Since the percentage of hours an installer’s hours that can be billed is a critical factor in determining profitability I would be interested anyone’s thoughts about it. Does anyone else adjust bids based on the percentage of billable and non billable hours for the job in question. For example if we have a job that will keep a crew busy full time for 3 days, our hourly bill rate will be lower than for a one hour service call which really ties up a crew or tech for 2 hours (drive time, talking to the customer, etc.) Second, is anyone willing to share information about what the industry average is for “percent billable hours” for different types of shops. My supplier says he saw a study once that claimed that the average time an electrician spent actually installing parts was about 40%. We are a service shop and we net out at about 60% and are always looking for ways to improve it. Is there any way I can get an idea of how we compare to others? Many Thanks.
We have no such thing as "non-billable" hours. We charge for travel and every hour on the job. We don't do this as a hobby, we try to make a living at it. We do not offer free quotes or free materials either.
#157493 - 11/19/0502:40 PMRe: Billable vs Non-Billable hours
I looked at a job the other Day . Service upgrade is straight forward. The DIY previous owner had wire the whole basement in BX and then finished the ceilings and walls. All i could do was estimate how much time it would take to repair. I can only do the extra work with T&M.I dont have to discribe the DIY work but its bad wrong connectors and no anti shorts any where
#157494 - 11/19/0504:55 PMRe: Billable vs Non-Billable hours
if you are getting 60% efficiency on service work, that is above average. We set our flat rate pricing at a 45% efficiency. we are lucky to get 4 out 8 hrs in a given day.
just saw an article that claimed that the average among all trades for the construction end is 6.5 hrs. They worked out the numbers and a 10 man shop was paying approx $136,500 per year for downtime (based on total package of $35/hr)
we've been doing flat rate on residential for about 8 yrs. and that is exactly how it is done. Unfortunately, a few too many companies see flat rate as a way to R&R (Rape and Run) a customer. They have incredibly too much overhead, advertise like mad, and come in with billable hourly rates of $300+ (that being said, they are only productive 3 hrs per day, so they are only making $900) But they are hurting our industry and giving us all a black eye.
#157498 - 11/20/0508:51 AMRe: Billable vs Non-Billable hours
Mahlere, What is giving our industry a BLACK EYE is a lack of education. There are newbee"s out there working out of the back of a pickup charging $20 an hour. There are other established EC's out there charging $900 for a comlplete 100 amp service change using SE cable. So let me ask you what is wrong with charging $300 an hour for a residental service call? I've put in my time and effort to build my business to a reputable, award winning structure. Electricians are not slugs and should be paid for the professionals they are. By your figures of $900 a day per man x 25 techs = close to $6 million per year. Education is what's needed so that all EC's will be on the same wave length. Lets not sell ourselves short we are professional and should be proud of it. Put a name on the side of your truck and let the public know who and what you are.
#157499 - 11/20/0509:41 AMRe: Billable vs Non-Billable hours
All, Thanks for the comments. Let me clarify: 1) With us this is a business not a hobby – Like the rest of you; we are in this for the money. At the end of the day, ALL costs – labor, materials, overhead must be paid and what we must charge the customer must cover those costs plus our profit targets or our kids don’t eat and our wives get annoyed with us. 2) We base our bidding on the estimate the total cost of the job plus profit targets. 3) The question of hourly rate is really one of presenting the customer with an image that we are a professional shop that will not compromise on codes, safety, materials, workmanship or quality. However within that framework, we will do everything in our power to save the customer money. 4) When a homeowner asks, “What is your hourly rate?”, we currently them we charge for materials plus $xx for the first hour and $yy for all hours after the first hour. This seems better than telling them that we charge for travel, set up, etc. If asked why, we explain that the first hour has to be hire is because it includes travel, set- up, etc. 5) When an R&R contractor wants us to do a job T&M and asks our rate, our response is that we charge less for less for full day jobs than for short service calls. I think this is consistent with what I am hearing you guys say, if not please let me know. I think the more important question is what are realistic targets for keeping your electricians productive. If your guys are less productive than average, you have to charge too much and eventually get an R&R reputation. Thanks to mahlere for the link.
#157500 - 11/20/0509:47 AMRe: Billable vs Non-Billable hours
sorry, i wasn't really clear. there is nothing wrong with charging that much. so long as you provide that level of service. For the record, we are in the $180-200 range (but I serve a small area) and we are around $3000 for a 200A service. I am comfortable with our rates and the service we provide.
The key to my entire post was th R&R philosphy. Bang the people for as much as you can. I do have an issue when a company charges $3000+ for a service, then uses AL SER cable and a homeline panel.
I preach to my techs all the time, charge a million $, but give them $1,000,001 worth of service. It's not a novel concept.
My issue is with the companies that bill out at $300+/hr. but run in and run out of the customers homes. They don't provide the level of customer service they should. Their techs throw prices against the wall and see what sticks. They have the techs running 5-7-10 calls per day. You can't provide customer service when you are pushing your men on that many calls.
They charge a ton of money and leave the customer feeling like they just got out of a prison gang rape. (sorry to get so graphic, but I've seen the results)
I am not saying that we are perfect, I am saying that we have about a 60% repeat customer rate in the 1st 18 months.
I do agree with you whole heartedly about the $20/hr guys. I've said for the longest time, you can charge $20/hr and rip someone off, or you can charge $200/hr and give them the biggest bargain of their life. It's not about the money, it's about what you do for the money.
My point was that, too many guys see flat rate as a way to bloat their overhead and jack up their prices with impunity. If used correctly, flat rate can create a great business. If it falls into the wrong hands, it leaves the customer feeling cheated.