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

timothy posted about a year ago | from the life-imitates-dilbert dept.

Advertising 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?"

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Next up (0, Troll)

Anonymous Coward | about a year ago | (#43630023)

Next up: I'm an intern at a company that uses money. Should I keep our financials in notepad or excel?

Re:Next up (2)

jehan60188 (2535020) | about a year ago | (#43630059)

i don't get it. are you saying that it's obvious that marketing is more important than engineering?

Re:Next up (2)

flyneye (84093) | about a year ago | (#43630107)

Well, we have 3 lab rats, but only two peddlers. (-1)

Anonymous Coward | about a year ago | (#43630025)

Dear Linux Advocate,

Money doesn't grow on trees. And, Linux Advocates is growing. Naturally, we anticipate operating costs and hope to be able to meet them.

But, any amount you feel you are able to donate in support of our ongoing work will be most surely appreciated and put to very good use. Your contributions keep Linux Advocates growing.

Show your support by making a donation today.

Thank you.

Dieter T. Schmitz
Linux Advocates, Owner []

Re: (1, Funny)

Anonymous Coward | about a year ago | (#43630097)

I see that the 'Marketing-to-Engineering Ratio' at Linux Advocates is equal. Equal to zero, that is.

Re: (1)

AlphaWolf_HK (692722) | about a year ago | (#43630769)

Well technically if you have marketing but no engineering then your ratio is infinite because you are dividing by zero.

Re: (2)

Samantha Wright (1324923) | about a year ago | (#43630859)

So then it follows that they have no marketers and an unknown but non-zero number of engineers?

Modern Business (2)

tengu1sd (797240) | about a year ago | (#43631127)

Well technically if you have marketing but no engineering then your ratio is infinite because you are dividing by zero.

That's the most efficient business model. Companies like HP for example are laying off or selling their research and development teams focusing on the spam and telemarketing. Senior management collects their bonus for making the company more effective. When perfected, you're left with an imaginary company.

non labour? (5, Insightful)

Anonymous Coward | about a year ago | (#43630031)

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

Re:non labour? (1, Interesting)

Dins (2538550) | about a year ago | (#43630119)

Posting to undo a bad mod. Move along...nothing to see here...

Re:non labour? (5, Insightful)

icebike (68054) | about a year ago | (#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? (3, Insightful)

Shavano (2541114) | about a year ago | (#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? (4, Insightful)

icebike (68054) | about a year ago | (#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.

Re:non labour? (2)

serviscope_minor (664417) | about a year ago | (#43631057)

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 for one until it turned out they only had 6k of budget for 4 months work. Riiiiiiiiight.

Bigger companies with smaller R&D budgets suck. They tend to have ancient, slow outdated computers and can't retain great people because they feel rather constrained (not surprising).

Also, you mention this 5 man software company going to about 1.5 conferences per year per person. Well, let's say that they replace desktops for $1500 every 3 years. That's an average of $2500 per year.

Plugging in some reasonable conference fees ($300) plus $1000 for travel including non roach hotel for a few days, meals rentl car and flight, at 5 people, 1.5 per year leaves a generous $4750 for expenses.

I guess they don't develop much resource intensive stuff since you can just about get the cheapest quad socket for that price.

That might be OK for them though.

But if they're spenging $250k on marketing and $17k of engineering, they should probably check to see if hte engeineers aren't being hampered by lack of budget.

Remember if you make each engineer wait for one hour per day due to bad kit, you've burned through way more than $17k before the year has ended.

Re:non labour? (1)

AlphaWolf_HK (692722) | about a year ago | (#43630791)

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.

Re:non labour? (0)

Mike_EE_U_of_I (1493783) | about a year ago | (#43630307)

Wish I had mod points today. I came here to post exactly what you just said.

Re:non labour? (0, Offtopic)

Anonymous Coward | about a year ago | (#43630805)

So because you don't have mod points you decided an AOL style "me too" post would do instead?

Re:non labour? (0)

Anonymous Coward | about a year ago | (#43630663)

Solve one engineering problem on your computer and you don't need a new computer to solve the next one.

Yes, you do
Because another company will copy it tomorrow, and unless you stay ahead, your company will die. Or do you think the competition is at a still-stand? Even if they don’t copy, you still have to implement their new features.

Good luck succeeding in business against me with that attitude!

Re:non labour? (1)

icebike (68054) | about a year ago | (#43630707)

So you design bridges, or houses and after each house or bridge, you worry so much about your competition that you run out and buy a new computer?

Because the old one is worn out?

You are delusional.

Re:non labour? (1)

cryptizard (2629853) | about a year ago | (#43631015)

I think he just didn't read the sentence correctly.

Re:non labour? (1)

realityimpaired (1668397) | about a year ago | (#43631159)

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? (2, Insightful)

beelsebob (529313) | about a year ago | (#43630275)

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? (1)

Zumbs (1241138) | about a year ago | (#43631115)

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.

Yes (4, Insightful)

Anonymous Coward | about a year ago | (#43630037)

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

Re:Yes (0)

Anonymous Coward | about a year ago | (#43631147)

What about capital costs for things like lab equipment, test tools, facilities, and etc. that are engineering-specific? I suppose it depends on the actual industry and function but here we spend a lot of money on tools and gear. I'm not privy to the financials of my company but I gather our engineering costs are pretty high.

Not directly comparable (5, Informative)

Anonymous Coward | about a year ago | (#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.

5:1 (0)

Anonymous Coward | about a year ago | (#43630049)

But then again I do work for a research institute. Your company probably outsources engineering work to us.

What? Non-labor means money spent... (4, Insightful)

Assmasher (456699) | about a year ago | (#43630053)

...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.

Re:What? Non-labor means money spent... (0)

Anonymous Coward | about a year ago | (#43630093)

$1 != Infinite amount.
$1 == $1


Infinite ratio (2)

tepples (727027) | about a year ago | (#43630229)

The ratio of $1 on marketing expenses to 0 engineering expense is infinity. (Or pedantically, the limit of 1 divided by x as x approaches 0 from the positive side increases without bound.)

Re:Infinite ratio (0)

beelsebob (529313) | about a year ago | (#43630303)

Actually 1 divided by 0 is not infinity. It's simply an invalid computation. 1 divided by an infinitesimally small number is infinity. That's a very different thing.

Re:Infinite ratio (0)

Anonymous Coward | about a year ago | (#43630419)

It's only different because you decided to define it differently. 1/0 is only an invalid computation if you don't define it. Defining 1/0 as infinity is entirely reasonable. The place where you get in real trouble is 0/0 because there is no one definition of it that always works the way you want - sometimes you want it to be 0, sometimes 1 and other times something else. But you can still define it to be whatever you want.

Re:Infinite ratio (1)

Austerity Empowers (669817) | about a year ago | (#43630555)

Is 3/3 =1, or .99999999 repeating? Is 1/infinity=0, or an infinitesimally small number that's >0? What's the difference? (answer: infinitesimally small and indistinguishable from 0!)

The only thing i will give you on this is 1/0 can be plus or minus infinity and if you're doing a calculation you'd better not forget it. But calling it "Does Not Compute" is being a robot, the real world is based around assuming value(s) for 1/0.

In this case infinity is a valid answer as you can't really have "negative engineering" expense, and if you work in a technology company you have to argue that the engineering expense can only ever be as the expense approaches 0 from the positive side. Tech companies with $0 engineering expense don't last long.

Re:Infinite ratio (0)

Anonymous Coward | about a year ago | (#43630939)

No. First of all, the .999 repeating is exactly equal to 1, but if you tried to give it as an answer to 3/3 you would get some funny looks from people. That whole thing is an artifact of the number system we use - try it with a different radix.

1/0 is undefined for a reason (other than robots). If I divide 8 by 4 this is the same as asking "What do I multiply by 4 to get 8". So you try to define 1/0 as infinity means that infinity multiplied by 0 is 1. But wait! 6/0 is also infinity, so infinity multiplied by 0 is also 6. Assuming a value for 1/0 isn't going to accomplish anything in the real world and breaks down quickly even in abstract math land.

Re:Infinite ratio (1)

ceoyoyo (59147) | about a year ago | (#43630633)

The limit of 1/n as n -> 0 is infinity. That particular limit is implied by the described situation, so he's quite correct in stating that 1/0 is infinity, for his stated problem.

Re:Infinite ratio (1)

beelsebob (529313) | about a year ago | (#43630779)

And this is why it's important to say "the limit as n tends to 0" rather than "where n = 0" ;)

Re:Infinite ratio (1)

Soft Cosmic Rusk (1211950) | about a year ago | (#43631065)

Only if you approach 0 from the positive side. The limit of 1/n for n -> 0+ is infinity; the limit of 1/n for n -> 0- is minus infinity. Which is why you can't in general assign a value of infinity to 1/0.

Re:What? Non-labor means money spent... (0)

Anonymous Coward | about a year ago | (#43630103)

Actually, you would be spending a dollar more on non-marketing expenses, which is a finite amount.

Re:What? Non-labor means money spent... (0)

Anonymous Coward | about a year ago | (#43630121)

Also, if it's a software development company and IT (the servers and everybody's desktop hardware) and facilities (desks, chairs, etc.) are separate categories from engineering, those figures could be quite reasonable. The main engineering non-labor costs would be for engineering-specific software: compilers, IDEs, whatever.

Re:What? Non-labor means money spent... (0)

Anonymous Coward | about a year ago | (#43630131)

Do you really not buy computers, desks, paper, or pens for your engineers? I would say that you don't focus on engineering, you are focusing on torturing engineers. Less so on the markers, since you just have fewer of them around.

Re:What? Non-labor means money spent... (1)

beelsebob (529313) | about a year ago | (#43630323)

Sure, but you buy a pen for them once every month, a computer once every 2 years, and a desk once every 20 years. That's on average $1000 a year (assuming a pretty damn impressive computer) per engineer. Compare that against the marketing guys, who probably need to fly out to somewhere once every month, possibly internationally, so, account $1000 for flights per month; $1000 for hotels (assuming a week away); a few $2000 conference tickets in the year; a couple of $20,000 booths at conferences; a telephone budget of a few thousand a year.

I don't get why this is unexpected.

Re:What? Non-labor means money spent... (0)

Anonymous Coward | about a year ago | (#43630535)

Sorry, I was not arguing that the expense ratio in TFA was absurd, I was arguing that "assmasher" was not making a coherent point: he simply states that he'd expect more non labor costs in marketing (first complete sentence), and then gives an irrelevant argument (last statement; what I was responding to). You, on the other hand, actually are giving a coherent argument, which was helpful. Thank you.

To be honest, I don't know why I bother arguing with people on the internet with these kinds of names. I should just read their name and decide based on that.

Re:What? Non-labor means money spent... (2)

Kjella (173770) | about a year ago | (#43630349)

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 rest is small change. In other obvious news, software development companies have more labor costs than manufacturing companies with factories, robots, raw materials and inventory.

Re:What? Non-labor means money spent... (3, Informative)

Austerity Empowers (669817) | about a year ago | (#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).

That comparison is useless in a vacuum (0)

Anonymous Coward | about a year ago | (#43630057)

What's the total expenses including labour.
Some sales people need to travel often, engineers tend not to do as much.
Writing software doesn't tend to need as many non-salary-based expenses as marketing that software.
I could go on, but you're an idiot for even raising this question in this manner and with this little in the way of background information.

Typical slashbait.

Seems reasonable for non-labor costs (4, Informative)

Anonymous Coward | about a year ago | (#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.

Re:Seems reasonable for non-labor costs (0)

Anonymous Coward | about a year ago | (#43630211)

And the Engineers follow in their wake to fix all the problems and promises that the SalesDroids made to the customers.

I've spent the best part of the last 9 months in some god forsaken place in the Middle East doing just that.

Off the books (0)

Anonymous Coward | about a year ago | (#43630069)

A company I used to work for did business with South American governments. It had a signifcant budget for briefcases full of cash.

Non-labor (0)

Anonymous Coward | about a year ago | (#43630073)

Yes you are being cynical. Non-labor engineeringing expenses does not include labor (i.e. developers, Q&A engineered, sales engineers, ect....)

Based on the amount I'll assume That $250k for marketing includes ads across media platforms, trade shows, events, travel fares to/from events, graphic design, giveaways, media consultants, ect...

Depends on the products (3, Insightful)

bruce_the_loon (856617) | about a year ago | (#43630075)

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.

Marketing is more important than engineering (2, Interesting)

deanklear (2529024) | about a year ago | (#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.

No, you're being silly (1)

Anonymous Coward | about a year ago | (#43630085)

You're not being cynical. You're being silly. That $17,000 obviously doesn't include salaries. It is for expenses, which the marketing department will always have more. Advertising costs money. And sales people often have to travel to meet customers. Engineers do what they do without paying for TV spots or traveling to Bumfrack, CA for two days.

If anything, I'd question what the engineering department needs to spend $17,000 on as far as expenses go. Unless this accounts for engineers traveling to customer sites, which should really be on the sales' dime.


Re:No, you're being silly (0)

Anonymous Coward | about a year ago | (#43630199)


If anything, I'd question what the engineering department needs to spend $17,000 on as far as expenses go. Unless this accounts for engineers traveling to customer sites, which should really be on the sales' dime.

That depends heavily on the software and other equipment your engineers use. I have used a software package which costs 300k$ per year and seat for commercial customers (0$ and a thick NDA for academics). Even when you restrict it to software engineering you can spend >10k$ per year and seat (IBM Rational e.g.).

You're not being cynical... (2)

whatthef*ck (215929) | about a year ago | (#43630089)

Just naive, that's all.

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

Re:You're not being cynical... (1)

Technician (215283) | about a year ago | (#43630693)

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 promising one demo'ed on Youtube. Unlike the demo, or the literature that touted a time trial, the software installed, scanned and listed the files that could be recoved, then when the destination was selected to recover them, it brought up a registration page instead. This I treated the same as the fake av scan software because it behaved the same. Scan find problems, please pay us.

Uninstalled it and looked and found an open source program instead that actually works. A time trial would have been ok if it was indeed a functional time trial. It was cripple ware and rejected.

Please market your product demo to be either demo ware upfront or timre trial up front. Cripple ware that wastes my time to hit a dead end without knowing ahead of time is a deceptive time thief.

Plane tickets are expensive. (0)

Anonymous Coward | about a year ago | (#43630115)

If your company's salespeople travel as much as my company's do, most of that non-labor marketing budget probably goes to the airlines.

What about capital expense? (2)

rdunnell (313839) | about a year ago | (#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.

Re: Not a fair comparison (0)

Anonymous Coward | about a year ago | (#43630125)

Engineering Labor is the primary cost of engineering. I need one article to make one CAD model to do all of my design. The exceptions are destructive testing or statistical analysis of a sample size.

Yes there is always the cost of first-article prototypes, but as a whole Engineering cost is WAY more equipment & labor driven than anything else such as consumables.

Contrast that with marketing where labor is almost nothing as a percentage of Advertising costs such a Radio, TV, & Printed Media. Most small business marketing involves the production of large volumes of hand-outs casting a drag net over potential customers and providing them with a unique keepsake that will help them remember you when the need arises.

I can't speak to the appropriate ration because I don't think there is one. It depends on the business, the type of engineering, and it truly is an Apples and Oranges comparison.

The fact that you are asking the question at all suggests that you suspected as much before hand anyway. We've had the unfortunate experience of interacting with marketing driven suppliers and their products are always a disappointment.

Sales is hard (5, Insightful)

sjbe (173966) | about a year ago | (#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.

Re:Sales is hard (1)

Alarash (746254) | about a year ago | (#43630325)

Most engineers don't travel, sales people do. I'm a pre-sales engineer, and I have to travel around all of EMEA. I expense plane tickets, meals, hotels, gasoline and tolls, etc. I probably don't cost as much in expenses than in salary, but I would make an educated guess of 30-50%. What is true, however, is that I'm probably better paid than a developer of similar competency. About 50% of our developers are outsourced to China so there's that..

For example (4, Insightful)

Sycraft-fu (314770) | about a year ago | (#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.

Re:For example (0)

Anonymous Coward | about a year ago | (#43631013)

Have you ever found something, particularly something released years ago, and said "How the hell did I never hear of this?"

Yes. All the time. Either I'm not considered the expected target market or I'm immune to all advertising. Though, haven't dealt with the marketing department of a fairly large company (around 10,000 employees), I will have to go with I'm not considered their target market. I've seen results from countless focus groups cherry picked to fit predetermined outcomes.

Re:Sales is hard (1)

udachny (2454394) | about a year ago | (#43630865)

Completely agree with your comment on every point.

I spent enough time trying to convince people to buy my product and it's much harder than actually building the damn thing :) It's very difficult, a good sales person (basically anybody who can sell your stuff) is worth his weight in whatever currency you are most comfortable dealing in.

Build a better mousetrap ... (0)

Anonymous Coward | about a year ago | (#43630901)

Build a better mousetrap and the world will beat a path to your door. A saying from when productivity actually meant producing things of value.

The reasons so many companies spend obscene amounts on adverstising/sales/marketing are either because their product is not really needed or desired by the consumer, or because their product is essentially a commodity.

In both cases the vast majority of the marketing/sales is simply lying and manipulation.

Look up Bill Hicks quote.

Re:Sales is hard (1)

doesnothingwell (945891) | about a year ago | (#43630947)

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.

Maybe the bigger problem is not enough engineers in the purchasing decision loop. I think sales is a symptom of an uneducated customer.

Re:Sales is hard (0)

Anonymous Coward | about a year ago | (#43631121)

I am an engineer,

I post AC because I modded you up.

What you say is all too true,

I HAVE tried to sell a product, and discovered I was much better at designing things than selling them.

all of it; both ways (1)

burdickjp (2530248) | about a year ago | (#43630161)

I wa in Psychological Operations in the military, which in a lot of ways is marketing. Now I'm going to school for mechanical engineering. So my sole proprietorship is is heavily both marketing and engineering!

commodity products = huge marketing $$$ (2, Interesting)

alen (225700) | about a year ago | (#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

Labor vs Non-Labor Costs (0)

Anonymous Coward | about a year ago | (#43630225)

If you advertise in almost any medium, TV, radio, internet, newspaper, ect, then that's going to be a "non-labor cost". In other words, besides the salary of the marketing guy, you also have to pay for the advertising, so most of the advertising cost is non-labor. Meanwhile, the engineer costs ought to be mostly be for labor. I'm guessing most of the costs for equipment is going to be covered under IT, but even if you do need to spend a few thousand dollars for hardware and the occasional pizza, it's not going to cost as much as advertising.

I'm betting it's almost all travel (4, Insightful)

Corporate T00l (244210) | about a year ago | (#43630227)

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.

Don't forget advertising (1)

rgmoore (133276) | about a year ago | (#43630351)

Don't neglect the cost of advertising, either. Paying for ads is a non-labor expense, and it can easily make or break a product..

In any case, complaining about marketing costs is often silly. An engineering team is basically a tool to convert money into new products. To stay in business, it has to be connected to another group that converts the new products back into money, which means some kind of marketing. You need both sides to pull their weight for the organization to thrive in the long term. As long as the marketing people are doing a good job of bringing in the money and aren't making promises the engineers can't keep, it shouldn't be a big deal to the engineers exactly how they do it.

Re:I'm betting it's almost all travel (0)

Anonymous Coward | about a year ago | (#43630911)

>Engineers rarely need to travel anywhere

Not when your customers run into problem using your products? (see Field Application Engineers - they are not sales staff!)
Not when the latest batch of production has a failure rate of 10% on the factory floor? (much worse if you use contract manufacturing and they have no history/clue of how your product works.)
Not when outside lab certification test runs into issues? (test runs cost tens of thousands and have to prebook schedules)
Not when they need a geek to speak at the dog & pony trade show to answer customers' real questions?

Beware of skewed results (1)

Todd Knarr (15451) | about a year ago | (#43630239)

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 costs are surprisingly low. Most of the cost will be salary and other labor costs. Sales requires printing of marketing material (which probably has to be farmed out because the specialty equipment isn't something most businesses can justify buying themselves), phone and postage and other costs related to contacting customers, costs of flying salesmen out to talk to customers or negotiate contracts, costs of booths and supplies for trade shows... And it's all recurring costs, spending the money this year doesn't get you out of spending it again next year.

Sounds right (0)

Anonymous Coward | about a year ago | (#43630269)

If you're doing primarily in-house engineering, then non-labor engineering costs would be a small percentage of marketing's non-labor costs, because...
Marketing requires the use of outside resources, which inherently involve external labor costs which your company of course sees as non-labor.
Paying for that "hidden" outside labor is going to generally be at least equal to your internal labor costs. To complicate things, your company's external resources may be using yet another external agency (media), so potentially a chain of middle man costs.

Defense contractor example (0)

Anonymous Coward | about a year ago | (#43630279)

In terms of engineering labor vs. overhead, the breakdown is roughly 40% labor, 60% everything else.
In terms of marketing $ spent, it greatly dwarfs the labor rate for any level of engineer, including those who make $200K/yr. Would guess at least ~100:1.
Our CEO makes more than $3 per second, which is over 300 times the salary of an average defense industry worker. Add to that the hierarchy of VPs and presidents across the company drawing seven-figure salaries. Most of them answer to Wall Street rather than the engineers who are indirectly paying their salary by the products they create. Do you feel better now?

why such crappy description (0)

Anonymous Coward | about a year ago | (#43630285)

Why is this story on slashdot smaller and much less descriptive then an average user comment. cant the editors be bothered to explain terms like 'non labor engineering' in more details. why not at least give details on the the industry the contributer worked in? why should I bother 'discovering' the intent of contributor if they cant be bothered to write a decent paragraph explaining their thought.

Re:why such crappy description (0)

Anonymous Coward | about a year ago | (#43630335)

why can't you punctuate properly.

Defense contractor example (0)

Anonymous Coward | about a year ago | (#43630293)

In terms of engineering labor vs. overhead, the breakdown is roughly 40% labor, 60% everything else.
In terms of marketing $ spent, it greatly dwarfs the labor rate for any level of engineer, including those who make $200K/yr. Would guess at least ~100:1.
Our CEO makes more than $3 per second, which is over 300 times the salary of an average defense industry worker. Add to that the mind-boggling hierarchy of VPs and presidents across the company drawing seven-figure salaries. Most of them answer to Wall Street rather than the engineers who are indirectly paying their salary by the products they create. Do you feel better now?

What is your market? (2)

Ambassador Kosh (18352) | about a year ago | (#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.

Re:What is your market? (0)

Anonymous Coward | about a year ago | (#43630449)

And that is just software. Lab equipment (durables like measurement devices and consumables) is also very expensive.
When you are fresh from university you are very impressed with the amounts of money required for engineering (and later production) but you get used to the fact that your engineering decisions can have multi-million dollar effects down the line.

Re:What is your market? (3, Insightful)

Ambassador Kosh (18352) | about a year ago | (#43630489)

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.

Anecdotal Data (1)

MLBs (2637825) | about a year ago | (#43630359)

I don't know about company (large) numbers, but in a recent project that involves a few engineers, when the company was going to publish a press release, the team size on the email chain has quadrupled overnight.

That is SO wrong! (-1)

Anonymous Coward | about a year ago | (#43630361)

Companies should spend more money on their product than on marketing. Just imagine how much better Coca-Cola would taste if they reduced their marketing budget by 70% and spent that money on putting better ingredients in their drinks. And what about Budweiser? Or Apple? or Walmart? Or Microsoft?

Americans can no longer see the forest for the trees, and it hurts them so, so, sooooooo much. They just don't understand. They're too stupid to understand, and they never will understand, because they are ignorant and incapable of learning.

Americans are fat, dumb, and lazy. Just go to any Walmart and you will see what I mean. They are a joke. Instead of saying "Down with Big Brother!" they are all chanting "If my father says 'Down with Big Brother', I will report him to the police ASAP!"

Americans are good for nothing except chugging kegs full of ranch and eating deep fried Snickers bars. Almost all of their children are bastards because their girlfriends and wives are whores, and both genders smell bad because they only shower once a week (maybe). Most Americans also graduate from college/universities without knowing how to read and/or write in American English, their native language!

Americans are also evil, as they allow homosexual marriage, and they worship statues of Jesus Christ, which is considered blasphemy (Exodus 20:4 "You shall not make for yourself an idol, or any likeness of what is in heaven above or on the earth beneath or in the water under the earth."), and wasn't Jesus allegedly a Jew? Why are you defiling His name by disobeying His laws?

Ignorant Americans are ruining the world. They are so ignorant. Ignorant. IGnorant. IG.NO.RANT. IGNOARANT!!!!!

A better metric (1)

PPH (736903) | about a year ago | (#43630367)

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.

Nothing (1)

Murdoch5 (1563847) | about a year ago | (#43630393)

When I started working at my company I know the market budget was several times what the engineering budget was, I actually use to get my deadlines given to me by marketing employees. It was during my first software major project when I went to my director and told him this is bullshit, I can't have a marketing guy set a deadline for our product when he has no clue how much work I need to do, the fact was he had under estimated the amount of work "writing a firmware was" by about 10 fold. My director agreed and asked me to sit in on a meeting with the marketing team.

The meeting started off with me asking one question, "Steve ( the head of marketing ), Can you tell me how long it takes to write a full firmware in C for the xxx product", he looked at me and said, "I don't know, I don't program, why would you ask me that!", my response was "Well how about tomorrow you do all the marketing for the new product and have it ready for me, I want it by 5pm", again he looked at me and said, "WTF is wrong with you, I need at least a few months to get that done", my response was, "Oh, I didn't know that, I thought you can do anything in the time set by someone who doesn't know what you do", he sat back and I could tell he was thinking about it and said "Oh wow, I get it, sorry, how long do you actually need?". The next day I got called into the SVP's office and he said, "I heard you caused a shit storm yesterday, well done, because now your incharge of sending deadlines to the marketing team".

My point is that marketing should never out rank engineering and on the same right engineering shouldn't out rank marketing, both sections need to work together and market should NEVER EVER NEVER set deadlines for an engineer. With in the course of the next 6 months my budget got increased and I got to hire some new people to help me. I think a lot of this has to do with the fact business guys just don't understand that engineering isn't sitting down and waving a wond, you need to let the other teams know that you need the right amount of time and that shoe string budgets and impossible deadlines don't work.

In my case I work in a small company so it was easier to deal with but if I ever leave and go to a bigger company I'll have the point to make, if you can't market the product over night then why would I be able to build the system over night, I need to listen to marketing for what there timelines are just they need to listen to me for mine. Under no circumstance should another team tell you when to have work done by, they can ask you to have it completed by such and such a date and invite you to sit in to all the meeting that matter and involve planning, but they shouldn't set your dates or budgets.

Re:Nothing (2)

Ambassador Kosh (18352) | about a year ago | (#43630513)

Marketing should never set deadlines but they should be able to communicate outside realities. There might be some external date that needs to be hit and they should be able to see we need this by this date for this external reason and why it is so important to hit that date. That way engineers can access if that can be hit and work with marketing about what features can be removed in order to hit that date.

Neither marketing or engineering should set dates for each others but external realities have to be accounted for in both.

Re:Nothing (1)

Murdoch5 (1563847) | about a year ago | (#43630619)

Oh I agree to that, but in that case the engineers should be sitting in on the meetings about the external pressures. My issue is when I was given deadlines that didn't make sense or were to short based on the fact the engineers weren't sitting in on the right meetings. The reality is that sometimes the company just starts to late getting to work on the new product and that shouldn't cause engineers to work hard at getting an underdeveloped product to market.

Return on Investment (4, Insightful)

Gutboy (587531) | about a year ago | (#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.

I have the opposite problem (0)

Anonymous Coward | about a year ago | (#43630471)

My employer seems to spend about $0 on marketing. We make a lot of products, but we don't bother to tell anybody about most of them.

Marketing and sales are better at selling (1)

mysidia (191772) | about a year ago | (#43630539)

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 on the flip side -- expect more marketing responsibilities to come with that.

@ my company (0)

Anonymous Coward | about a year ago | (#43630611)

Posting anonymous just in case, but at my company a major US internet provide). We spend roughly 400 million in my department each year (Fortune 500 company) and 250 mil on marketing. I do high end network architecture supporting around 6 million users.

Computer Science |= Engineering (2)

Tokolosh (1256448) | about a year ago | (#43630677)

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

Re:Computer Science |= Engineering (1)

Ambassador Kosh (18352) | about a year ago | (#43630777)

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 to software programming and physical engineering.

It is almost scary to see the costs of some engineering software packages. $100K/year and to know it is cheap for what it does and how much time it saves.

Build a better mousetrap... (0)

Anonymous Coward | about a year ago | (#43630799)

By all means, build a better mousetrap, but rest assured this act alone will not get the world 'beating a path to your door'. You must inform the audience - to do this, you need marketing. Until we humans evolve full telepathy, this is your only hope to make sales figures that are viable.

Get over it.

Just like new consultants (3, Interesting)

chipschap (1444407) | about a year ago | (#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.

Re:Just like new consultants (1)

Ambassador Kosh (18352) | about a year ago | (#43631029)

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.

Check out Apple, they get it right (0)

Anonymous Coward | about a year ago | (#43631095)

93.2% of their staff are sales and media lackies (according to their reports). Techs are a long way down on staff costs. If you are making a product, you need an army of people to push and push and push it. You only need a small team to actually build things, especially when physical products are made by near peasants in China and India. If your devs outnumber your sales, you're niche and won't make much money.

Have you ever talked to one? (1)

Anonymous Coward | about a year ago | (#43631097)

I guess it wouldn't bother me so much if the sales people weren't so.... detestable.

Basic Accounting (0)

Anonymous Coward | about a year ago | (#43631133)

Much engineering falls under capital expense, not cost of goods, so it may well be showing up in a different location. Also, I turned from engineer/scientist (Phd in CS) to entrepreneur when I realized a basic fact of life: you either bring in the money or you work for someone who does. As they used to say: Don't like the news? Get out and make some of your own! cheers

Welcome to Budget Planning 101. (0)

Anonymous Coward | about a year ago | (#43631161)

Sales brings in the money, Marketing spends it.

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