I have seen some recent comments that suggest that anyone charging "high" prices has questionable ethics.
Let's look at that a moment.
I once considered taxicab rates to be outrageous. Then I met a few drivers. They were living in extremely marginal conditions; many were only surviving because they had other income (pensions, etc.). Some were actually living in their personal cars. In other words, those "outrageous" rates were barely enough to support a man at a minimal level, and keep the car running. That meter rate had to cover the overhead (taxes, insurance, etc.), the dead miles coming to pick me up, etc. When I look at my own driving 'expense,' I tend to only think of the gas I burn, forgetting all those other things.
Our business is the same way. It's going to cost us to keep that truck running, to pay our bills even when the phone is quiet, to cover the unexpected expenses, to make those sales / permit / planning / warranty calls.
Even under the most optimistic of conditions, you are lucky to have 20 billable hours a week. What this means is that you need to charge $40 / hr just to cover your paycheck, and keep that truck running. License fees, bonds, social security, permits, insurance, accounting expenses, etc., are all added to that figure.
Now, when you see a nice ad for that other company, the one with the new vans, the spiffy uniforms, the big office along the main street ... where do you think the dollars for all that comes from?
A higher rate, that's where.
Why do thay spend this money? Because their experience has shown that the 'good' customers will gladly pay to have a "real pro" come out ... rather than have someone who looks like he lives along the river push his rickety jalopy into the parking lot.
Heck, you show up like that, the customer just has to wonder if you're really qualified. Lack of respect means business trouble. Hillbilly Hank then gives a low price- and the customer thinks "there's no surprise!"
Now, lets take a hard look at the work we do. And who we do it for. 90% of our work is pure vanity. That is, the customer would get along just fine without it - ask any Amish farmer! Our customers almost always earn more than we do. just look at their cars and homes! Optional work for the weathy... why should I cut them any slack? THEY ought to give ME a break!
[This message has been edited by hackelect (edited 11-20-2006).]
In my part of the country (which isn't very different from most other parts of the country) you really need at least $100k household income to live remotely comfortably.
That's $50/hr for a 40 hr week just for my payroll. That's not including benefits, etc.
I can't ethically try to bill someone T&M and make enough money. I don't have the ability to bill someone a 4 hr min, when we are done in 1 hr. There is nothing wrong with that, I just can't do it. I'd rather be honest and tell the customer that it will be $x.xx to do the job or fix the problem. Not tack on extra time for travel, or worry about parts markup.
Now, to be honest we still do T&M, but it's only for commercial and only for long time accounts that understand us.
hack, keep up the good thoughts...
[This message has been edited by mahlere (edited 11-20-2006).]
#159273 - 11/20/0602:43 PMRe: In Favor of High Prices
Please, for anyone posting in the business section, try to keep everything on an information format, and avoid responding to post will cause conflict, if we let things get out of hand, the good information from quialified, and experienced business owners will not be posted, they will just move on.
#159274 - 11/20/0603:04 PMRe: In Favor of High Prices