For those that think they can't raise their rates check this out.

http://www.nspgweb.com/ads/NSPGNewsletter05-07.htm

A very good article. I've never lost money as a result of raising prices.

Dave

Good article, it gets to the point, let Larry, Moe, and Curley use the so called going rate, going, going, and gone.

"When you undervalue yourself, no one else will feel you have any value." By S. Orman

What rates are you guys using? I charge $40/35 for 1st/2nd man after the service call. For regular customers who call us frequently I use 35/30 or 32.

I'd love to do flat rate all the time but electrical is so "custom" built that it would be astronomically high to give a fixed price for some things.

$30 to $40 an hour would not even cover half of our operating expenses, in todays market it costs $37 an hour to employee a guy making $19 an hour, not counting any cost of operating, or profit.

If we charged $30 an hour we would be paying the customer almost $40 an hour to be there.

Have you read thru this article http://www.nspgweb.com/ads/NSPGNewsletter05-07.htm

That's why everyone needs helpers @ 8.50/hr. They may not be able to build a service but if he's smart and wants to learn, you can teach him to do many tasks you now pay your $19 man and you make money. Yea, he will screw up and have to move some boxes sometime but still, he's working for half the other guys pay and can stay busy with simple tasks. So what if he stands around waiting for instructions sometime?

Geez LK, if it costs you $70/hr to break even, you guys must have some hellacious labor burden up there! Whew!

Your a funny guy, you make me laugh!

Teester, LK has identified the core of the problem in operating a 'legitimate' business, as opposed to, say, being a 'trunk-slamming side jobbing pretender.' )Not that I am saying that you are ... but I suspect the same pricing factors are in play here).

There are a multitude of 'overhead calculators' available, and it's darn near impossible for anyone, anywhere, to operate a business with a 'shop rate' of $40/hr.

"Overhead" is everything from the license, tax burden, truck, tools .... and paying the bills when you're not actually able to bill your time.
To put it another way ... If you work an 8 hr. day, you're lucky if you can bill for 6 of those hours.

In its' most common form, the 'trunk slammer' pays no taxes, makes no insurance payments, and defers maintenance on his truck. The end result is: he goes broke. The trouble is, he goes broke only after teaching lots of customers that $40/hr is a reasonable rate.

Look at it this way: I once was involved with a 'not-for-profit' Delaware corporation. Strict accounting protocols were in place to ensure that this place did not turn a profit - just broke even. Yet, that firm billed it's customers triple the salary of the guys working the job. For your $19/hr guys, that comes to $57.

There's a fair amount of debate as to what work a helper may do, or what work can be performed by guys without 'electrician' cards. Many places have some sort of regulations that are enforced. Otherwise, the only checks are OSHA rules ("qualified employee") and your cost to go back and fix a mistake.

No employer is running a charity. If a man is getting $19/hr ... he's worth it.

After all, I've yet to see someone replace their heart surgeon with a short-order cook, on the theory that both know how to use a knife

It's great you guys got a laugh. Now come on down here and bid something figuring $60/hr. Better bring some money with you because when you leave you'll only take what home what you brought with you minus what you spent! I'm not being fecicous. It's reality.

We don't have the unions and regulations some across the US have here in SC. I can't imagine what you have for labor burden etc that would demand that kind of rates! Pick up the phone. Call any contractor in our area. Any legitimate contractor in town, those in business 5 years, 50 years can survive here billing at $30/hour. None of us will become wealthy but it will keep men busy until more and better paying jobs can be had. Most bill somewhere on small jobs at 35-40/hr in addition to a service call.

There are many of your "trunk slammers" in the area who are doing commercial work. They may not make it but they are holding prices down none the less.

One job that I lost at 31/hr I was beaten by $5000. To get to that figure with the materials required, I would have to lower my rate to $20/hr! Yes it's absurd. It's an impossibility if anyone has insurance etc.

I bid several jobs this spring using a labor rate in my software of 31 & 32/hr, the same rates I was using 3 years ago. Could not get a job. I do a detailed takeoff and don't "gamble" that we can reuse circuits, get lucky etc. At 31/hr I've done pretty well but one thing that helps me is I have a strong service customer base that we bill at 35-40/hr. Another thing is I don't hire "crack heads" for helpers like some of my competitors do and thus theft of equipment is rare.

I don't know how large you guys companies are. Mine isn't large by any means but I'm making some changes. I've worked on average 5-7 men over the last 5 years or so. We average $500,000 sales/year.

Last year we had around $450,000 with 4-5 guys on average which comes out to around $50/hr. Part of our revenue however is markup on parts, bucket truck & other equipment rental etc. and my occasional field labor.

It might not be reality in Penn. but in SC if your average hourly billing was $45 you would be, as we say in the south "shi%%ing in high cotton", or in other words, living extremely well. The sad thing is, lots of people think $40/hr is absurd as in too much!

PS. My trucks are well maintained, yes I'm fully aware of all the things involved in overhead, software annual support fees, printing expense, license renewals everywhere, legal and accounting expenses, alarm monitoring, advertising, computer & IT expense, vehicle insurance, field phones and a $1200 monthly gas bill etc. How well I know. I've been doing it for over 10 years.

Why?

I'd go work for someone else if my employees made more than me. I went into business to make a lot more than what I could make working for someone. I don't see a point in going into business for myself if I can't do that.

After 10years if your not making substantially more than what your top employee is making something is seriously wrong in my opinion.

I guess if you're happy with that, it's fine.

Well, it isn't quite like that. I don't take home all the company makes. I've got an amount I budget to take home. The company is paying for my truck, insurance, fuel and the building I'm in etc. All my trucks are paid for except for the one I drive and the new one I just bought (Ford has a $3500 rebate on F150's btw until 9/3 I think)

When I built my shop I paid for a shell building with a loan and paid for the drive concrete, inside finish work, plumbing, ceiling, surveillance etc out of pocket (The company's pocket).

I've been plowing money back into the business pretty much since I started to get my debt down and keep it down. My lift and trencher, concrete saw etc were purchased out of checking. My cash flow is pretty good. When I get closer to retirement I'll probably start dipping a little deeper.

Teester,
I know what you are saying on the labor rates. There is just me and a partner, we work together out of one truck, and bill 60per hr. This is for 2 electricans and a truck, and we still have people that think this is highway robbery. We manage to stay busy and make a decent living thanks to low overhead for now. Just been informed that I have to have workers comp. ins. to sub to some of the contractors we work with.Prices will be going up

I'm going up on my rate to new customers. Most don't ask and probably don't know what the going rate is. I'm going to $50/40 or 90 for two men. I'll see how it goes. The going rate here is 40/35=75