Ask Slashdot: What's Your Company's Marketing-to-Engineering Ratio? 202
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?"
non labour? (Score:5, Insightful)
you would expect a huge difference what are the overall budgets like.
Yes (Score:4, Insightful)
I would think engineering is mostly labor, while marketing involves quite a bit of non-labor expenses. There's your difference.
What? Non-labor means money spent... (Score:5, Insightful)
...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.
Depends on the products (Score:4, Insightful)
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.
Re:non labour? (Score:5, Insightful)
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.
Sales is hard (Score:5, Insightful)
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.
Re:non labour? (Score:4, Insightful)
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.
I'm betting it's almost all travel (Score:5, Insightful)
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.
Re:non labour? (Score:3, Insightful)
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.
Re:non labour? (Score:5, Insightful)
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.
Return on Investment (Score:5, Insightful)
Re:What is your market? (Score:4, Insightful)
All of that stuff certainly racks up serious dollar amounts very quickly. That is one thing I understand from having worked for 10 years before going back to school to become an engineer that most students have no concept of.
I was just making the point that you can't compare engineering expenses to marketing expenses if you don't know the industry. Although I don't think it is really far to call most programming engineering. Most software is not engineered.
For example (Score:5, Insightful)
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.
Re:non labour? (Score:4, Insightful)
Re:non labour? (Score:4, Insightful)
Re:Next up (Score:5, Insightful)
Well, the way I see it, a good engineering department can typically shave 5% - 10% off the cost it takes to make some widget.
A good marketing department can simply convince customers to spend 100% more on the product.
So which might have the higher ROI?