Ten years ago, I worked at a contract engineering company. Their business model was if you had a concept, they would do the engineering to turn the idea into a product… For a price. This little addition led to great confusion, anger and lawsuits.
The core of the issue was that customers did not understand the company was not a friend or partner. Instead, they were a coin-operated entity, meaning that when the customer stopped paying; they stopped working. This almost makes sense, but there is another aspect of a coin-operated company that is not always appreciated.
When a customer approached us with a concept, we gave them a time and money estimate along with estimated material costs. After the customer agreed to hire us, we would begin development. Some projects went according to plan, but others required multiple attempts or encountered unexpected issues. As a result, costs ballooned, which angered customers.
I am sure you have experienced the same frustration with a project like a house renovation. For example, if a contractor gets hired to replace a tile floor. All goes well until they find asbestos, mold, or dry rot. Then, the contractor asks for lots more money to fix the problem(s).
What about the other side of this situation? The contractor is a fair person and does not want to cheat anybody. They do not have x-ray vision to see asbestos under ten old tile layers. No matter how the project goes, they must pay bills, pay employees, and profit. If you wish for them to stop working, they would say, “Fine, pay me for the work I have done so far.” Sometimes, a contractor can do no wrong, but the enraged customer feels they got mega-ripped off.
I can recall customer meetings exploding when we explained how much the next step would cost, and those hurt feelings have stuck with me. “I thought you were our partner.” “That is way too much money.” “You never told me it could cost so much.” “You should cover this cost.” “This is not my fault. It’s your fault.” “You should have expected this problem.” It is easy to get comfortable with a coin-operated contractor and forget their place.
One project failed right from the start. We promised them an easy project, but it took too long and failed miserably. Essentially, we charged them for junk. Was this our fault? Yes, we failed to understand the problem when we developed the estimate. Should we have known better? Yes, because we developed the estimate based on worthless information. (We worked through email and did not go to the site to do our research.) Would we make the same mistake? No, we learned to ask more questions. The problem was that the customer paid for us to learn this lesson.
I hired a building contractor to remove cement and install pavers from my backyard. When they dug up one area, they found long roots and spent two days hacking them all out (40+ wheelbarrows full). I wish I had known about the roots in advance, as did the contractor, but we did not have x-ray vision. The extra work added a lot to my bill, but I watched them hack away the roots (doing actual work), and the amount they charged me was fair. Still, I was not happy.
Now, hold on. What about a fixed-price contract? The problem with a fixed-price contract is that all the information must be present to develop it. If a customer insists upon a fixed price to ensure a profit, the company must account for the unknown by adding a buffer. In addition, it takes time to make a proper estimate that accounts for everything, and most companies do not wish to put in the effort as they know the customer will not go through with an expensive project.
I developed fixed price estimates at this engineering company; our buffer was 40%. We usually did alright with these, but one lost money because of poor contract wording. The customer took advantage of the loose deliverables by adding additional requirements. Essentially, they got three times the work out of us.
The heart of the confusion over hiring a coin-operated company is the pride in the work and going the extra mile. This added value might include an extra coat of paint or staying late to finish the job. Coin-operated companies get paid for these additional services, and when a job is done, they are done. Want more work? Put in another coin.
I think of book editors as coin-operated. You give them your document, they glance at it and quote a price. Usually, two to five cents per word. So, the author signs the contract, and a few days later, the editor says, “Hey, I found big issues and need to charge you more.”
The author would counter, “You saw the entire book and gave me a quote.” “Yeah, I know, but this mess needs extra work.” So, the author pays.
Usually, things work out with editors, but I have had three unpleasant experiences. One editor did a light pass, catching minor errors. Another hated my book, deleted an entire chapter without explanation, and I did not use 80% of their edits. A third editor introduced as many errors as they found.
Did I pay? It takes time to review the edits, and quality is not apparent until looking deep into them. Thus, I had to pay, which made me understand they were not my partners.
This coin-operated mentality also addresses ethics. Was my company behaving ethically when they delivered a pile of junk to that customer? From the customer’s viewpoint, they were an unethical company. From the company’s viewpoint, we fulfilled the contract. Still, I feel bad about my participation.
I must step back and think about my lousy editor experiences with the coin-operated mentality. They did a terrible job but fulfilled the contract. Fortunately, the fourth editor I worked with did a fantastic job, and I gained experience.

You’re the best -Bill
January 31, 2024
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