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#165096 - 06/18/07 07:56 AM Minimum Rate
Zapped Offline
Member

Registered: 10/01/02
Posts: 481
Loc: Huntington Beach, CA, USA
What do you charge as a minimum rate for a service call?

If I'm on a series of calls and my schedule is full for the day, I really don't use a minimum, but an hour is the least that I will charge.

If, on the other hand, I'm done for the day or it's the weekend, and I get an "emergency call", It's a 2 hour minimum, even if it's just flipping a breaker and takes me the drive + 5 minutes. I don't think it's asking too much, as the vast majority of the people who have these "emergencies" would never even consider going into work after hours or on the weekends, and I haven't had an argument yet.

Any thoughts or different policies out there?

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Business, Office, Estimating, Legal:
#165098 - 06/18/07 09:23 AM Re: Minimum Rate [Re: Zapped]
REW Offline
Member

Registered: 11/15/06
Posts: 30
Loc: Sykesville, Maryland
I sure wouldn't want to use on a day that you are not busy!

In order to be consistant and fair with each customer, you should charge a fee to everyone, everytime. You wouldn't want two neighbors to discuss why one of them was charged a minimum fee and the other wasn't. One of those persons is going to be very mad.

I suggest charging a fee to everyone, but do not attach a time limit to it. Call it a travel fee, show up fee, service fee or anything else, but not a "1 hr minumum charge". When you charge everyone the same fee, it will make you more consistant (and thus easier to prepare invoices), and make you more money. An extral $100 a day in "travel charges" really makes a difference in your bottom line.
_________________________
Rich

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#165112 - 06/18/07 03:37 PM Re: Minimum Rate [Re: Zapped]
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
 Originally Posted By: Zapped
What do you charge as a minimum rate for a service call?

If I'm on a series of calls and my schedule is full for the day, I really don't use a minimum, but an hour is the least that I will charge.

If, on the other hand, I'm done for the day or it's the weekend, and I get an "emergency call", It's a 2 hour minimum, even if it's just flipping a breaker and takes me the drive + 5 minutes. I don't think it's asking too much, as the vast majority of the people who have these "emergencies" would never even consider going into work after hours or on the weekends, and I haven't had an argument yet.

Any thoughts or different policies out there?


If it is any help, let me tell you what I found while working some jobs the past month, One customer needed a gas appliance hooked up they called the gas company, when he srrived while we were there, he came in with tool box, took him about 6 minutes to attach gas line, another 5 to write up invoice, she paid $159 plus tax, no hourly rates just a flat amount.
Another job we were on an appliance repair showed up, they were there for an oven repair, the man came in looked at the oven 4 or 5 minutes at best, told the lady she needed a new oven, and presented a bill for $139 plus tax, his total time there was about 15 minutes.
Another job we were installing a line for a sump pump, when an AC repairman came to the house, he took about 5 minutes looking outside, came inside opened the air chamber and replaced a filter, the owner touted how good he was, only $279, well for 20 minutes of work that was not bad.
This friday, we were replacing smokes, and installing an outdoor light, when a plumber arrived, to replace a toilet seal, he was there for almost an hour, $290

The way it lookes to me, everyone seems to be moving away from hourly charges.

Electrical Contractors in my area charge different rates, one guy just up the road charges $90 just to ring the door bell, then charges $120 an hour, the big yellow guys charge from $139 to 159 just to ring the bell, then they quote a flat price for the job. The new guys on the block make call for either nothing or a very small amount, but we don't worry about them, they are usually back working for someone in a few years, then a new crop comes along until they go bust.
You really have to find your own costs. and establish a price, just don't forget, service calls cost more then scheduled work, plenty of existing posts to explain the difference.







Edited by LK (06/18/07 04:00 PM)

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#165113 - 06/18/07 04:19 PM Re: Minimum Rate [Re: LK]
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
 Originally Posted By: LK
If it is any help, let me tell you what I found while working some jobs the past month, One customer needed a gas appliance hooked up they called the gas company, when he srrived while we were there, he came in with tool box, took him about 6 minutes to attach gas line, another 5 to write up invoice, she paid $159 plus tax, no hourly rates just a flat amount.
Another job we were on an appliance repair showed up, they were there for an oven repair, the man came in looked at the oven 4 or 5 minutes at best, told the lady she needed a new oven, and presented a bill for $139 plus tax, his total time there was about 15 minutes.
Another job we were installing a line for a sump pump, when an AC repairman came to the house, he took about 5 minutes looking outside, came inside opened the air chamber and replaced a filter, the owner touted how good he was, only $279, well for 20 minutes of work that was not bad.
This friday, we were replacing smokes, and installing an outdoor light, when a plumber arrived, to replace a toilet seal, he was there for almost an hour, $290

Then the electrician shows up, diagnoses the problem, gives a free estimate and leaves with nothing.

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#165120 - 06/18/07 07:42 PM Re: Minimum Rate [Re: A-Line]
PE&Master Offline
Member

Registered: 02/25/06
Posts: 138
Loc: TX, USA
The guys charging T&M are working out of their garages.
Those with a flat rate system own a shop.
If you like your garage, stay with T&M.

We struggled with T&M for years. People don't like you telling them you charge $100 bucks and hour and they make $20. They have no clue of the costs of business and don't care to hear about it from you. I tell them it costs so much to do so much. New customers don't see a difference in quality, just the bottom line costs. They assume all work is done the same.

You need clean, uniformed, courteous, SALES people who can pull out a price on work while they're on site. This provides consistancy. I lost a good customer by charging different show up fees, just because I couldn't remember what I charged them on previous trips. They actually kept the receipts and compared them. Caught in the act (of ignorance).

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#165123 - 06/19/07 03:05 AM Re: Minimum Rate [Re: PE&Master]
Luketrician Offline
Member

Registered: 07/08/06
Posts: 273
Loc: Sale Creek, TN USA
 Originally Posted By: PE&Master
We struggled with T&M for years. People don't like you telling them you charge $100 bucks and hour and they make $20.


That's a good way to put it into perspective PE'. Thanks for the insight.
_________________________
Luke Clarke
Electrical Planner for TVA.


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#165127 - 06/19/07 07:40 AM Re: Minimum Rate [Re: Luketrician]
mahlere Offline
Member

Registered: 11/17/05
Posts: 514
Loc: New Jersey
there is a huge misconception that if you are flat rate you have to be expensive. You can be the cheapest guy in town and be flat rate.

PE, REW and satcom all made the points.

here is one last one. most contractors that go to flat rate purchase some type of pricing system. as part of that system, to create their flat rate pricing, they have to perform a break even calculation. This determines the cost of doing business.

Once you perform a break even calc, you would be a fool to charge less than it costs you to operate.

most guys who charge T&M, have never performed a break even calc. they just charge the "going rate" and live according to what they can make.

edit to add- this is figuring a small resi/lt commercial service company. Larger commercial companies that do installs will often make money on the install and lose money on service just to keep the customer happy for the next install project.


Edited by mahlere (06/19/07 07:41 AM)

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#165142 - 06/19/07 07:49 PM Re: Minimum Rate [Re: mahlere]
Tiger Offline
Member

Registered: 05/04/05
Posts: 714
Loc: Crystal Lake, IL USA
All good advice. Doing business can be like a game. It doesn't matter how you play it as long as you can do well with it. Once you know your breakeven you can...

1). Do Free Estimates and boost the rate of the first task.
2). Have a Service Charge to cover travel, setup & cleanup, and keep the first task normal.
3). Have a Minimum Charge that covers travel, setup & cleanup, with normal task rates.
4). Whatever else will work for you.

The main idea is to recover your overhead and earn profit. The method you choose to do that may depend on your territory or your business style or your comfort level.

Dave

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#165154 - 06/20/07 04:19 PM Re: Minimum Rate [Re: Tiger]
gibbonsseabee80 Offline
Member

Registered: 10/10/05
Posts: 40
Loc: Chesapeake, VA
Like LK was saying earlier... I used to work up on Long Island as a Journeyman. We would charge $90 min to show up at the front door. This lady call us for a problem with some light fixtures. An old three-way switch was half-way between positions. We just flipped the switch and back in business. Ninety dollars.
_________________________
Brian Gibbons

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#165175 - 06/21/07 02:22 PM Re: Minimum Rate [Re: gibbonsseabee80]
mahlere Offline
Member

Registered: 11/17/05
Posts: 514
Loc: New Jersey
now the key is to spend another 30 mins, turn it into a $200 call and leave a happier customer.

think about how that lady felt spending $90 for you to flip a light switch.

Now, spend another 30 mins, replace the switch, change out a bad GFCI, etc. charge her $200 and leave her happy. Because now she got something for her money.

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