I've heard from more than one source that the average electrical contractor is only making 2.75% net profit. Been doing electrical work for about 22 years; only started my own company about 4.5 years ago. Been working my a-- off and thinking it is not worth working for myself much longer.
Plumbers in my area (Washington DC suburbs) are charging $120 to $150 per hour while electricians are at $75 to $85. What the heck are we doing?
Anybody out there making money? How are you doing it? Anybody using flat rate pricing?
Sorry for the long first post but I don't want to give up yet. Just looking for answers.

Pat

Pat,
Stay with it , don't give up now, the younger generation of EC's are business smart and they are doing a fine job at making their business run at a profit.
Yes, there are a lot of EC's out there that are always looking in the rear view mirror, when it comes to operating a business, they are more concerned with what the other guy might be charging, when what they need is to find their own real operating expenses. They are good electricians, but need some help on the business end.

Welcome Pat
If you have a chance come and join us on Wednesday Night in the Chat Room This has been a chatable subject in the past for chat

Thanks for the encouragement and the business chat tonight at 9:00. Planning to attend.
What the heck are you guys doing up so late?

Pat

Welcome to ECN Pat your post was not long, take a look at Scott35's or my own posts.

I am sure you can get some answers from the other members at the chat. I do not run my own business so I am not any help to you. I do have a lot of respect for those of you that take the plunge and work for yourself.


Remember that this forum is world wide your 1 AM is another members 9 PM.

Of course some of us just have strange hours.

Good Luck

Bob



[This message has been edited by iwire (edited 08-25-2004).]

Its 3:25AM here & I just got back from a 7/11 that burned a 2pole 30A for the slurpee machine!

What'cha saying about wierd hours???

Welcome to ECN Pat Come to the chat as before mentioned & they'll be some experiance from different facets of the EC biz.. (New construction, resi & commercial service, plant maintenance, etc...) Great place to ask questions & get different points of view.

-Randy

I was wondering why everyone was sleeping so late. No wonder the plumbers are making more money.

Now to my way of thinking 40hrs ar 80 dollers an hr (3200) is not bad.

Hi Getelectric

It seems that if I have 40 Billable hours per week I would be working another 40 hours to administrate that time spent.
IE doing quotes ordering,paying the company bills, downtime for servicing van,my list could go on longer I am sure.You make it sound to simple

You can slice that $80.00 an hr any way you want to, but you are talking to someone who was in business for 10 yrs and experience tells me that is good moneyand that you could hire a clerk at the least and still have a fistful of dollers.(by the way if you are charging 80 what does an journeyman make an hr?)

Welcome to the forum Pat.

The timestamps on the messages are all EST/EDT, so a 1 a.m. timestamp is only 10 p.m. for the guys out in the far West.

But we do keep some odd hours anyway, and you find my message posted at what appear to be all sorts of odd times. Oh, and where I am it's about 7:20 p.m. right now, just to confuse matters even more!

I figured out the "time thing" in the truck this morning,(coffee must have been a little weak) but didn't want to turn around just to edit my erroneous post.
I pay my guys (and myself) $25 per hour. If you add up all the lost time in traffic, going to the supply house, set up, clean-up, vacations, doctor's appointments and on and on ---- you only get about 1400 hours of billable time per year for each tech. Even less for me because I do all the estimating, scheduling, billing, permits and going to put that last 5-gang switch plate on so the customer will pay us.
Pay out for GAS!!, trucks, insurance, cell phones,FICA, workman's comp etc. and no matter how Getelectric slices my pie, my bank account is still hungry.
Getelectric,
If you made enough money to retire after 10 years in business, PLEASE join the business chat tonight and let me know how you did it.
Thanks for all the replies gentlemen,
Pat

Lostazhell,
Who needed to buy a Slurpee at 3AM?

lets see 2 guys working for you 1400 billable hrs a year each at 80 hr=224000.

you pay these guys on a 40 hr week,52 wks a year a total 0f 104,000.00

the difference om your side is 120,000.00

now with only two guys working you should be able to work yourself for added revenue never mind the m.u. on material.

not bad on my ledger sheet.

Keep in mind prices vary widely in different areas.

On another thread talking about the going rate for a standard 200 amp service prices given ranged from $800 to $2,500.

This does not mean the guys getting $2,500 are rich, the cost of living in those areas may be high.

If plumbers are getting $120 to $150 in Pats area I would think it safe to say the costs in his area are high.

Bob

I'll take a chance on boring you with more particulars.
Take the $120,000 minus $75,000 in above mentioned expenses and that leaves $45,000.
Pay myself $52,000 and now company is only $7000 in the hole. Must pay my own FICA of $7,800 for the pleasure of being self employed and that brings us to -$14,800. Throw in a few bad jobs and the picture darkens. With the work I can put out personally, I'll get above break even. Add in the mark up on material, then split the profit with my business partner and I come out with about $60,000 per year.
Scale wages are at $38.00 per hour now. That's about $76,000 per year for eight hours, 5 days a week.
Thus my original post.

Pat..what do you mean when you say scale wages are $38 an hour?

shortcircuit

I don,t know how yoy can incur 75,000.00 in expenses,but thats what you suggest so be it.
How then in Toronto higher gas prices insurance is unbelievable,vehicles cost more is it that an company can charge 70.00hr(CDN)
union scale is over 40.00 and still make money.

Getelectric,
That's what I'm trying to figure out. Totally confused myself. I have no business training (obviously), and avoided math like the plauge in school.

Shortcircuit,
Davis-Bacon wages for scale jobs at government sites in the Washington DC area are now paying $38 per hour, overtime if you want it at time and a half.

40% mark-up on material.

Just curious Pat. Billable hrs = tech hrs?

Love this discussion! Best learning tool out there. Sorry I missed Biz Chat last night.

Twh,
You are absolutely right. I've been afraid to mark up the small items because I figured all the homeowners can walk around the local hardware store and see that I din't pay that much for a keyless socket.
As for the more expensive items like fancy light fixtures, they are already so pricey I'm afraid the customers would freak out at a 40% mark up on a $400 light.I'm gonna have to get over that aren't I?

Steve,
From my point of view, billable hours are different from tech hours. I pay my guys 40 hours per week (tech hours) even though it is nearly impossible to keep them busy exactly 8 hours a day. Sometimes the calls don't take quite as long as I anticipated so what do I do? Piss loyal employees off; send them home and dock them an hour or two? Over book the day and piss the customers off because they took the day off work to wait for us, but we're not going to make it there until tomorrow because the last job took too long?
Billable hours are basically the number of hours the tech is actually on the job in front of the customer with the $ meter running. Traffic, trips to the supply house, etc., all cut into the billable hours. I do charge more for the first hour to make up for some of this lost time.
I saw one electrician on TV that charged customers a minimum of four hours no matter how small the job. That would cover most of the difference in tech vs. billable hours.Good solution, but you gotta be one hard son of a gun to charge a little old lady four hours to fix a bad receptacle.

Pat

[This message has been edited by Pat@Amber (edited 08-26-2004).]

Pat.
Getelectric missed the expenses of company payroll costs, he just took the pay rate, and he did not consider the increased comp insurance costs, company paid, or the payroll services, then after that add overhead and truck expenses. And the most inportant did not consider that all hours are not billed out. If his figures worked i would have been retired 20 years ago.

I was hoping he was right

I don't think anyone should be afraid to mark-up mats! Have it right there in the agreement they sign, and go over it with them before they do. "We mark-up ALL material 20%...Billable hours are any hours concerning said project..."

If someone doesn't understand how that works explain it to them, if they don't like it... Tough! It's that or raise your rates, and don't mark-up anything. We do this for money, and if people understand the billing before hand, they either hire you, or look for someone willing to lose money. If they do the later, great, it wasn't your loss. You may not have had the job, but you didn't lose at it.

Sorry, this is a sore subject with me, as current employer often takes jobs lower than his original bid, because somebody low balled. Then whines to me about it, when he knew it was a looser to begin with.

A Company I used to work for had a rate plus mark-up, and a higher rate with no mark-up (And clock every minute you even think about the job, material handling too.). With a little explanation of what that mark-up covered. Once the customer understood how it worked, (maybe to thier advantage, if fixtures or high cost items were involved) many choose the higher rate! They say to themselves, "I pay high rates, but I'm not paying bluebook column #2 for a GFI!"

Thanks e57,
I'm gonna print that post out and tape it to my dashboard.
Pat

Print it on all contracts!

"I do this for money punk!"

Kidding... there are subtler ways of saying that.

Oh, discourage your employees from side work, but tell them to charge 2X market rate if they do. Otherwise they kill thier day job, and after all it is thier week-end!

Why would you tell people what your markup is? Does Wal Mart list their cost on a case of paper towels? No way. Also I would never tell someone they can't do side work. Why sould someone not be allowed to make the best posssible living they can?

Hi LK

For your info i did not miss,payroll costs.
also if a seviceman wants to be paid for 8hrs he has to show 8 hrs of billable time, if not you are running a charity.The only time i want to see time on his time sheet that is not accounted for on an invoice, had better be put towards a bid project.I rarily will pay a man just for the sake of paying him,their are times that this will happen but in no way should it affect you bottom line.

GETELECTRIC,
It is difficult for a small business to schedule service stops, It comes down to scheduled time, which may result in a work day ending at 3:00 instead of 4:30, this hour and a half is not billed, or the Call ended at 11:00 and the next job is at 1:00 so the $75 an hour covers the time not billed, and is not money in my pocket, or that excess you showed with your figures.

Now the way you figured, can work, and does work, when you are able to assign a man to 40 billed hours. Contractors that have men, doing maint, and installations in office buildings are very sucessful with this, however they charge a lower rate for the study work.
And no, I will not send my men home early without pay.

[This message has been edited by LK (edited 08-27-2004).]

Electricmanscott,

Everyone knows you're marking stuff up, it is no secret. Keeping the amount a secret creates mis-trust. So if the customer knows how much a circuit breaker cost, as they can easily find out, and reverse engineer an invoice, as people do. They look at it and say, "Hey, I just paid $50 for a $30 item! Wonder what else they're #%^king me on? Was that light fixture really $500?" If they know right off the bat, that you are marking up, and how much, you'll find yourself doing a lot less negotiating/bickering at the end. Not to mention if the customer trusts you, he'll be a lot more likely to call you back. This for T&M invoices, bid prices are different ball game. Tell them you'll charge an hour to break it down for them.

And, you can not tell people NOT to do side work. But they should understand that their day job suffers because of it. If the local going rate is $75-80, and they're out there on the week-end charging $35 cash as your compitition. (No license, permit, insurance, taxes or 'comp.) They have no right to whine when they ask for a raise and don't get it, or bussiness is slow and they get laid off! The underground economy accounts for big losses to the market. If we were not competing with our employees, we could charge more, and pay them more! Right now, I'm an employee, but been on both sides as an employer too. (Still do some side BUSSINESS on the up and up, at market rate.) Had to close because as a start up, I was competing with that underground, and go back to work for someone else.

Everybody should go to- www.nosecrets.com click on "pricing for profit" in the left hand menu. When you get to that page, click on the "Labor rate calculator" button in the center of the page. Once there you can change the numbers written in blue to fit your own personal situation. You all might be suprised by the numbers and what you need to be charging to make the profit you want. I sure was!




[This message has been edited by Pat@Amber (edited 08-27-2004).]

Everyone knows you're marking stuff up, it is no secret. Keeping the amount a secret creates mis-trust. So if the customer knows how much a circuit breaker cost, as they can easily find out, and reverse engineer an invoice, as people do. They look at it and say, "Hey, I just paid $50 for a $30 item! Wonder what else they're #%^king me on?

This is one subject that makes me mad enough to kill!

ITS NONE OF THE DAMN CUSTOMER'S BUSINESS HOW MUCH YOU PAID FOR AN ITEM. Period. End of story.

I couldn't care less if some cheap SOB goes to Home Depot and can get something for less. If they have that attitude they can install it too! I'm not even going to go into WHY you HAVE to mark up material and how you should arrive at the prices you charge.

The customer is supposed to trust me because I tell them what my markup is? Don't give me that crap! Hell, why not just show them your tax return so that they can decide whether or not they are paying you too much.

If you have to prostitute yourself to these people to get work you really need to look at how you present and promote yourself and your business. When was the last time you asked someone how much money they make? Apparently you command little respect or these people wouldn't have this attitude in the first place.

The last time a customer questioned why he was charged $20 for an item he found on line for $10 I removed the charge from his invoice as a courtesy and informed him that I was no longer interested in his business. THAT'S how you treat those kind of people.

This guy lived in a 2.5 million dollar house. I didn't ask him how he made his money, he damn well isn't going to tell me how to make mine!

-Hal

[This message has been edited by hbiss (edited 08-27-2004).]

When the issue of prices comes up, I tell the customer that we charge more because we warrantee the items. If it fails within one year, we will come back and replace the item, free of charge. Let them try to get that from Home Depot.

hbiss,
If it makes you mad enough to kill, come on down.... (A good thinning needs to happen...) 'Cause we could deal with a few less 'round here. I'm sure you don't compete with illegal immigrants on slave wages, or low ball artists from tinckerville. So come to SF and see if your numbers work here?!? Without being in court for hours at a time. (justifing it to Judge Judy down at lein court..... Trying to command respect....)

"The last time a customer questioned why he was charged $20 for an item he found on line for $10 I removed the charge from his invoice as a courtesy and informed him that I was no longer interested in his business."

What if that was every customer? Welcome to my world!!!!

We just tell them up front, if they don't like it.... They do have to do it thenmselves.

Hal,
Please go into why we have to mark up material and how we should arrive at our prices. It would be a big help to all of us.

Anybody try the labor rate calculator?

Pat

Pat, I'll attempt an limited explaination of why we have to markup, but hopefully someone will expand on it.

When I got started and was working by myself I used to never markup my materials. I had about $2000 in inventory on the truck alone. Some items sitting there for years before they got used. If I had that money invested in the stock market I could count on 8% per year. If you don't markup, you lose that at the least. Second, it takes time to purchase materials, stock them, inventory them, etc. Nobody pays you for that time. What if a part is bad or your helper fries a $50 1000watt dimmer while installing it. Is the customer going to pay your time while you drive to the supply house and either exchange it or have to purchase another out of your own pocket? I doubt it.

We actually buy many items so much cheaper than home centers sell them for, that our mark up makes our price only slightly higher, so we don't get many complaints.

Hot topic- Materials are marked up for all the reasons already listed- we all purchase quantities at advantageous times(low prices on emt, wire) for obvious reasons and hold stock, just like the retailers. The retailers also aren't sitting handily in the parking lot, like our vans; the retailers also won't return to repair under warranty,labor included. I will not compete with retailers or even supply houses, if it becomes an issue with a customer, we tell them either that we won't install materials we don't provide(except lamps), or we will not warranty their materials AT ALL.(they pay for all labor, travel, diagnostics) This shows them the value of our policy. I think the "how can I make a living at this" question gets easier as you develop faithful customers and more word-of-mouth referrals. Our experience is that when you come well recommended, the customer will respect your judgement.(Every satisfied customer will refer 4 people, every dissatisfied customer will refer 10) It took about 10 yrs to realize that I didn't always "win" when I competed for EVERY job that came by. But, to get back to markup, everyone knows that the retail market will sell items at below cost(loss leaders) to get you in the lines. Also using one large orange place as example, many manufacturers are building special low price/quality product lines specifically for this retailer. A large device manufacturer(starts with 'L') makes a particularly cr@ddy line of dimmers to compete pricewise. It took a while to identify these products as we came across them-item number was same with a letter added, but the performance was less than supply house identical line. And which would you use in your home- Homeline or QO?

Yes Box Store is higher prices then local supply house. As our accountant was trying to tell us, our rate needs to increase to meet expenses, he used the same format that Pat posted, www.nosecrets.com
On material he said we paid an average of 40% more for all our material at the Box store, he had all the receipts, from both Box, and local supply houses.

We mark-up Fixtures 30%, High ticket items 10 to 20% and switches outlets boxes, fittings 50 to 100% and these figures may be on the low side, as noted in other posts stocking material costs money, pick up the item, sort it, every time you move it, inv. the item, and pay the inv tax on it, add a small profit to it, it all adds up.

My last invoice for truck repairs, Spark plug $6.10 ea.
Hmmm, I guess i will bring my own spark plugs the next time. Think he will do the job?


[This message has been edited by LK (edited 08-28-2004).]

That is a great labor calculator tool. I need to raise my rates for sure. Thanks.

I try my best to include material and labor in one price for the whole job. That is the number that is inportant to the customer. Maybe some other states have to seperate material and labor for taxes.

The more you break down the prices the more the customer can pick your prices apart. A lot of people do it. Look at the $6 spark plug. If they just said $600 for a tune-up you would have nothing to say.

The customer does not allways know the current prices or the quality of materials you use.

If you put down 3/4 EMT $9 x 10=$90 it sounds high to even me as the price was $2 a stick not long ago. But $9 is about 50% mark-up of the prices today. I would say a number for the whole job.

On proposials I break it down by type of opening and other extra things like kitchen circuits. I'm starting to wish I just put "electrical as to print". In the end I might find one thing I forgot to count and put on the proposial. But the customer wants an exact count on everything and credits for anything less than on the proposial. So I loose both ways and waist time counting every thing in the end.

Tom

I am having trouble opening the calculator. It keeps wanting to download it to my Palm installation program. Any tips? I not exactly a PC whiz.

I've compared my local distributor and the box stores. The local is reasonably competitive (within 10%). I'll usually allow them up to 15% over the box before I purchase there. After all, while the hours are better, the box didn't extend me credit, won't deliver, and can't tell me war stories over the same crappy coffee!

e57, about the only thing I can suggest if the situation is that bad is not to do work there. That's a business decision as valid as any other.

We refuse to do work in the City of New York. It's not because of the money- that's actually very good, but because of the lack of parking, theft from trucks, union problems, etc. To me it's just not worth it and I do business in the smaller cities just to the north and the suburbs.

-Hal



[This message has been edited by hbiss (edited 08-28-2004).]

The compitition problem is wide spread over the whole Bay Area. Don't get me wrong, I am well aware of what mat mark-up is for, and how to work the numbers in my favor. Nor do I do any work for free or at a loss. And there is so much work out there, no lack of that, and lay in the center of it. My average commute to a job is 3 miles! I also have only ever taken a day off by choice, in the last ten years here!

The problem here is that the are TOO many of us here. We have EC's coming in from 80 miles around. Many with slave waged and unqualified labor, little over-head and desparation. (which is why they come in droves, there isn't much work where they are.) So there is a lot of under cutting, or rightly, "cut throat".

Another issue, is the customer base here is very well edjucated! The average new home owner goes directly into remodel mode on purchase, which is great! Bad part, they have a wealth of experianced freinds who've done the same for "How to wittle away at the cost." A lot of the older money here is very edjucated in contract negotiation, as most of thier mansions are in constant re-model, trying to out do each other.

Four months from now we are all due for a big shake up of the electrical trade! Due to a law about to take effect. It requires Certified Journeymen for any work over 100VA, for all employees of C-10's. No one is quite sure what will happen... I actually fight against and maintain a webpage about it, but for policital reasons don't talk about it here. (Not ECN policy to discuss politics here) In short, I don't like the law for its many loop-holes, but think in ideal is great. Anyway in four months our market is going to change possibly... Better? All the hacks are gone. Worse? We compete with landscapers for service upgrades. Who knows....

[This message has been edited by e57 (edited 08-29-2004).]

BigB,
Sorry, I'm no computer whiz either. Somebody help him out.
Everybody else,
Thanks so much for all the posts and help so far! All of your input has helped me tremendously. I'm sure you all have helped a lot of other guys struggling like me too.

I had about a 50 minute conversation with one of my clients about all this yesterday. He basically told me he didn't care what labor rate I charged, or what my mark-up was. He knew my work and my reputation in the area, and would gladly pay what I needed to keep me in business. He told me to raise my rates and see what happens. Worst case---lose all my customers and go out of business quickly instead of a long slow death by under charging.

Pat I tried that calculator, it is pretty cool! Rates were not far off.

BigB, try this to open it:

http://www.nosecrets.com/Labor%20Rate%20CalculatorHVAC.xls

[This message has been edited by e57 (edited 08-29-2004).]

BigB,
Did that link work? If it did, how do your current rates compare with what popped up on the calculator? Anywhere close?
Pat

Money is always a sore subject, but one I believe more of us in this industry who are in our own business could use a better education in.

My 2 cents

Free estimates:
They can use up to 2 weeks of your billable time per year,in some cases even more (that happens when you do not charge enough, so you keep going on estimates for more work).
I stopped doing free estimates when I got busier, I charged on average for a house estimate $500 and right away knew who the serious players were, not wasting any time with the people who were fishing for the lowest price.
Remember, that a lot of jobs come without the proper prints, so then you become the 'engineer'. Hmmm - do engineers work for free?

My prices went up, thereby immediately eliminating the poor paying customers who wasted too much of my time early on in business. A huge benifit is when you service these type of clientele, they always tell their 'rich' friends about your work. These people will rarely ask for a price, but demand service and do not want to hear any storie of why the job is not finished.


Working less hours for more money affords you the time and money to properly train your men, and offer better pay to keep the good men.

ITS A WIN WIN SITUATION!!!

The only problem is not enough of our industry has grasped this principle yet.

Oh one more benifit of making more money... when the job for an elderly couple comes along, you have the benefit of charging them less if charging them at all !!

Pierre

Pierre,
Excellent advice!!!!!!! Your "two cents" was worth at least a couple of bucks.

I looked at a job for a new GC the other day. His policy is that he buys all the light fixtures, thus giving him the profitable mark-up. Should I deal with him, or is this a strong indicator that he is going to find a thousand other ways to keep the profit for himself?

[This message has been edited by Pat@Amber (edited 08-31-2004).]

Going back to earlier mentions on this topic it might be possible that you are giong through typical growing pains of a small contractor,to nuch work for two guys but not enough for 3.if you can keep yourself and another busy fulltime you will make a good living.There comes a time when one has to decide whether he wants to expand his business or can afford to.Sometimes small contractors here in T.O. will borrow men from each other during these times.
GOOD LUCK

Hey Getelectric,
Thanks for posting again. I think you are probably right. The size of my company is perfectly wrong in just about every way.
Just as you said, too much work for 2, not enough for three. Then with trying to get the extra work for three, it just adds to the paperwork and office stuff so I don't have enough time to go out and work in the field anyway.
I'd love to expand enough to get out of the field (feeling old at 40), but that takes more money than I have right now. Credit is stretched pretty thin at the moment too.

Pat

No Pat it didn't work. For some reason my PDA program jumps in and takes that file and I can't view it. I'll get my son over here to figure it out. Thanks.
My operation is so small I track every dime on Quicken and so far I am doing all right as long as I stay away from the tract homes.
Brian

Well, shoot! Wednesday nights have been busy, and I miss the chat again every time I also tried to go to the nosecrets website, and it asks me for a user name and password. I sure don't remember visiting the site before, so I have no user name or password for it. Of course it won't let me access the site without them.

Good topic, by the way, for those of us who never make the Wed night wing-ding.

Won't let me in now either!

HVAC boys are on to us!

I did try the labor calculator. I set up my own a while back which is very similar to this. Will also say that I use Microsoft Excel for anything in my business which has anything to do with any number involved with my business. From bidding to invoicing to tracking overall profitability. I would say that the calculator is a good one but the numbers in blue must be adjusted to meet the real numbers involved with your own business situation or it has no meaning other than to give you some idea of what your expense catagories are. If you can't meet what the competition is charging in your area it my be a good time to take an honest look at your overhead and fixed expenses so that you can still make a profit. It took me a while to get over the pay check once a week mentality to looking at my pay check as a years worth of work and how many months I would need to work for free to pay all of the expenses and taxes for the year. But I sit down at the beginning of the tax year and look at just that.
The points made by all on material mark up has been great.
I mark up everything but I do not mark up everything at the same rate. I work with an engineer all of the time and I would not be competitive if I tried to mark up his fees say 50% and passed that on to the customer. Again I take a hard look at my volume and expense for the year, figure what I want to make, understanding my competitions rates, and make every penny I possibly can.

By the way I used to run a service dept and can not believe you guy's do not charge for travel or at least have a trip charge line on every invoice. I thought that was standard everywhere. Also when running service type work I never marked up standard supplies less than 20% and at that time I charged 4x journeymans rates for hourly charges to meet O&P.

I must agree that a trip charge should be added for service work. I charge from the time I leave the shop to the time I get back from the service call.(Port to Port)I also figure travel time into my job estimates...have to do it,I'm paying the guys to travel to the job,not to mention the gas,and wear and tear on the vechicle.If they don't like it ,tell em to bring the house to the shop for repair!!

shortcircuit

it's not how much you make, it's how much you keep.....and how you keep it

~quote from my accountant

~S~

I do charge $50 extra for the first hour but don't have the stones to ask the customer to pay for my ride back to the shop like Shortcircuit does. Gonna have to start cutting overhead somehow. Exel is a mystery to me, so I don't know how to track everyting using it. Maybe time for computer classes too. I did get back into the Nosecrets site today without a password. Did google search for main site index and went in from there.

Pat,
"Gonna have to start cutting overhead somehow."

Yup, just cut your overhead, give up some of those frills, like your insurance coverage, stop wasting money on truck maint, Find a cheap Accountant and do your own payroll, Cut back on ad's , print up a flyer and take it door to door, cancel your comp insurance, what's chances anyone will get hurt, Oh don't use call forwarding or any phone features they cost too much, just put an answering machine on line, customers like them.

If your rate is a little higher then others, it may be possible, you have some needed expenses, that they do not have, so compete on good service, not price.

It used to really bother me when a customer would question my price or tell me they could get it done cheaper. It doesn't any more. I have to make a profit. If I don't, I won't be in business at all. The "good" customers, the customers you want, will pay your price without question because they know you do quality work and if they have a problem on that installation or need something else, you will be there to help. The guy working for wages without insurance won't be there and probably will have a new phone number later.

You can,t take it as an insult when your prices are challenged, it is just business nothing else.how many of you whrn your vehicle breaks and you get a quote say theres no way,I will take it some place else,how can it cost that much,well just do the minimum to keep it running.I would bet more of us than you would like to admit,so what is the difference.

I guess I've been avoiding those challenges by keeping my prices lower than they need to be. Now, with everybody's help here, I feel like I am totally armed to meet any challenges to my prices with clear, logical and rational arguments. All your posts have also helped me justify raising my prices to myself---no matter what somebody else is charging. Thanks again everybody.

Anybody out there working for a residential service company that works out of a flat rate pricing book?

Pat

Pat,
Are you asking if there is a flat rate calculator or book for residential?
I will more than likely catch *#@& for this but Home Depot gives away a CD that has their pricing in it as well as a little estimating package that gives labor hours to install any given item. You can adjust the labor dollars, taxes and mark-up. I think it is one of the best free estimating software packages out there. I don't use it since it does not fit my end of the electrical biz but I did find it to be very close to the labor hours I used when estimating commercial work.

[This message has been edited by kentvw (edited 09-03-2004).]

We don't quote residential, except for new construction. Too many surprises when you get into what the "previous owner" did; and, they try very hard not to understand that a quote to change the fixture doesn't include relocating the light.

I'll look for that software at H. Depot thanks.
I know that some of the bigger residential service shops (read franchises) have their own flat rate pricing books/software that include the vast majority of situations you will find in most homes. I believe these companies charge a service call fee to show up and diagnose the problem----THEN give the customer the flate rate prices to fix or replace the problems they found. If the customer says the prices are too high, they collect their service call fee and away they go. Close rates for this type of service are around 80-90%--- Meaning that the customer says go ahead and fix the problem while you are here 80-90% of the time.
The books/software they use are based on the material costs and average labor time to perform any given task. You just program your own mark-up % and labor rate into the computer and it gives you the prices. You avoid complaints from the clock watchers about hourly rates because the customer really doesn't know what labor rate you are using, and doesn't feel he is being charged by the minute.
At the business chat last Wed. night, somebody mentioned that the company he/she works for calculates it's flat rate prices at $275 per hour for labor. That would be $2,200 per eight hour day (assuming that all 8 hours are billable). Not bad, right?
I have to assume that there are separate line items for replacing a light and MOVING a light. Those darn customers can be very confused when they want to be, can't they!

Pat

sooner or later HD inspectors will probably be available too, just like insurance companies that own the facilities and the doctors these days

some call this the invisible hand of capatalism, or that which sets the tone for all whom constitute supply / demand....

all they really need do is lobby the NEC, and we'll all end up with orange tool belts...

~S~

There was an interesting sign at my supplier that showed an ad from Home Depot regarding electrical installations. My supplier's comment was that they would never compete with us for business.

Dave

[This message has been edited by Dave55 (edited 09-04-2004).]

We avoid the mileage or trip charge by charging $125 for the first hour for one man, and $175 for two men. These are minimum charges whether we are there for 5 minutes or the full hour. We make it clear that we do not charge a trip or mileage charge unless the travel time is over 45 minutes one way. More than that and the excess time is added to the invoice.

-Hal

[This message has been edited by hbiss (edited 09-04-2004).]

Ok, I am new and you guys are very funny. As with any new business there are several ways to operate and all of them have learning curves. I think that most of us who started out young in business wanted to grow but, being young and dumb never let the business grow in time by staying fast to one operations. Everyone starts out being nice and reduceing bids until you can't buy food or gas or pay your supplier. If your new new construction but are ready to add service work you will need to hire at least two laborers for your lead techs in the new construction. Their wages are set at the minmum wage for your area and you do not have to work them every day. If at possible you should start and do the service work until you can establish annual contracts then hire a lead and laborer for that work. Once that is established you you be funn-in and joking with your suppliers and customers out on the lake.

Just a quick quote from the August issue of EC&M Magazine:

Only 23% of small independent companies are still in business after their 5th year and only 18% are still around after 10 years.

Kinda stupid to be charging what everybody else is charging like I have been. Everybody else is going out of business!!!!!!!!!!!