ECN Forum Forums General Topics of the Trade Business Related Discussion Pricing to high?

Marc,

Thanks for your thoughts. We actually try to do most of the things you suggest – present a professional image, follow up surveys, confirming phone calls, etc. and it seems to help.

Any thoughts on my question about a the existence of a “neutral, trusted third party” the consumer could contact to get information about how much they should expect to pay? If anyone knows of such an organization, I would like to know who they are so I could contact them.

Thanks to all for your valuable insights.
VinceR

Vince,
I am not sure how a third party would pull that off. First of all, there is no real market price in this industry. The guys who are claiming there is are the guys who are giving there work away and using there prices as a basis to say it is market pricing so they can justify not making a profit. Until the industry on a whole wakes up and starts selling there work for what it is really worth, you will never have a consistent market price.

My 2-Cents - I have been in business since 1980. Our phiposophy is this. We work for XX/hr period. We do quality work, we are neat, pleasant, clean, ontime and fair. There will always be someone who charges less and there will always be someone who harges more. I just can't worry about those guys, that's just the way it is. We don't slam anyone due to circumstances or take advantage simply because we can. We have survived nicely for 25 years with this philosophy. If the kids are starving, the wife is doing her own nails and you're sitting by the phone from 8-4 - then you're probably a tad high.
Bill

Another observation that I have made over the years. EC's seem to shoot themselves (and others) in the foot. Around here (MA) you can find EC's from $30 - $90/Hr. BUT!!! You can't and won't find "plumbers" in that range. They maintain pricing better than EC's. This has always been a peeve of mine.
Bill

Learjet, Atom

I don't know what the licensing requirements are in your area, but here in PA, there is no statewide license. It is left up to the local municipalities, most of which require no more than a fee to become "licensed".
Having spent 4 years attending classes to study NEC and Electrical Theory, and then taking several licensing exams, I resent having to compete with those who can open shop with no formal training and no competency exam and then charge $30.00 / hr. (or more).
Unfortunately, that's the way it is in PA.

Also,

Good business skills, favorable customer perception and higher profits don't necessarily mean safe, compliant installations. These are my main objectives.

[This message has been edited by Redsy (edited 04-28-2005).]

Redsy - Here in MA state licensing is required. There are so many rules here it is sometimes tough to keep up. That being said - We too have non-licensed wanna-be's who call themselves electricians who perform electrical installations and repairs unlicensed for a cut rate. It hurts us all, not to mention the liability the business or homeowner is setting themselves up for. Most of these guys are also not insured.
Bill

This thread reminds of George Carlin now.

"If some is driving faster than you, he's an idiot, if going slower, he's an A@@hole."

Now we brought it to a new level, if someone is cheaper than you, he's giving work away, and if he is higher than you, he's a crook.

Do your own thing, and make a comfortable living.

Dnk...

Vince,

I agree with Rick, there is no real organization that could provide what you are looking for since pricing within a specific area will vary from shop to shop. And as Dnkldorf mentioned, it is not because someone is lower or higher that makes them cheap or a crook.

When we help out 1 man shops with their breakeven, it ends up usually pretty high since 1 man is carrying the entire overhead and labor burden. The minute they bring on a second guy, that breakeven drops dramatically. However, your breakeven should not automatically dictate your prices. They should only reflect your costs, the actual pricing is left up to you, the breakeven will inform you of your true profit based on the pricing you set forth.

So if you do hire a second, third or ninth guy and your breakeven goes down, bring up your profit to maintain the same pricing level if it is working for you. You should benefit from your added efficiency and perhaps pass on a little discount to customers to be a little more competitive. If your breakeven goes up, you have two choices. Make less profit or increase your pricing accordingly.

There is no right or wrong here but only choice. Make an independent survey of pricing in your area and see how you compare. But bottom line, you need to pay the bills so make sure you cover your costs and a little profit for yourself at the least. And make sure your customer's perceived value is adequate for the price.

By the way, a lot of shops make a thin profit that is quickly lost due to a miscalculation of their breakeven. Don't forget about expenses such as callback labor, disposable tools, paid vacations and holidays, etc. If those are left behind, you will end up with little money after what seemed to be a good year.

Marc Blanchard

"Now we brought it to a new level, if someone is cheaper than you, he's giving work away, and if he is higher than you, he's a crook."
(copied from prev. post)
Dink,
I'm not sure why you would think that at all. This post started by AdamsAtoms asking if he was charging too much. The answer to his question was simple. Find out what it costs you to get in the truck and go to the job everyday and add your profit. There have been some wonderful posts here as to how to find that out, so I won't waste any time re-explaining them.

Just because someone charges more or less than you, doesn't mean he is either a thief or an idiot. It may mean, though he knows his cost of running a business. Also keep in mind that my operating expenses are much different from the next guy. I work along with the guy who works out of his pickup with no advertising, little or no insurance, no utilities, rent, employees, benefits, etc. My advertising budget is more than some guys make in a year. So my hourly rate would not be the same as that smaller company. The same goes for a bigger company, they would probably be higher then me.

With all this being said, we are all in relatively the same game, cutting our individual niche in the industry using the gifts that God has given us. As I plug along trying to achieve the goals I set before me, I encourage you all to do the same.

Marc, Rick, All,

I agree with both you guys. We have been at it for going on 5 years now and I have yet to find see any third party info that was helpful solving this problem. However, since my vantage point is limited and it is a big world, I thought it was worth a shot to see if anyone else knew of anything.

Thanks for your replies.

VinceR