I went to a "seminar" today given by Electrical Success International. That's all I really want to say about it unless anyone has heard of this and wants to give and opinion/feedback/thoughts, etc.

Same folks that provide another Electricians forum of sorts, I think, at: http://www.electricianboard.com/forum/default.asp. That forum used to be more active but has slowed over the last several months.

Radar

Try this discussion from ElectricalKnowledge forum.
http://www.electricalknowledge.com/forum/topic.asp?TOPIC_ID=934

How about searching this site? We have had a number of discussions about ESI, and a related operation, "Plumbers' Success International."

If you're going to operate a business, you have to exercise your own "due dilligence."

ESI stands for Electricians Success International. Are these the people that tell you to charge an elderly person $500 to change out a 20 amp fuse on an emergency call? Financial success isn't always sucess on a moral level.

You're the one that went to the seminar, Happi_Man. How was your experience?

Dave

IMHO,

We have debated ESI and the "Flat-Rate" system here.
Some guys believe in it, some curse it.
Be warned...It can get as hot as some of the other volatile subjects.

Get out your checkbook. Guess who will be the Happi_Man.

How I understand Flat Rate is there is no way i can run around town for 65.00 per hour doing these small Jobs .

That rate is all I can get at the best of times. Theres just no way when a customer asks how much per hour and I say a min 100/hr .

My overhead costs per hour is over 150.00 per hour based on a 4 hour productive day doing service work.

If i can get 600.00 in 6 hours great then my overhead is covered for the day that includes my employee and paying my self for 30.00 per hour in that 4 hour period. So now if i work 6 hours per day i am making less than 30.00 per hr.

I need to learn how to convince customers that i need 100.00 per hour to cover that extensive overhead items list that ALine posted, I guess carrying it with me will help.



[This message has been edited by dougwells (edited 01-14-2006).]

How I understand Flat Rate is there is no way i can run around town for 65.00 per hour doing these small Jobs .

That rate is all I can get at the best of times. Theres just no way when a customer asks how much per hour and I say a min 100/hr .

My overhead costs per hour is over 150.00 per hour based on a 4 hour productive day doing service work.

If i can get 600.00 in 6 hours great then my overhead is covered for the day that includes my employee and paying my self for 30.00 per hour in that 4 hour period. So now if i work 6 hours per day i am making less than 30.00 per hr.

I need to learn how to convince customers that i need 100.00 per hour to cover that extensive overhead items list that ALine posted, I guess carrying it with me will help.



[This message has been edited by dougwells (edited 01-14-2006).]

doug it's simple. you don't quote an hourly rate.

if you know that you are losing money at $65/hr, yet continue to do it, because the customer won't pay more, go work for someone else. At least then you won't lose money.

Flat rate is not just pricing, it involves a change of corporate culture. But when done properly, you sell the job, not the hourly rate. By selling the job, the customer doesn't have to guess how long it will take or what the total price will be. You will tell them before you start.

You'd be surprised at how someone who claims $65/hr is extremely expensive, will ok $400 for a job that will take you 2 hrs.

It does work. It'll work better when more guys see it and get on board. We should all look to raise ourselves up, rather than look to pull everyone else down. (note:this last comment is not directed at you, it's a general statement regarding the state of our industry.)

Thanks Mahlere


I am not quoting my hourly price over the phone anymore. I understand exactly what your saying. And I do hope others in my area get on Board and see the writing on the wall also.

The way i see it, if you are trying to start or build your business, it will require an investment, if you feel you have a good business background, or have someone in the business, with a proven success record, then you may not need a support company like ESI, or any other support services, however if you have excellant trade skills, and little, or no business know how, then the support services may be worth the investment, i would check, any company offering this type of service, to be sure, they can deliver what they promise.

[This message has been edited by LK (edited 01-14-2006).]

Yeah, ESI = $20K. I say "no way, Jose!"

there is no real magic bullet in any of these companies. what there is, however, is an education.

how much time and money will it take you to learn whats necessary to run a successful business on your own? I'd say about 3-5 yrs and probably well over $100k in lost revenue.

how many years will you barely get by, or worse, lose money, until you learn some of the principles taught by ESI, Nexstar, etc?

It's simply an education in running a service contracting business. If you want to just do new construction, probably won't help. If you want to run service, I guarantee you will learn ideas that will make you $50,000 in your 1st year alone.

It's a relatively cheap price for the education. People pay $100K+ for college in order to go into other industries. For a small tuition, you could create a life for your family that is better than you ever dreamed.

For the record, we are not an ESI or Nexstar company, however we run the same system. And yes, I paid for my education. Saved me a ton of time and money. I prefer to learn off others mistakes, rather than my own.

Doug,

Try this for the next 2 weeks. On a service call or a small install that you would normally quote a T&M price for.

Use your experience to determine approx. how long it will take you. Then use the $150 figure that you determined it would take to cover your costs and make a profit.

give the customer a complete price of the time @$150/billable hr plus the material with whatever markup you want.

for example. customer wants you to extend a circuit and install a receptacle. You figure it will take you 3 hrs and material is $20.

let's double material, since it's not alot, and get our labor.

3*150=450
material = 40

quote the price of 490. you'll get it. You just need to explain that it's a fixed price. no guessing. no worrying on their part over how long it takes you, etc.

try this for 2 weeks, you will lose some jobs, but I bet you actually make more money overall.

worst case scenerio, in 2 weeks, you go back to losing money on every job but making it up in volume.

it's not easy. but final question:

if you could double your rate, but lose 40% of your customers, would you do it?

What I took from it was a lot of what mahlere said. I just wasn't sure if it was a scam or whatever. There was a really overwhelming pressure to drop a couple thousand bucks without even thinking about it.

But the "philosphy" if you will made sense to me. I don't think its about ripping people off, but it is about the average homeowner not really understanding what it takes for us to make money in our business. So, yeah, $150/hr sounds outrageous to most people. You bypass that, sell them the value of your company and the work that you do, give them a flat rate price that they know will not change and most people will be happy with that. The stressful part about callign service people is that you have no idea what its going to cost and you always figure it will be higher than what you were quoted anyway. People don't want that stress.

We do spend a lot of time in this industry lowballing each other, which might get you the job instead of me but you might have just devalued us all as an industry. And we all work way too hard and eat way too much aspirin to drag ourselves down any lower. A lot of times (and this might be only my feelings) GCs and home builders don't really have any respect for us as it is. They think we're uneducated and ignorant and basing our prices on nothing or trying to rip them off (guilty conscience?). I think a large part of it is because we are putting our energy into "getting the job" as opposed to "selling the job" at a price that will allow us some profit.

I don't know. It was kind of a mindblowing experience yesterday but the good thing about it, regardless was that it got me fired up about a business that I have been really down on lately. I started feeling like all my hard work was for nothing and at the very least that "seminar" rejuvenated me. I read between the lines and realized that I can take the genereal info they gave me just then and improve my business.

Of course, I'll check back in 6 months and let yal know how its going


[This message has been edited by Happi_Man (edited 01-14-2006).]

happi-man,

look into nexstar as well. i've been told that they run a more above board (might not be the right term) ship. They apparently will give you answers and tell you why you should give them money. But I've never talked to either company, so it's only hearsay on how they specifically operate.

good luck

mahlere

"if you could double your rate, but lose 40% of your customers, would you do it?"

Yes doubling my rate and losing 40 percent or working half the time would be very easy to accept

doug,

that tells me you get it. seriously look into flat rate. you will double your rate, but you'll lose less than 40% of your customers. you'll definately come out ahead.

good luck.

I am in New Jersey, so contract, or as some are calling it flat rate pricing, is nothing new to us, the laws here require us to have a contract, for all our work with consumers, with commercial or industrial we can do either contract or T&M, the service end of electrical work, requires a higher rate to support the cost of doing service type jobs, unlike planned work, service has schedule problems, and non billed hours, and many other traps, that if not properly addressed, will cause losses, rather then profits, i think we all tried to bill out service work, at hourly rates, and never realized we were loosing money, because most of us, never tracked jobs, or did actual reports, to see if we made a profit on a job.

The customers you will loose, by charging a rate that will enable you to stay in business, are not the ones you need, you are not gouging the customer, only asking them to pay, your operating and overhead, plus a decent wage, to provide them with the best services, to resolve their problem.

Just one more thing, the next time you take your truck in for a repair, when they present you with the bill, tell them you will be right back, go to the bank, and ask the teller to give you that amount in one dollar bills, then go back to the repair shop, and pay the bill, by counting out each dollar bill, this may help you better understand the cost of service work, and remember you brought the truck there, he did not come to you.


[This message has been edited by LK (edited 01-15-2006).]

LK, I agree. Just wish more guys around here would see it that way.

But the key to flat rate and correct pricing, is offering the service. if you don't offer the service the price you're charging, then there is a problem.

Sure, everything from how you respond to their call, to how you preform your work, all has to be delivered as promised.

Paul,Roger or Scott,
Couild this thread be moved to the Business Area?.

I plan on going into my own business in a few years. The discussion here has been priceless. Thanks fella's.

I agree Mike, this is a Business Area subject.

Mike and Les, it has been moved.
https://www.electrical-contractor.net/ubb/Forum20/HTML/000343.html

Roger