ECN Forum Forums General Topics of the Trade Business Related Discussion service call

I don't see anything wrong with doing T&M for some jobs. I have a auto shop that just calls and says we need this and this and that and do it, no questions. I charge them by the hr and mark up the parts some, 25% is not bad to me.
To me this is for small projects only. Anything large that requires planning and product ordering is a price job, my way or the highway.
Maybe we should be reporting guys working with no lic where one is required or push to have a lic required in your area if it is not already. This can only help our industry in the future.

Service calls, vs. established customers...completely different worlds.

Ms. Yellow Pages calls you and says her living room light isn't working any more....could you come and look at it?
In that scenario, you explain your 'trip charge," go out there, look at things, see what's involved, then stop and talk to her. You tell her the foozewhopper is shot, and the doppleganger needs calibration, that this will probably take three hours, cost $220,- would next Tuesday be ok? Or Wednesday? Oh, and could she get the piano moved, so you can access the attic? Then you charge her for the trip charge, or diagnosis time, whichever is more.


In the other situation, prpperty manager Mr, Reg Cust calls. You go out and look it over, and give him your estimate. You might discuss with him how he wants your bill presented, and adjust your numbers to match.
Now, maybe he just calls and says "do it." T&M can be a very good way to do business- IF there is a well developed trusting relationship between the two of you. The sort of relationship where you don't charge him for that unnecessary second trip to the parts house, and he has no problem paying for delays caused by unforseen problems, or for time you spent in your shop fabricating the thing that took only 15 minutes to install.
"Parts expenses" are one area where that trust can be destroyed. Anyone out there ever hear about the hospital that charged $100 for an aspirin? It just doesn't fly.....the customer isn't going to agree to pay you $20 for a part he can get at the box store for $3.
Add to that other things that run up parts charges....buying a whole new fixture, just for that one piece, or paying for shipping, and there's plenty of room for unhappiness.

Service calls, vs. established customers...completely different worlds.
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Service work & Contract(Bid)Work are different

I do Service Work for Established Customers all the time.
Man times the regular customer calls with no time for Quotes to have work done.
Many times I quoted replacing lamps in a 2X4 troffer.
Both can be done and still make money.

Rob

Hi guys,I am new to the forum but I feel as if I should say something on this topic. Ihave started charging double my rate for the first hour and a regular rate for each additional hour after that. I know of some guys who charge "port to port" and seem to have no resentment from their customers. I am not so lucky. I do explain the rates for this and customers usually seem reluctant to go for T & M as well as I am reluctant to do it. It seems the majority of the problems (usually) are ones we have come across before and therefore don't take so long. The customers look at you when you finish the problem quickly as if to say,"You still plan to charge me full price,you were only here 5 minutes" Meanwhile, I am thinking what am I going to do with the rest of the day. That didnt pay my wages for the day let alone profit for the business.

Some of my clients are rather big, management ain't stupid. they didn't get to where they are by not knowing the cost of services.

I'm not saying that you should get away with overcharging. What I am saying is that you base your prices on making a fair profit for you or your company depending on your financial situation. Your labor charges and material markup are based on that. If you charge less your profit decreases and at some point you will begin to lose money. You have to decide how much you can take.

You are right, they ain't stupid and they didn't get to where they are by not saving the company (or themselves) money. Believe me, your profits don't mean a thing to them. When you are gone they will just find another sucker and their boss will pat them on the back.

-Hal

Just a note on material mark-up, the burden costs for purchasing and stocking material, is a real cost, incured by a real business.

Example: 1/2" pipe may have a mark-up of 300% depending on how many times you have to move it, and anyone operating industrial or commercial operations should be aware of these costs.

Another issue, the customer knows what the material costs, yes he may, i know what a spark plug costs, but when i need my truck repaired, i would not question the service station on his mark-up, that is if i intend to have any work done there in the future, He has overhead and operating expenses to support, and so do you.

[This message has been edited by LK (edited 07-30-2005).]

The customers look at you when you finish the problem quickly as if to say,"You still plan to charge me full price,you were only here 5 minutes"

And you look them straight in the eyes and say "our minimum service call charge is $____. Doesn't matter if I'm here 1 minute or 1 hour. Unless you have something else for me to look at I'll prepare your bill."

Oh, and yes I do tend to get excited over this. A fellow EC and long time friend of mine had a customer grab him by the shirt and "inform" him that he had no right to charge any more for material than he paid for it. I've not been that unlucky but I have had my share of customers that didn't think my markup was to their liking. Any customer that pulls something like that is only out for one thing and that's to screw you.

-Hal

[This message has been edited by hbiss (edited 07-31-2005).]

You have to love when they also decide to do something else "while you're there anyway". For example, change a dimmer. Well it just so happens I carry alot of dimmers on my truck. I go out, get the dimmer,change the dimmer charge handsomely for the dimmer. The customer is shocked and I have to explain that if it was some other contractor that they may be paying $65.00 an hour for them to shop for the dimmer plus the cost and typical markup on the dimmer. In addition now I have to restock that item back on the truck. I dont just go out in the garden at my house and pull one from the dimmer tree.

This is beginning to remind me of a story I once heard....

At one of the Dams out West, the power output was seriously reduced one day. Try as they might, the engineers were not able to figure out why this was so, let alone fix the problem. Then someone recalled that "George" knew what to do in this situation.
Well, as it turns out, George had retired some years before. So they look him up, track him down, bring him into the plant, and explain the problem.
George says "Sure, I can fix it!" He then borrows a hammer, and, accompanied by a parade of management types, preceeds to walk into the miles of catwalks and piping within the dam. He reaches a place, gives the pipe a solid whack, and all is well.
Soon after, the PoCo gets a bill from George for $10000. Somewhat taken aback by the size of the bill, the PoCo askd for an "itemised" invoice.
George responded "$25 for hitting the pipe. $9975 for knowing where to hit it!


The point to keep in mind is that we, as professionals, are paid as much for our knowledge and experience as anything else. We are not parts stores, nor simply retarded apes doing grunt work.
Sometimes the customer doesn't really appreciate that fact. The best "cure" is to let him hire a hack a few times.

LK, why do you pay for estimates?

I have never paid anyone for an estimate for anything that I can rememmber.

There are to many other people, looking to drum up business, that will quote you a price for free.


Dnk.....