How long do you guys stay on hourly rate for service call? Lets say someone calls with no power to outlets and the wire from outlet to outlet needs to be replaced. Do you stay on hourly the whole time through the repair, or just till you find the problem and give them a price for the repair?
I guess the simplest answer is whatever makes them happy. I do very little T&M now, but I did it for years. Some of those older clients prefer T&M and if that makes them happy, it's fine with me. With new client I'd talk about a troubleshooting charge to locate the problem, then bid the repair.
The tough one for me so far is that I can find some problems in 5 minutes, others take much, much longer, so the troubleshooting fee is a guess. You can try to make it up in the repair bid.
Our retail customers demand T&M. they will not accept flat rate pricing. If you don't offer T&M -Bye bye! So, we have no choice if we want to keep them as customers. They also demand only cost+25% mark up on materials. As we all know, there are handyman shops waiting in line to offer discount electrical services to anyone!
Our retail customers demand T&M. they will not accept flat rate pricing. If you don't offer T&M -Bye bye! So, we have no choice if we want to keep them as customers. They also demand only cost+25% mark up on materials.
Sounds like your attitude needs to be adjusted! Since when does the customer dictate what prices they want to pay?
I think that in the long run the customer always dictates what they are willing to pay and what they are willing to pay for. The American Automobile Industry is a good example. For years they thought the public would buy whatever was made. When competition was introduced into the market and they found out that they were wrong. Same thing with the phone companies. If you don't have a lot of competition , it's easier to name your price and your service. If the competition is strong then you must give the customer what they want. The idea is to make the customer believe they want what you are selling. The American people think that they wish to pay big bucks for SUV's ( a four wheel drive station wagon , that doesn't get good gas mileage ). If the hourly rate is high enough then a flat bid will look attractive.
Growler, you are talking about legitimate competion. LearJet9 isn't.
As we all know, there are handyman shops waiting in line to offer discount electrical services to anyone!
If you have to bring your prices down to that level just to get work you are better off flipping burgers at McDonalds! Matter of fact that's probably where you will be in a short time.
They also demand only cost+25% mark up on materials.
There is probably nothing that would get me more furious than a customer telling me how much I was supposed to make. Especially those who want to know what I paid for material and tell me how much I can mark it up. Do that and you are a dead man! That's the same as telling me I have no right to support my family or live in a nice house.
LearJet9, just the tone of your post sets me off. You sound like a battered wife. "The customer demands"- who the hell are they to demand anything from you... unless you let them.
Hal, you are right about not trying to compete with handymen ( you can't, they don't have any overhead ). I think that learjet may be talking about certain commercial customers where you have to give T&M pricing up front before you can even get on the job. That's not really a problem if you keep your hourly pricing high. Then you add travel & administrative and late fees. I think most of these places are trying to keep you from working 30 minutes and sending in a $900.00 invoice. I make it clear up front that there is a 2 hr. minimum plus any fees but it's a lot better than them thinking that I'll charge what ever I want. Some of these places want a cap on price without authorization from the top. I don't see this as a problem, while they are making a decision , you are on the clock. If you need to come back, then that is a seperate service call. The customer needs to know that you are always using standard business practices for the industry.
Don't know about that. "Retail" customers and handymen make me think residential.
If you are doing T&M the customer should know up front what your hourly rates are and how they are computed. I know some companies that fax over an authorization to the customer that explains the rates they will be charged. It must be signed by an owner or other person with authority and faxed back before any work can start. That way there there should be no surprises.
Flat rate they have the entire cost up front so I can't see what they would complain about. If you are there for 1/2 hour and give them a flat rate bill for $900 you should already have justified it- again get it in writing.
Anybody customer that takes the time to research material prices to argue with me or asks for the prices I pay my supplier is an insult to my intelligence. As I said I have zero tolerance for that practice and the relationship with that customer will end right there.
I'll chime in. (you had to know that would happen)
hbiss and growler, I agree with Learjet on this one.
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.
If a guy came in to them with a pricing book, or some kind of set fees for things, no doubt you are out the door, never to be invited back again.
A good businessman, knows the cost of things, he knows he has to pay you travel time, he knows about markup, he has been around. Heck, some of my clients have their own electrical depts. They know the cost of goods already, sometimes when I run out of a conduit fitting or wirenut, I get a couple from them. If I went in there and charged him 300% markup, and guessed at prices to what I felt it should cost, or pulled out some price book, I would be out looking for work in no time.
Granted there are managers who have no clue what things cost, and can be easly manipulated, but that is not my, or Learjets customer base. I think him and myself probably have a totally differrent client base than what you are discussing.
My customers are to intelligent, you can't pull one over on them.
Hal, you are 100% correct. Two years ago I was facing looseing a couple of good Commercial accounts. These guys supplied me with a large amount of work.
This is what they did: They started hammering me on my invoices, whining about how long it took to do this and how much material cost. They hired a maintinence man (handy-man type) to do light work, elec,pluming, drywall.... (who soon took over all maint) They then asked to see my margins Profit, O/H and Material Mark-up. They blamed that on Corprate. They started delaying payments in to 90-120 days. (Oh that invoice isn't even in our system yet...are you sure you mailed it?)
I tried to convince them the pricing was fair and to talk to other EC's to compair the numbers. This obviously went on for a while. The stress level got real high, so I dumped them and a few others too. My wife said we were done for financially and I was scared. But you know that was only the begining of realizing that I could actually charge a little more money with fewer customers as long as the quality of workmanship remained high. As a note in my experiences the type of customers most often trying to beat you up were Property Managers, Commercial or Residential & a few GC's
I am a company with no employees now, so this can be different with other companies or in different areas.
This is only my opinion in my little corner of the world. Sometimes you have to take a big chance to correct things.
Respectfully submitted Rob
[This message has been edited by sierra electrician (edited 07-30-2005).]