ECN Forum Forums General Topics of the Trade Business Related Discussion t&m vs. flat rate for service?

The key word here is "same".
Same quality of materials, same workmanship, same service.
I've seen some pretty poor service upgrades, didn't meet code, etc. and I've seen some really high quality service upgrades.
I've also seen some contractors that provide terrible service and some that provide superior service.

We're not selling panels, breakers, wire, boxes, receptacles, switches, etc.
The customer can buy these at Home Depot cheaper than what we sell them for.
We're selling service. This is what the customer is paying for.

I've seen some of the work customers have said they got a great deal on. I personally wouldn't have paid a dime for some of the crap I've seen. In fact I would want to be reinbursed for having to rip out all the crap they installed and have it done right.

I believe it's ultimately up to the customer to determine whether or not the price they paid for the quality of the work and the level of service they received was a ripoff.

When you go out to dinner you can go to a really cheap restuarant or you can go to a really expensive restuarant. Are the really expensive restuarants a ripoff?
There are plenty of people who don't seem to think so.
I can go to the store and buy my own steak a lot cheaper than the what the restuarant is selling it to me for.

The end result is always the same. It all flushes down the toilet the same.
So why would anyone go to a really expensive restuarant just to flush it down the toilet a couple of hours later?

Who determines the market average?
The customer?
The electrical contractor?

So if all EC's sold service upgrades for $6500.00 than it's not a ripoff?

If I sell service upgrades for $1500 but you sell them for $3000 does that mean your a ripoff?
What if I do a crappy job, don't show up when I say I'm going to, don't call the customer to let them know I'm not going to make it and the customer took of work that day only to have me not show up?

Some people place a high value on their time, don't like to have it wasted and are willing to pay more.
Some people also want a top notch installation and not some half fast scabbed together installation that barely meets code if even that.

If the customer paid $6500 for the same crappy service they could have gotten from the guy that would have charged much less then yes they got ripped off.

Sid, where in Florida? Im starting in Tampa area.

Hey Jason, I'm over here in Pinellas

You guys should look into joining the Fl IAEI. I assume the Sun Coast chapter is like the Gulf coast chapter. They have a lunch meeting once a month where people in the trade can get together and talk about what is going on in the business. It is an excellent "networking" opportunity and you can usually pick up some CEUs from time to time.

Residential wiring and service is usually a race to the bottom to see who can be the cheapest. I honestly can't see how you guys can make Monet at this unless you have a supply of really cheap labour.

Or maybe the t&m guys lose money and flat rate guys make money.
I see contractors in my area advertising $30 per hour shop rate for residential work. That's crazy.

The only time I can see that T&M makes sense is when it is clear that bid risk is too great:

Extensive fishing in old work...

Projects way outside one's experience...

Tracking down and fixing broken underground circuits...

For them I go with a minimum fee, T&M and a worst case maximum fee.

Everything else is bid work; it's the only way that I can get my per-hour rates where they need to be.

I normally will not even bid a T&M ticket unless it's for an established account. It demands mutual trust.

For some contractors commercial work is a race to the bottom.

http://www.thesuccessfulcontractor.com/spring09-article07.asp

http://www.thesuccessfulcontractor.com/index.asp

yep, for the right type of person, residential is the largest cash cow you could ever hope for...

but one thing to keep in mind: the attributes needed for success in resi service are very different than the attributes needed for commercial construction...

very rarely does one person have the attributes required for both sectors...which means, as a small EC, you best learn what attributes you have quickly...like before you go bankrupt:D