Marketing can spend money like nobodies business, even excluding travel. It's amazing how much they spend considering how little it clearly does. But unless you're doing software I would be very surprised if you compared department budgets and Marketing spent more than Engineering (counting MFG as part of engineering, as some companies do).

  • by Anonymous Coward on Saturday May 04, 2013 @01:27PM (#43630061)

    Marketing and sales have high expenses. They need to buy ads, for starters, and they often need to travel around the globe. In engineering, the bulk of the cost is the engineers themselves (which is excluded from your numbers). In certain industries they might need some expensive equipment, but that gets amortized over several years.

  • by bruce_the_loon (856617) on Saturday May 04, 2013 @01:29PM (#43630075) Homepage

    Depends whether they are they physical or software products? And whether assembly of physical products is outsourced to other companies.

    If they are software products, then most of the cost will be in the labor side, not the non-labor side of the budget and without that information, an informed opinion isn't possible.

    $17,000 will get you a pair of very decent servers that can host virtualization quite happily for a couple of years. Or one rather cheap CNC machine if you're making physical products.

    Marketing on the other hand is expensive. $250,000 won't buy you a TV advert series on mainstream channels. You'll probably squeeze printed media, maybe a booth at a couple of tech events and online advertising out of that.

  • by deanklear (2529024) on Saturday May 04, 2013 @01:30PM (#43630077)

    There are very few products that serve needs, so manufacturing the desire for conspicuous consumption is more important than making sure the product works reliably.

  • by whatthef*ck (215929) on Saturday May 04, 2013 @01:30PM (#43630089) Homepage

    Just naive, that's all.

    Get a grasp on the concept of marginal costs, and it all might start to make sense to you.

    • Don't overlook your competition. You may have a fantastic product worth the price you charge, but if your competition has built a better one for a lower price, their product will get the sales.

      Be honest and upfront with any demo software you provide. An example is given below.

      My parents took a cruise. They accidently deleted some photos in the camera and caught it and aborted the delete and saved the card for me to recover. This put me on a search for recovery software, either Linux or Windows.

      I found a

    • The really important metric is LOC/HHAM (lines of code divided by hours of hot air at meetings). You can increase your corporation's LOC/HHAM ratio with a morning's worth of cut and paste. Do it for America. Do it for a better world. Just do it.

    • Products don't sell themselves. Companies that aren't aggressive with getting their message out/marketing and paying top dollars to good salespeople are called bankrupt.
  • by rdunnell (313839) on Saturday May 04, 2013 @01:34PM (#43630123)

    You're looking at one aspect of the budget. Non-labor expense is usually stuff like paying consulting firms, "cloud services," buying advertisements, paying for training, etc. Capital expense is where you typically book things like servers, enterprise software, storage, etc. So this could be a company who spends a ton of money on marketing crap, or it could just be a company that spends more on external advertising buys and focus studies than it does on sending IT guys to training and outsourcing business apps. Without looking at the total picture it's hard to say what they really invest in.

  • Sales is hard (Score:5, Insightful)

    by sjbe (173966) on Saturday May 04, 2013 @01:38PM (#43630149)

    Am I just being cynical when I say that my company spends almost 15 times as much trying to convince the outside world that we make a good product, than it spends on actually making a good product?

    Short answer, yes you are being needlessly cynical.

    Longer answer, don't underestimate how hard it is to sell any product, even a very good one. Further, it isn't a moral issue. Activities cost what they cost. Pick any software company you care to mention and you'll find that their engineering costs are somewhere between 10-20% of total expenses. Most of the rest is the cost of sales and administration with sales and marketing accounting for the lions share of the expense. The reason for that isn't because the sales team is wasting money but because it requires a lot of resources to convince people to buy something. The activities used to sell products frequently don't benefit from economies of scale and like basic research have uncertain paybacks on the investment.

    Frankly I think it is a worthwhile exercise for every engineer to spend some time trying to sell their product. Engineers too often are dismissive of sales and marketing and they shouldn't be. A good sales man is an incredibly valuable asset and frequently harder to find than a good engineer. I run a company where we are pretty good on the engineering but until recently were pretty bad at sales. (we're still not great but improving) And the result showed. We make a good product but that isn't enough by itself.

    • For example (Score:5, Insightful)

      by Sycraft-fu (314770) on Saturday May 04, 2013 @02:55PM (#43630607)

      Have you ever found something, particularly something released years ago, and said "How the hell did I never hear of this?" Well that right there is a failure of marketing. There was something you would have been interested in, but you didn't know that it was out there for you to buy. Things don't just magically spread word-of-mouth. Sometimes it happens, you get lucky and your item is real popular to talk about and everyone spreads it around. However more often, you have to go and make it known.

      Also this Ask Slashdot is particularly stupid because he says "non-labour" when talking about expenses. So he means excluding all salaries. You know, the really big expenses. That is the really telling part of how much you spend on something. Salaries will almost always be by far the largest item.

      For example I work for a university IT group for an engineering college. We have an annual capital budget, meaning money for computers, switches, that kind of thing of around $100,000. We have an annual salary budget of about $1,000,000. We spend literally around 10x on people as we do on things. It is also fairly expensive when it comes to things since computers need relatively frequent replacement, you usually only get 5-7 years out of them.

      That also doesn't pay for a ton of people. That is maybe 9 staff and 10-15 of students.

      People are expensive, at least if you want good people and you want to pay them a fair wage. $10,000 gets you a pretty nice Dell server that you can stack a ton of VMs on and it'll last you for a number of years. $10,000 also pays a fraction of one person's salary for a single year. Easy to see why things get stacked in the people direction.

      Also more people, more labour, is usually what you need to make something better, to have better service. I mean thinks if you are writing a program, what helps more: An additional server, or an additional coder? I'm not saying the capital equipment is unnecessary, but the expense will be way less.

      • Yes, I once discovered that my laundry could have been April-fresh, but had merely been late-March odor neutral. I still haven't fully recovered, but I did learn my lesson. When I read the trades, I now spend twice as much time on the advertising as on the advertorials. It's paid off. My clothes are static-free!

    • selling X at price Y to someone who needs X and is willing to spend price Y...that's **as easy as falling off a log**

      don't underestimate how hard it is to sell any product, even a very good one.....because it requires a lot of resources to convince people to buy something.

      It is hard. But you didn't hit why. People LOVE buying things. It is competing **independently** in a gamed-out large corporate dominated environment.

      Take an Asian market (mine is in Korea b/c i lived there for a year)...so much commerce h

      • Take an Asian market (mine is in Korea b/c i lived there for a year)...so much commerce happens in Asian open-air style markets. Billions of transactions. Virtually **zero** marketing...why?

        If you think there is no marketing occurring in those markets you are very confused about what marketing is. Most of the products you buy in a local market like the one you describe (I've been to plenty of them in China and Southeast Asia) sell branded products or knockoffs of same. A lot of marketing has already been done by the big companies that produce the product. Brands matter for a lot of reasons. More is done by the shop owner when they try to make their products attractive to customers. The sh

        • sell branded products or knockoffs of same.

          no...unless 'squid' or 'apple' is a brand...and the clothes...they weren't 'brands' either

          you're one of the people that's ruining American business with your lack of understanding. Your error is you label any human communication 'marketing'. Human behavior is much more complex and cannot be predicted by 'marketing' tactics.

          Yes, things that have alot of marketing sometime sell alot, and sometimes they bomb. Yes, if you **hit the customer over the head** until they h

  • by alen (225700) on Saturday May 04, 2013 @01:48PM (#43630213)

    cars, breakfast cereal, video games are all about the same no matter the brand you buy. that's why the amount spent marketing them dwarfs the engineering budgets. iphones and samsung galaxies are pretty close.

    basically any product where the competition makes the same thing that is not very different from yours, you have to spend a lot on marketing. investing in engineering in this case is usually a waste of resources since most of your potential customers won't care

    • Investing in engineering is *always* a waste of resources -- why so squishy? The really important thing is getting celebrity endorsements. Without celebrity endorsements, ideas wither on the vine. Why, imagine if Jesus had never endorsed Christianity! It would still be a minor cult! And Scientology without Tom Cruise would be like, I don't know, like C without the semicolon. Lots of potential, but unrealized.

      The world needs marketing. Can you imagine how the worldwide economy would collapse if people

  • by Corporate T00l (244210) on Saturday May 04, 2013 @01:50PM (#43630227) Journal

    Engineers rarely need to travel anywhere, whereas sales people need to be on the road all the time working with and at customers, even in technical (e.g. "sales engineering") roles. Travel is very costly, when I was in sales engineering doing on-site proof of concept deployments, demonstrations, etc... I was easily racking up travel expenses equal to or greater than my annual salary. And this wasn't particularly glamourous travel; customer sites where the technical guys are tend to be out in the middle of nowhere. As a ballpark, that $250K number you cite would be enough to support around 3-10 sales people depending on how on-site intensive your product and sales model is. I presume you know how many engineers you have, so you can compare and decide for yourself.

    • Yep. Let's break this down since we-geeks like numbers.

      Airfare domestic: $400 round trip.
      Hotel: $75
      Parking @ Airport: $30
      Taxi to customer site or rental car: $100
      Per Diem x2: $150
      -----------------------
      For a full day on-site trip you're looking at about $750.

      If you have 5 sales guys that works out to about 66 trips per year each.

      You also have to look at an international trip since a lot of people have international customers. Look at a trade show for instance to put up a booth:

      $50k booth easy, two people

  • If your company's making software or selling services based on software, it may be that it's not that sales is high but that engineering's artificially low. Non-labor costs for software development are low. A few thousand dollars for office and computer equipment per engineer (which is a one-time expense, you don't have to buy new equipment when one engineer leaves and you hire another), a few thousand total for printers spread across all engineers... after the first purchases when you start up the annual c

  • by Ambassador Kosh (18352) on Saturday May 04, 2013 @02:07PM (#43630311)

    This seems to be entirely based on what market you are in. If you are doing software programs in a small company then this seems very reasonable. If you are doing something like pharmaceutical drug creation this would not be even a tiny bit reasonable. Based on the dollar values involved I would guess this is a software company and not actual engineering. Having been a programmer for 10 years and now becoming an engineer there is a huge world of difference.

    Most engineering software apps I have run into (process simulation, fluid dynamics, materials etc) cost $10K-$100K per year which would completely wipe out that budget instantly and that is a per engineer cost. Most of these apps also have no free software counterparts. These apps are also updated frequently (as new materials and the simulations for these get entered into the system) so these costs are recurring. This software is hard and expensive to develop and requires actual lab work to create the software simulations.

  • As others have pointed out, marketing and engineering costs are very domain dependent. And the comparison across industries doesn't tell you much.

    Better metric: look at engineering vs legal costs. How much does your company spend to build something correctly vs defend a crappy design later in court. Still, this will be domain specific.

  • by Gutboy (587531) on Saturday May 04, 2013 @02:22PM (#43630405)
    What's the ROI for non-labor engineering expenses vs. non-labor marketing and sales expenses? I think you'll find your answer to the budget question here.
  • Therefore, they might also be more effective at persuading management that their non-labor costs are needed, than Engineers with limited sales skills persuading management that their costs are needed; because the marketing people are more experienced and skilled at this art of persuasion, it is natural that, there could tend to be a bias....

    Maybe engineers need to learn more marketing skills, if they think non-labor costs that would help their department be more productive, are being underfunded, BUT

  • by Tokolosh (1256448) on Saturday May 04, 2013 @03:05PM (#43630677)

    Very annoying that a bunch of computer programmers are posting here who know nothing about engineering!

    • Worse a lot of programmers think they are engineers. I don't think most have any concept of what software, consumables etc cost. If you are trying to turn a lab bench drug into an actual shipping product just the cost of the software and consumables in a pilot plant to figure out how to make the drug at an industrial scale can easily cost millions of dollars. If you create a new biomaterial the expense of all the testing to get FDA approval is extremely high. There is really no comparing the costs related

  • by chipschap (1444407) on Saturday May 04, 2013 @03:41PM (#43630875)
    The discussion is related to the phenomenon experienced by new consultants. After a successful technical career, someone launches his or her own consulting business and very soon comes to realize that 90% of the job is marketing. You might be the best tech person around but without contracts / engagements, you starve.
    • I think this person is also in a field that doesn't involve physical engineering so they don't have all the high costs of chemical reactors, consumables etc.

  • Marketing/sales probably has a heck of a lot of travel expense, food and other entertaining expenses, long distance charges, cost of posting ads etc. Also do they count bonuses/prizes as part of labor costs or does this come out of a general pull of cash? Sales always amuses me they are more incentivized for results but at the same time it seems like a lot of time the incentives are for doing what they are paid for anyways (example answer a phone and take an order without any need for a sales attempt still

  • In a manufacturing business, engineering will often have direct expenses like one-off charges for trial materials, and esoteric accounting items like built-in down time costs, amortized efficiency, etc. that can be considerable but never approach the necessary travel, printing, and ad-buy costs the marketing weasels must budget for.

    OTOH, engineering gets next to nothing in indirect expenses like printer cartridges or the occasional professional class/seminar, but marketers are usually treated like golden ch

  • Short answer: Yes.

    Long answer: Yes, you are.

    I'm generalising hugely here, but as a profession, most IT people (whether it's in software engineering, systems administration or management) can be extremely dismissive of sales and marketing.

    This is a huge mistake.

    If you're selling a commodity (a commodity is something where the product from one company is much the same as the same product from another company - gold, copper, coal and bananas would be examples of commodity items) - you've got to persuade people

  • Am I just being cynical when I say that my company spends almost 15 times as much trying to convince the outside world that we make a good product, than it spends on actually making a good product?

    You're not being cynical, you're just missing an important piece of the picture. Others have already pointed out that marketing requires ongoing expenditure while engineering and R&D are usually lump sum startup costs and only further invest in new equipment / licenses as needed. However there's something more fundamental to your statement.

    If you spend all your time making a good product how will people know? This isn't a case on gutting engineering and making up for it in marketing, the two go hand in

  • It may NOT be the case at your company, but over the years I've seen total stupidity at many companies with regards to engineering budgets or lack thereof.

    Consider an engineer - let's say that hypothetical engineer is paid $100K a year. They talk to their manager - and say 'Hey I if I could spend $20K I could quadruple the number of build,test,debug cycles I get done in a day - they currently take 5 hours on average. 4 hours of that is building and running the test suite.

    Many managers would say 'You're ou

    • I'd look at it differently. Assume the staffing stays the same. Faster build cycles should shorten the product cycle. The markteteers understand how important it is to be first to market. Get them on your side by showing them that the tool buy means an earlier ship date and let them convince management.
  • The horrible horrible truth is that if you have an awesome product and no marketing you will have no money. If you have little to no product and awesome marketing you will have piles of money (think con artists). That said, the world is a better place with more awesome products and fewer con artists. I have always thought that there should be a limit to how much marketing is tax deductible as a huge number of companies make terrible products such as junky fizzy sugar water or fast food and are able to run c
  • "Real" engineering or software? For some, there's no difference.

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