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#209189 - 03/14/13 04:02 PM service pricing
schenimann Offline
Member

Registered: 02/18/08
Posts: 194
Loc: Western North Carolina
I have always charged hourly for service work. I am wanting to change to set prices for most fixes. Obviously some things will always be hourly, However many things can be a set price. I know some of you currently do this. What is the best way to go about setting this up?

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Business, Office, Estimating, Legal:
#209190 - 03/14/13 04:28 PM Re: service pricing [Re: schenimann]
HotLine1 Offline

Member

Registered: 04/03/02
Posts: 6786
Loc: Brick, NJ USA
Set pricing by item is used by the majority of the plumbers up here, and as you say, some of the electrical contractors.

IMHO, keep in mind your local economy when you are comparing set pricing. Your 'regulars' may have sticker shock.

When I had my business, the last few years, 90%+ was done T&M, with flat fees for all design related work. The 10% was successful bid jobs.
_________________________
John

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#209193 - 03/14/13 04:36 PM Re: service pricing [Re: schenimann]
schenimann Offline
Member

Registered: 02/18/08
Posts: 194
Loc: Western North Carolina
As of now I do all electrical work. New, remodel, commercial, whatever comes along. I am actually looking at "creating" a new company that only does service work. I will have to work my current customers, many of whom are friends, in at a slower pace. I enjoy that kind of work and think that the profit is better. I am trying to get away from bidding any work.

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#209194 - 03/14/13 05:19 PM Re: service pricing [Re: schenimann]
Tesla Offline
Member

Registered: 06/16/04
Posts: 1280
Loc: Sacramento, CA
I don't know how you can survive on T&M in the retail marketplace.

1) CraigsList quotes -- and the like -- are set by non-businessmen/ tradesmen unaware of their economics.

a) They assume that they'll be able to bill 40 hours/week...
b) They assume that they'll be able to bill for materials runs...
c) etc.

2) The market/ public/ general contractors would rather have trunkslammers take a shot at the task... assuming that, really, anyone can be a wire runner. After all, just how tough can running Romex be?

3) Professional design expertise is expected to come free... right along with a free quotation... and your consequent personal visit -- and jaw, jaw. Obviously, you've got nothing better to do, anyway. All the other guys are advertising free quotes -- and, implicitely, free design.

4) Any sales effort will be used against you. Namely, the prospect simply compiles design advice until he feel comfortable working up his own scheme -- which is to hire day labor talent and have them attempt to pull things together. If and when it does not quite work, he can always pay for a quick service call.

========

The o n l y way that T&M can work out is if the contractor drags his feet -- a lot.

========
_________________________
Tesla

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#209196 - 03/14/13 06:57 PM Re: service pricing [Re: schenimann]
HotLine1 Offline

Member

Registered: 04/03/02
Posts: 6786
Loc: Brick, NJ USA
Tesla:
Without a bunch of details, T&M worked financially well. Kept 3 men busy, all billable. If I had my tools, my T was billable also. I had long term clients who didn't want to 'shop', 'bid', or 'go cheap'. As for material runs (when necessary) no issue on the T either. Most materials were delivered by a local supplier, or from shop stock. The local supply house had no problem with 'rush' deliveries.

Think of it as a company that outsourced the electric shop, and had a contractor 'on call' at controlled cost agreements.
_________________________
John

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#209204 - 03/14/13 11:32 PM Re: service pricing [Re: schenimann]
Lostazhell Offline
Member

Registered: 02/21/04
Posts: 1248
Loc: Bakersfield, CA (Originally Or...
T&M, service work, bid can all work out well depending on your customer base..

We have large oil producers which we work 30+ wiremen/linemen 40+ hours/week.. on T&M (Well, the T part.. They have their own accounts for material.) But aside for charging out for personnel; trucks, FR, personal H2S monitors and cell phones for foreman and above are charged out as well.

Me, my truck, cell phone, monitor and FR costs our customer $685 for an 8 hour day. I take care of whatever their I&E department requests from motor changeouts to instrumentation troubleshooting to cogen maintenance. Our company has weathered California's ugly economy surprisingly well.. We also have a few guys as part of a call out service department that stay generally busy as well.

Some of you know I used to work for a flat rate service contractor that paid us commission on the jobs we "sold" and completed. (Electure knows ALL about it LOL) Large full page phone book advertizing was their lifeblood and they were constantly busy. I cleared $100K/year working for this company and their yearly profit was upwards of $20M/year.
Their demise came not from lack of work, but from greedy management that refused refunds when someone screwed up and from hiring people who could "sell the job" but didn't know the difference between an I-beam and Jim Beam. They had no business attempting electrical repairs.

Scott (Electure) and I both worked for a company that did predominantly bid jobs. They had good relationships with a handful of general contractors that kept us busy. It wasn't the best paying company, but their checks never bounced and I had a steady 40 hours a week.

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#209211 - 03/15/13 06:35 AM Re: service pricing [Re: schenimann]
HotLine1 Offline

Member

Registered: 04/03/02
Posts: 6786
Loc: Brick, NJ USA
Lost:
The 'bottom line' is what you say, a weekly paycheck! Or, if you are a small company, paying your bills, payroll, and yourself.

We have a few of the 'full page ad', shirt & tie, mega service contractors here (Plumb/HVAC/Elec) that operate as you mentioned.
_________________________
John

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#209240 - 03/17/13 08:24 PM Re: service pricing [Re: schenimann]
schenimann Offline
Member

Registered: 02/18/08
Posts: 194
Loc: Western North Carolina
I am actually going to start a new company that is a flat rate service company. As it grows I will phase out my existing company. I am at the beginning stages and it is quite an undertaking. I have always been a local electrician, no ads, all types of work(new, old, resi, comm, service, whatever needed to be done). I would like to grow my business and don't think that my current model is valid for that. For my new company I am going with full logos, ads, marketing, the works.

I would like to acquire a list, whether book or spreadsheet that lists jobs with a manhour number for each. Does anyone have one or could recommend one that I could purchase. There are lots out there but I would like a recommendation of one that has be used. This will be one piece of the puzzle.

I will be asking more questions along the way and keep posted how progress comes along. Thanks.

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#209241 - 03/18/13 02:09 AM Re: service pricing [Re: schenimann]
Tesla Offline
Member

Registered: 06/16/04
Posts: 1280
Loc: Sacramento, CA
Schenimann...

Cost/Price books much outside of your area -- or this time period have little utility for you.

Build your own.

Start with your specific overhead, do include yourself, too.

Work out what you'd have to charge, per hour, if you worked 2,000 hours per year.

Now figure out how many hours you will r e a l l y be able to bill. It'l be less than 2,000, for sure.
_________________________
Tesla

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#209242 - 03/18/13 02:40 AM Re: service pricing [Re: Tesla]
dougwells Offline

Member

Registered: 05/03/03
Posts: 1226
Loc: kamloops BC Canada
Originally Posted By: Tesla
Schenimann...

Cost/Price books much outside of your area -- or this time period have little utility for you.

Build your own.

Start with your specific overhead, do include yourself, too.

Work out what you'd have to charge, per hour, if you worked 2,000 hours per year.

Now figure out how many hours you will r e a l l y be able to bill. It'l be less than 2,000, for sure.







i would say about 1000 hours

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