just got my copy anybody else use it and any tips?

Do a search, and check out some of the past postings, there were quite a few discussions on flat rate.

So what do you think of the price? Are they resonable? I've heard (well read) about $5k service changes, is that really the case? If it is, what does it include? 200 amp changes here (outside of baltimore) go for about $2100.

Can this book be purchased w/o joining ESI?

Rich

$5000 includes everything a $2100 200 amp service change does plus neat, clean, and fully stocked vans. Neat well trained and uniformed employees, phones answered 24 hours a day, and an ironclad guarantee.
Who charges $2100 for a 200 amp service change outside of Baltimore? You or everone else? If it's you why don't you try charging $4800 for a 200 amp service? Don't do what everyone else does, do it better.
People shop at Wal Mart all the time but sometimes those same people will shop at Sachs 5th Ave.

Bigventure,

Could you justify a $5000 service change for me. Let's say a 200 amp overhead service in cable. The average overhead will have about 30' of of 4/0 Al. Now I know what it costs in material, and I know how long it takes, so could you please explain how you think it is reasonable to charge $5000 for the amount of work that this upgrade entails. Why don't you break out the costs of material including panel, breakers, SE cable, hours of labor, $ per hour of labor. I think you will find that $5000 is i little too much.

Other areas of the country have different requirements from the POCO. Some require meter/main which require more material plus more time in termination. That is not required here. We don't even terminate (or change for that matter) the meter socket. That is done by the POCO.

By the way, do you get $4800 for each 200 amp service you do?

Some companies run at a loss, some at a small profit & some at a large profit. When you have your own business you get to make those big decisions. He doesn't have to justify anything to you.

Dave

Thanks for the cover Dave.
WOW! The last time I was asked to justify something, I was talking to my WIFE.
Please refer back to my last post. Re read the line that states " Don't do what everyone else does, do it better.
This is not about price but about business. You can work in the trench's or you can stand on the top of the trench and watch the people in the trench work for you.
Yes, if they are standard we get $4765 for every 200 amp service.

Congratulations on your pricing. Perhaps justify was the wrong word, how about enlighten.
I'm not trying to offend, but do you think that there is a limit to your value? Unless it is significantly different there in Mass. I estimate that you would be charging about $514/hr after material. Does that sound about right? (8 hours work including setup, cleanup, collection; $650 material/permit)

If your service changes take 2 men 8 hours, now that would be a different story.

Without giving the exact number, what range in $/hr is your pricing based on?

Thanks,

Rich

George Carlon has a routine about driving....

Anyone who drives slower than you is an idiot and anyone who drives faster than you is a maniac.

As electrical contractors we are sometimes the same way when viewing other ECs prices. I worked at a loss last year and at a profit this year. Guess which one I want to repeat. My wife & I share the expense for health insurance coverage and I have an in-home office. I can't see how anyone could have a business at a lower cost than me, but I know I'm not the cheapest EC around.

Profit will let you achieve your financial goals.

Dave

Go over to the nearest new car lot. Take a look at the prices charged for vehicles that used to hover around $3,500 when I was a teenager. Justify that. Then go for a drive in one to the best neighborhood in your city. Check out the prices asked for purchasing one of those pricey homes. In the millions. Justify that. Get your wife pregnant. The doctor who delivers the baby will spend a grand total of about 5 actual minutes average in the delivery room, nurses do all the real work, he gets about $5,000 for it. Justify that. Drive over to a Tom Cruise movie. He gets about $20 million to star in it. Justify that. Why should electrical contractors have to feel that they need to provide work to the public at the lowest possible cost in order to "justify" themselves?

OK...Let's have a little mercy on the New Guy.

200-amp services aren't going for $2100 REW, that's what you're selling them for. If you could sell them for $3000 and provide a higher level of service that cost you $200...wouldn't that be better.

You may fear that you'll be flooded with price objections, but I'll bet bigventure's employees get the price objection less often than you do.

Did you ever pay more for better service, or do you always get the cheapest. There are many people that will pay more than the minimum for a better experience. Hang around, check out the archives & maybe we can encouraqe guys like bigventure to post more often.

I'd love to be on a forum where ten guys are posting comments about their multi-million dollar contracting businesses. At the moment I know two or three.

Dave

PS There are MacDonald & WalMart business models, and there are Starbucks business models. I'm interested in both.

"Why should electrical contractors have to feel that they need to provide work to the public at the lowest possible cost in order to "justify" themselves?"

Yes, why do they, a good question. Pricing will vary across the country, from town to town, and state to state they will differ.
What other business trades do is they try to make money on their sales, equipment is usually part of their profit center, EC's seem to give away equipment profit, again why do they, my view is they have a good understanding of the trade, and just lack some business practices.

REW, update your profile, or send me an email about this.

DNK,

Don't worry, i don't think he is going to drink the Kool Aid!

that's great LK.

big venture and tiger, keep it up.

rew - you can lead the way or try to hold on while you get run over. it's always easier to stay in the muck and pull people back down to your level, than it is to raise yourself up above it.

good luck.

[This message has been edited by mahlere (edited 11-16-2006).]

[This message has been edited by mahlere (edited 11-16-2006).]

Well, mahlere made a statement last year, that unless we changed our ways of operating, the big guys were going to eat our lunch, and he was correct, they moved in and they took over the marketing, by using in your face ad's, quick response, and up front prices, so far about 6 Local EC's have left the business, and 2 more big guys came in, and they are busy 24/7 with prices twice what we were charging, and they are hiring, and putting on trucks, while the others are laying off and parking trucks, so the whole idea of you can't get decent pricing, for jobs, is not a fact, they charge more and are growing.

LK, don't use logic against me

I'm going to school and in a few more years I'll be in business for myself. I do nice, clean work and take pride in what I do. I also want to make an abundance of money, watch my business grow, make enough to put a kid through college and have some leftover for retirement.

How do I go about charging $4k for a 200 amp service upgrade when all the others doing the same work will be charging nearly 50% less?

I have a well-groomed appearence, am honest with customers, and arrive on-time to jobs. Surely, an extra two grand in the price can't be justified by including a new GFCI receptacle and overhead pullchain light above the panel, can it?

How can Starbucks justify selling coffee for $4 when it has a little whipped cream on top? How can Panera bread justify a $7 sandwich when I can get a sandwich, fries & drink for $4 at MacDonalds? A can of Coke costs 50 cents, how can a restaurant justify selling it for $1.50?

A Jamba Juice was being opened nearby recently. I knew I'd probably never go in there. Places like that are in & out all the time. When it opened there was a crowd of young women. My daughter was all excited. Smoothies, I guess.

There's a market for anything. If you can build a repeatable client base, you can make a business of it. It's not about the steak...it's about the sizzle. There are plenty of qualified electricians around. Some of them are very busy & some are waiting for the phone to ring. Usually the difference isn't in craftsmanship, it's in marketing.

Dave

"Surely, an extra two grand in the price can't be justified by including a new GFCI receptacle and overhead pullchain light above the panel, can it?"

justified, does the supply house that makes a 100% on a loadcenter sale have to justify the price, or the plumbing company that marks up a furnace 100% have to justify it, or every other business that adds cost of living increases, do they have to justify the increases or do they just pass the increases on, an average 200Amp service upgrade was $10 an amp in 1987, somewhere around 2,000 on average, some a little more and some a little less, and here we are in 2006 and some are doing 200Amp services for the same or less. Now compare that with the plumbers, an average furnace install in 87 was around $2900 plus or minus, and today the same installation is around $5,600 to 7,000 for the same job, it all is justified by cost increases in material, labor, and cost of operating a business, remenber the next time you pay your phome bill have them justify the bill, and while you at it get the insurance company, to justify their bill, after all they passed increases on to you. I would not say charge $5000 for a 200Amp standard OH install, but make sure you have all your costs covered, with an expected profit.

That word justify keeps on comming up.
Do you know that if Starbucks sold as much coffee as Exxon sold oil Starbucks would have made as much profit as Exxon.
This like Tiger said is about service and marketing.
Who says you can't charge $5000 for a 200 amp service? What's stopping you? Yourself?
The big guys are comming in and taking over. Many small contractors are falling prey to them. I was not going to let that happen to my company. So they became my competition. I didn't join them I compete with them.
I started out like everyone else but now make on average of $300,000 to $360,000 per truck per year.
It's all out there for anyone that wants it. You just have to look and ask the right people.
Some will look at this and say that's crazy i'm happy making $80,000 a year working 75 hours a week and others will say HEY! I want a piece of that pie, and a mighty tasty pie it is.
I'm leaving for vacation on Monday and I'll be back the following Monday. My company will run fine without me there.
Success is sweet. I know "define success."

I want some pie! I just ordered The National Estimator and it should be here any day. Does this book help with the flat rates or is it for average pricing? I would assume to do the flat rating you need to have a number of techs on the road. Is it possible to start flat rating for just myself and an apprentice?

Anybody know how much it costs to join ESI?
Sure would be nice to make steady profits for a change.

National Estimator will not help for flat rate pricing on service work.
Flat rate will work for you and a apprentice. You must know your bottom line and never have a ratio greater than 32% between payroll and gross income.
Establish what it would cost your company to install a GFCI outlet on the outside of a residance using rx and 55 feet from the loadcenter. Take that cost and add 65%. There is your flat rate for this instalation for your company. Now make up a spread sheet of most common jobs and put a price next to them. Carry this sheet with you when you go to do a job and use it to give your customer a price before you start the job. As soon as someone calls you they are your customer you just have to make sure they stay your customer.
Of course it's more complicated than that but this is a general idea.
Bill

Justified?

Why??

Why should oil companies have to justify $3.50/gal, and $30 Billion in profits a quarter?

Why should health care companies justify raising rates and dropping coverages?

Why should Enron justify anything?

It's all business, right?

you can lead the way or try to hold on while you get run over. it's always easier to stay in the muck and pull people back down to your level, than it is to raise yourself up above it.

here is the deal, I have absolutely no say over whether or not the gas companies charge $4/gal, or health insurance costs me $14,000/yr (which it does btw) or my property taxes are $15,000/yr, etc.

The only thing I can control is that I make enough money to pay these prices. So, I will charge accordingly.

I need $7/hr for a 40 hr week just to cover my healthcare.

In addition, please do not forget 1 huge overriding factor when it comes to electrical work (particularly Service Changes)

If we do it right, it will not need to be done again in our lifetime.

Think about that. A plumber can change the boiler/water heater in the same house 3 times in their career.

HVAC can change the air handler/AC condensor in the same house 2-3 times in their career.

We get 1 shot to change the service. If done right, it will last 50+ yrs.

Think about that. There is a tremendous amount of value in that fact. We just have too many "electricians" who don't grasp concepts like that.

If your career lasts longer than 50 yrs, you either love what you are doing so it's not a job, or you never charged enough money and you are forced to work.



[This message has been edited by mahlere (edited 11-17-2006).]

man i never thought this thread would bring so much...... our esi flat rate was $500 because we already have the plumbing and hvac versions some things look hight but if you know your margins, including overhead and bennys it is the way to go ...

think about it you charge a diagnostic fee here its$80 get there find the problem and give the customer a price to fix it.


when you go to a restaurant, the steak costs the same if it takes 1 hr or 5 min to cook and you know the price up front... what an awesome idea.


Denny

Tiger said it best:

Prices can not be fixed, free and open trade is how it works, everyones operating costs will be different, and the wealth, or lack of wealth in the local that they are working in, is another factor, not everyone will be riding the same wave.

Are they our only 2 options?

Who made up them rules?



Everyone does.

But instead of fighting over a piece of the pie, make your own, and enjoy the whole thing.

I got a call last night from a homeowner who needed a service upgrade. He had a fried leg in the meter socket and the power company gave him 48 hours to get the upgrade done.

I went out this morning and found out the homeowner just bought the place and it's under warranty. I would need to call the bank to get the price authorized.

It's an overhead service & would need to be upgraded to meet the current standards of the power company and current codes.

That means a 2in. Rigid Steel conduit mast that penetrates the roof, ground ran to within 5ft. of main water line, ground rod & main breaker needs to be outside. Neutrals & grounds are currently bonded in the interior panel which is an old federal pacific panel. This would all have to be corrected and new SER cable ran to the panel about 20ft. The meter will have to be relocated from it's current position about 5ft. away. The old service will need to be removed.

I priced this at $2,500 and planned on replacing the federal pacific panel. I called the bank and gave them my price. He said the electrician they normally use could not do the job until tuesday so that's why they called me. He said my price was way too high and that their electrician was going to do this job for $900.

I explained he must not be planning on doing anything on the inside of the home and that he must be planning on just installing the meter main on the outside. I explained that if he doesn't make changes on the inside as well, the installation will not meet code.

I can't imagine even doing just the meter main on the outside for $900. He's still has to run a ground to the water line thats about 75ft. away & drive at least one ground rod & the only place to drive one without drilling a hole through the conctrete driveway is about 20ft. away.

He has to coordinate with the power company and the city inspector. Here the power company has to cut the power and the inspector has to call it in to have it hooked back up. He will need to go to the city offices and pull the permit.

I told the homeowner I wished him luck because for $900 I can imagine what kind of job he'll get. I'm sure they'll install the minimum 100amp service. I always upgrade to a larger service & put in a larger than necessary panel so they'll have plenty of capacity to add central air, a hot tub, etc.

I've gone out to many peoples homes that want a hot tub installed or something else and when I tell them the panel is full or the service is too small they often say; I just had this all replaced not too long ago.

$900 for a service upgrade?
I'd like to see someone justify that.

I'm going to have to go visit this installation to see what kind of fool would do this and what a $900 installation looks like.

I thought my price was low.


[This message has been edited by A-Line (edited 11-17-2006).]

[This message has been edited by A-Line (edited 11-17-2006).]

Wow, I didn't expect so much passion. but with all of the posts, only one of my queries has be answered, and that in a roundabout way. The ESI "book" is not for sale to anyone else but ESI members. Perhaps Denny you have obtained a different pricing manual?

Now if I may take a few minutes to reply directly to some of the posts. And this is all (mostly) in jest:

Tiger: Thank you kindly for trying to rip me a new one, and then espouse mercy on my poor uneducated soul.

Bigventure: The underlying hostility in this thread was brought on by my request for yout to "justify" and then "enlighten" me on your pricing practices. It is true that you can charge whatever you want "just because you can", but that is hardly a good reason to. Let me ask you, did you ever, even once, complain about the rising cost of fuel or criticize the oil companies for their record breaking (and absurd) profit? If not, you will surely be nominated for Sainthood, one day (hopefully a long time from now), but if you did, your pricing strategy and your attack on me is hypocritical. You have not given any clues as to whether I was correct in my estimation of you hourly rate for a 200 amp service. If I am way off base (you won't tell me), I apologize, but if I'm not, what I want to know, is that your rate for other work? Based on your truck revenue of upto $365,000/yr, that averages to a little over $200/hr. Why would your service change rate be so much higher? Why stop at $4800? Surely someone will pay $10K. But does that make it reasonable? If gas went to $8/gal we would still pay for it but does that make it reasonable?

As for the prices of service changes here, yes they are $2100. I encounter this every day. Please note that I said "encounter" and not compete with. As a member of ESI, I don't consider those contractors my competiton. I am in a different league than those contractors are. I do understand my cost of providing the services that we do. We do offer the "iron clad" warranty (no one has ever take full advantage of our 100% money back guaranty, becuase of our excellent customer service). We are uniformed, drug tested, background checked, trained and drive the some of the nicest trucks in the area. (see the bottom of the page.) Our 200 amp overhead uprgrade price is usually a between $2800 and $3k depending on the grounding necessary and permitting process. With a total of 8 hours involved, the final hourly rate and profit fit well within our business plan.

Mahlere: You are truely a "business guru" you too bigventure

Fredercburnisky: It is very easy to find out how much it will make (cost) you to join ESI... give them a call 800.505.8885. Without trying to start that debate, It is a good system for some, and not for others. I for one enjoy it and feel privliged to be a member.
http://www.connectionelectric.com/images///DSCN0751.JPG
http://www.connectionelectric.com/images///DSCN0756.JPG

[This message has been edited by REW (edited 11-17-2006).]

[This message has been edited by REW (edited 11-17-2006).]

Dnkldorf


Are you sure you want me to send you and email? You haven't had a lot of nice things to say about flat rate pricing.

Rich

REW thanks for the Pics of your Van...


One day i would like to have the Same . I would be proud to have a van like that pulling up in the Better neighborhoods
I am sure anyone in the immediate area that sees that van and its Electrician pulling out protective mats and a shop vac ... well dressed they are going to look and take note.

Rich, I was going to send you a link to Holts site, for more views on pricing techniques, and varying opinions.

I don't know if that was appropriate or not, so I thought it should be left off the board.

As for my views on flat rate?

It is not my intention of plundering any one system, and my views may not be the main stream here. I post thoughts and counter thoughts, with the hope that whoever reads them sees 2 or more options, and the good as well as the bad with any one system. And I have a real problem with the thought that anyone not using a "flat rate" system is somehow "dragging the industry down".

Any system done ethically, will work.

It's keeping it ethical, that seems to be the problem.

With thoughts like,
Take the customer for everything, because your going to do work for them once in your lifetime.
And,
I love stupid customers who don't know enough to get 3 estimates.
And
Take them for as much as you can because they can go get more.

You know what I am talking about.

So as for not liking some of the "flat rate" experts here.
I'll opt out, of being in your club.

But remmember, not all of the "flat raters" think this way.
Some are very good. And ethical.
We just need more of them to join this site.

PLEASE lets keep things on a positive note
and a GOING FORWARD type posts
Thanks

Thanks for the compliment about the vans.

I did'nt mean to mislead anyone, (well maybe a little), but my comments stand as my opinion. Charge what you want. I don't care. I'm not jealous or angry, but I do think that rate (if it is actually about $500/hr) is absurd.

And Mahlere, thanks for the "loveable village dolt" comment

Wait till you here about the one guy, that dealt with the lady and the $1K/hr, and the bragging about it.

BTW, Welcome..
Hope you stay around...

(and don't drink the Kool-aid)
Les, I got to ask?
Email me what this means.

They are nice trucks.

[This message has been edited by Dnkldorf (edited 11-17-2006).]

DNK,

some of it is people just trying to mess with you.

I do not want to lock this thread like i have had to do to other ESI threads
WARNING # 2 and yeah last one.

I don't understand why everyone gets on ESI. They are just another company. Like evrey other company they are out to make a buck. Some who have joined have made it well other have not ( see Responsive Electric in Mass.) We all have to take notice and compete with them just like Starbucks does with Dunkin Donuts.

I would imagine that those joining ESI know full well what they are paying for. For me, I was not educated in business, so this is a helping hand.

How many people have written a business plan from scratch. I mean really from scratch without using a model or template of some sort. ESI along with other groups like it are a template of sorts, for those who need or desire it. Sure you can get business plan template online for free or low cost, but you can also get more detailed templates for a higher cost.

ESI...great for some, not for others, but there is no need to bash them for helping and making money at the same time. Groups like this are slowly starting to educate us loveable dolts.

sounds like something i would say, but not ringing a bell. must've been a really good comment

As for service pricing- Just did a 100A service change. Emergency. Neighbor cut down a tree limb, took out a POCO line and caused 5 neighbors to have their service burn up.

We installed a new PVC and copper riser, meter pan, 100A sq d QO panel (house did not in any way shape or form warrant an upgrade. they will never use what they have)new grounding etc.

Here is what the job took.

estimate - 1.5 hrs
job - 2 men 10 hour day
meet with inspector, poco and get power turned on, phone calls, general admin - 5 hrs

These are real numbers that include travel, parts, men's breaks, etc.

So we have a total of 26.5 man hours. Our target is $1000 day (or $125/hr for an 8 hr day)

So do the math here 26.5 x $125 = $3321.00 not including material.

Total material was about $350.

We charged $3500 for the service. Is that too much?

That 26.5 hrs was a little higher than normal due to this particular town and power companies procedures, be we average 23 man hours per service when everything is added up.

My view on this is, ESI provides a service, you may want to think of them as the business school for electricians, they provide proven marketing methods, and other business support services, for good electricians that know their trade, but lack the business building know how, this may be the best option, for someone that wants to grow.

An electrician may be tired of working 14 to 16 hours a day 6 or 7 days a week, at medium wages, with no benifits, and nothing put away for retirement, working just to stay in business, for this type of electrician, a support company may be the answer, it may not be for everyone.

On the amount a service type business charges, you can bet the largest number of them are not gouging anyone, their overhead and operating expenses are higher then a scheduled job shop.




[This message has been edited by LK (edited 11-20-2006).]

Can I get a breakdown mahlere? Actually, I really appreciate the breakdown. I spend two days on a service, and the first day is usually a long one. Many services here have conduit which need to be rerouted/replaced into the new panel. With BX I run the short ones into J box(es) and pipe into the new panel. Sometimes I run everything through conduit. I never reuse old grounding...it all takes time. Those look like good numbers from someone that keeps good records. Thanks.

Dave

oh, i'm broken down alright....

Now that is what I was asking for!!. This makes perfect sense now. Just as I was asking, at least for some, it the man hours affecting the price. A service here is a one man one day job. Total-start to finish, no need to meet the inspector, the homeowner can let him in. With that amount of hours, $5k is perfectly reasonable. If you were to re-read my posts, this is what I was trying to clarify-the difference between the amount of work here, and in other places. That does "justify" the cost.

glad to be of service. just don't discount the once in a lifetime factor.

also, i have said on occasion to get all your customers money, so I believe I was quoted in an earlier post (out of context I might add)

What I mean when I say it is this...

That customer has a job, they will get another paycheck next week from that job. I will not get a paycheck unless I convince that customer to give me money. I firmly believe that in residential service you have to look for everything that customer legitimately needs and bring it to their attention. If you don't you are doing them a tremendous disservice (how would you like the oil change guy who didn't tell you that your break line was cut?)

You need to find ways to get their money into your pocket. Not by raping them for 1 job, but by finding 5 more while you are there that they need done.

Don't fool yourself, once you go into business, you are no longer an electrician, you are a salesman. whether you like it or not.

"I firmly believe that in residential service you have to look for everything that customer legitimately needs and bring it to their attention. If you don't you are doing them a tremendous disservice (how would you like the oil change guy who didn't tell you that your break line was cut?)"

This is where the difference is, when i bring my truck in for repair, i want the mechanic to bring my attention to needed repairs, i don't want to be stuck on a country road at 2:00AM with no one around, as it turn out i found a good repair shop, and he happens to charge the highest price in town, and has to turn work away, there are 5 other shops in town, all looking for work, their prices are low, and so is the service they give, no one forces customers to go there, they just know he takes care of his customers, he provides good service, and has good mechanics, because he can train them, and pay them a living wage with benifits.

You can't run an efficent business without increased overhead, anyone looking at price only, and not what they will receive for it, is sure to come out on the loosing end.

les, quick update. inspector was super nice once we met and talked. no problems. go figure....

Mahlere, 2-men, 10 hours to do a 100 amp service upgrade? IMO that's taking a bit too long. If the panel has less than 20 ckt's I know from experience that I could do one by myself in less than 8, including upgrades to required grounding and bonding.

shock, I can too. good luck with most employees.

But that 10 hours is this.

A mechanic and helper.
picking up the material
traveling to the site
stopping for coffee and bagel on the way
set up
installation
morning coffee break
lunch
afternoon coffee break
unknown # cigarette breaks
clean up
feet dragging
drive back to shop

now, I have 2 options. brow beat my techs and constantly replace them. or realize that it's fairly typical behavior and deal with it.

I've stated many times, the hardest transition is going from doing the work yourself, to hiring help, and adjusting your price for it.

Mahlere,

Your point about a service done correctly is a once in a lifetime expense for most homeowners is well taken. I will use that as a tool to increase the value of our services, and perhaps increase our revenue slightly.

You are absolutely correct in bringing all safety issues or code violations to the customer's attention. When you go to the doctor for a broken toe, why do you think they take your blood pressure and check your heart. It is to get an idea of the overall condition of your body. If I went in for a broken toe, I would want the doctor to tell me the tumor growing on the side of my head might be a problem.

I look at it this way: We are like doctors, we must 1. show the customer what is wrong and how it affects them (diagnosis) 2. then tell them what MUST be done to correct this problem (treatment). It is then up to the customer to accept treatment or not. If you cannot get the client to allow you to treat them, you have not gained their trust and you must refine your "bedside manner"

Very few times when a person goes to a real doctor and is prescribed treatment do they refuse. Diagnose and prescribe treatment to your customers with the intregrity of (most)a doctor. Perhaps we should have a hypocratic oath for contractors. Ok that's it- let's do it. How about one of you wordsmiths prepare a Hypocratic Oath for electrical contractors. If you are a Doctor Electric, Electric Medic, Pysician Electrician (i made that one up), Wire Doctor, Romex RN, ect., this would be a great marketing tool.

[This message has been edited by REW (edited 11-17-2006).]

[This message has been edited by REW (edited 11-17-2006).]

[This message has been edited by REW (edited 11-17-2006).]

I appreciate the breakdown, Mahlere. Really, I do. I'm extremely fortuneate to be able to use a website like this to gather information for when I do go out on my own. Like you said, "he hardest transition is going from doing the work yourself, to hiring help," that's going to be very difficult for me. I have a hard enough time keeping my cool when I ask a helper to go get me a 4x4 box and he comes back with a pvc nail-on box!

wait till you price the job according to how long it takes you to do it. You send out a mechanic and apprentice to do the work and it takes them 50% longer. Then when you yell at them, you get a dumb look and a blank stare. So you fire them, and spend the time and resources to hire someone else. You go through this same scene 10 times in a year, then just get frustrated and fed up with the help available. It's vicious.

Now imagine doing all your work T&M - you get a good little group of customers. They like you. You do good work, you work efficiently, no problems.

Now you send out your mechanic (because you did so good, you got so busy, you had to hire help) and he takes 50% more time than you and doesn't do quite as nice a job. All of a sudden the customer (who you have worked with for 2-3 yrs with no problems) is calling and complaining about your rates, your charging too much, etc.

Once you hire employees its a different world. There are some guys on here who haven't figured out how to run employees, but they will tell you how to do it. There are other guys on here who run employees everyday. They are easy to figure out who's who. If you intend on growing and having employees, I'd pay attention to the guys who run'em. Not the one's who don't. (caveat -there are a couple of guys who post here, who currently don't run employees-have no intention to ever run employees again - but spent years running more guys than most of us ever will- macmikeman comes to mind- he knows a thing or two about running men, and knows he no longer wants to deal with it.)

I sat through the ESI sales pitch a month ago and was VERY impressed with the plan they had. No, I did not sign up. Many of the ideas they presented I learned from putting together 'the best of the best' ideas from this website.
If you can't beat'em join'em.

ESI has a very good comprehensive plan for those who need it (and can afford it). They cover the entire needs, some of which would take you years to learn, and hand it to you for a fee. If they come to your area, I highly recommend attending their seminar.

It's pretty simple, if you have a plan that works for you, use it. If you don't have a good plan, you'd better get one or go work for someone who does.

[This message has been edited by PE&Master (edited 12-10-2006).]

"...you are a salesman. whether you like it or not. "

Amen!

It is our job and responsibility not only to let the client know what he/she needs, but to offer them products and services that can enhance their lives or provide them with greater safety. We always educate our clients on the latest technology and products. We NEVER pressure them into buying.

We know: Dimmers can save money. They don't.
We know: Attic fans can save money. They dont'.
We know the importance of surge protection. They don't.
We know: Power factor correction can save money. They don't.

These are a few examples of things we tell our clients to allow them to make an educated decision whether to upgrade or not. Also, we provide them with a third party reference on much of our services, so that they do not have to take our word alone.

It is imperative that we provide our clients with any and every option that will benefit them and allow them to make an educated decision on their own. If you ignore this aspect of service then you are not giving the client the best service available to them. Besides, short changing yourself.

We have alot of great products that we are excited about, but the average consumer has no idea exists. It is our job to present them to the public.
ie. Timers for bath exhaust fans. How many people know that when they get done taking their shower, they need to leave that fan on for an additional 20 mins. or so.
We sell timers for that and they are a huge hit.

Sorry this is so long, but I don't post much.

Thank you, Everyone, for bringing this Topic to an Information format.

LK

Thanks also

Hey LK and Doug,

Glad you are thankful, but how about some thoughts?

Sure sometime today have to work on the holiday lighting somewhat today guess after 5 years of weather time to replace with LED style.

Getting back on point ... the original poster said he had just received his copy of the ESI book, and wanted our opinions.

I have never seen, let alone used, the ESI book. Perhaps someone can post or link to it? I have no idea what the "ESI Book" is.

There are as amny variations of pricing and estimating as there are jobs; I'd like some specifics on this one.

I think he was refering to the sales book they send out, to explain the advantages of joining, not the pricing book.

Erik, I am starting to forget all those reasons, so maybe I need to do some hiring and find out again. Reality, it was just time for a change of pace. I found it.

macmike, don't do it....you've been clean and sober for years....you know employees are the number one cause of alchoholism and drug abuse?

But my post really refers to the guys who start out with 4-5 employees and work their way to themselves because they can't figure out how to make money with employees.

A few Contractors have mentioned they liked the Positive Information in this Thread.


I been watching this thread as for some reasons the ESI threads always go south.

That being said we are not allowed to flame anybody on this forum.


Please Play Nice

thanks doug, that got weird.

The whole bunch of you involved in this little war of yours need to get back on track.

You have all repeatedly taken your very good information and presented it, only to ruin it by jumping back into the same childish behavior again and again.

It's time to start acting like the professionals that you are.

You are ALL at fault.
Move on to something constructive.

Actually, I got LOTS of constructive stuff out of this thread.

It did turn somewhat "line in the sand", if you will, but I wasnt offended in any way. (And I know that doesn't matter).

Great thread...

If anyone gets Contracting Business magazine, there's a great column on this exact subject on the last page.

Check it out

I'm leaning towards flat rate more and more. I try to be as fair as possible but it seems many customers can't or won't appreciate. this. The crying when the bill gets there after they request additional work gets me going.. So if they ask me for additional work I flat rate on the spot. It seems to be working, iI might add. So I guess I use both Flat and T&M.

Thanks for the tip KH. There are some great articles there.

Dave

I am having a hard time believing this discussion about prices. This is business, and you put as much in the bag as the market will bear, and don’t look back. The only person you have to justify your price to is your customer and that discussion should be kept short as possible, if they will pay then justification over, get to work.

I pay more at Starbucks because the coffee tastes better, and I charge more for my work because my men are some of the most skilled craftsmen in town and my work is guaranteed. But my price is the one I make up based on my feel for the market, historical pricing, available manpower, price of copper, actual cost, and how hungry I am. Some jobs I wont touch without at least 30% profit in it, while others I will take with as little as 2%, it all depends on the current market conditions.

Why wire a Bed Bath and Beyond for $285K when you can get it for $325K How do you justify $40K? YOU DON’T HAVE TOO, they can take it or leave it and in this case they took it. If I were hungry and had to have it, my price would have been lower.

If you want to use national estimator, then wax on but the market will pay what you can sell, and you had better know your own pricing, your own market, and your own organization, which is where the real money is.

Also keep in mind a “hard bid” has risks and you don’t assume the risks for free if you want to stay in business. Sometimes you lose, sometimes you win, the trick is to win more often than you lose. Making 30% on a job helps make up for the times you lost 20%; its business and don’t even try selling that mentality, nobody will buy it they just want your work for cheap as possible, and preferably at your expense.



[This message has been edited by ITO (edited 12-05-2006).]

ITO,

Is is apparent that you are into more bid work than service work. These are two different fields and I don't think your method (get as much as you can) would necessarily work with service. I am by no means against charging what you want to for any particular job, but my point is that in service, it should be consistant. Does Starbucks charge you a different price by the type of vehicle you drive? Does the fanciest of restaurants charge by the type of clothing you wear? No. Charge what what you will, but first figure out your costs, and your desired profit, then apply those to your jobs consistently. Because you can "afford" to pay a higher price does not mean that you should have to.

And on another topic, the real trick is to not have any losing projects (easier said than done) because at a 10% profit margin, which is probably more than the typical new construction contractor, revenue would have to increase 10x of the lost profits to break even. So if a job jost $100,000, a contractor would have to bring in $1,000,000 worth of new work with the same crew to make up the loss. That is a pretty daunting task.

Yes you are correct I don’t bid service work and I avoid residential work like the plague. However the business model applies, you charge what the market will bear or you go out of business.

Just because you loose 10% on a 100K job does NOT mean you have to take 10 more to make it back. Some jobs are stinkers sometimes they are winners, and sometimes one really good job can make up for a bad one. Sometimes you take work at or below cost to keep from sending your labor home.

You are correct. If you double your normal profit % then you will make it up. But if you could double your profit % on any given job, why not double it on most jobs. the fact is, with the bidding process, it is difficult enough to make the margin that you aim for to begin with, let alone trying to make up for a previous loss.

I do understand that some jobs are more profitable than others, but generally speaking, if you have consistant estimating procedures and current material, labor, and equipment pricing, your bids to the GCs should reflect your standard overhead and profit markup. I believe that it would be very difficult to squeeze an extra 10% out of a $100,000 job unless are have a niche that no one else can or is available to do.

With all due respect I love bidding against guys like you.

Double the profit you put in your estimates and you will never get another job. Knowing when to add 30% and you can make some money.

An estimate is nothing more than a good guess, all money is made and lost through project management and bid strategy. Granted if you leave enough out of you take-off you will loser your ass, but sometimes you have leave something off your bid to get the job in the first place. If you go in knowing it is a losing job, you can make it work, and make money with aggressive project managing, but this has to be balanced with the market knowing when to raise your prices.

This is a subtle thing I know, but knowing your market is the most important part of this business. Knowing when to buy copper, and when not to, when to put out fat bids and when to cut them to the bone. When you competitors are all working their asses off, and GCs are coming out of no-where begging you for a number, then you can charge a lot more, but when you are chasing work and doing the begging you have to be a lot more competitive. The times when you are doing the fat jobs, helps you get through he times when you do work with slim profits, or when you get screwed on copper prices, or when the unexpected happens. You also need to know when to walk away, there are some GCs I wont bid.

Combine this bid strategy with doing multiple size jobs, like a 1 or 2 really big ones and a few medium jobs, and then multiple fat small ones and you can cash flow quite nicely as you pick which jobs you want.

BTW if you are not making 10% on your 100K jobs, you either need to charge more, PM more aggressively or go back to doing service work. The money is there for the right bid, the right job, and the right project manager.


[This message has been edited by ITO (edited 12-05-2006).]

we found one point to agree on...that is 10% on a 100k project isn't worth getting out of bed for.

ITO,

your points are incredibly valid for a commercial new construction company that does bid work for GC's.

For residential work, we have to have a set standard so to speak for our pricing and our tasks.

Imagine have 30 of you men out, each pricing 3-5 small service jobs a day. You couldn't rely strictly upon their instinct to price a job correctly. Nor could you have them all call one estimator in the shop to come up with the scientific price.

Now imagine a couple of those guys consistantly pricing too low and losing money. And also consider a couple of those guys pricing unjustifiably high (maybe the homeowner is a senior citizen that really has no clue)and sells a service upgrade for $15,000 (not a justifiable price, a just cause they can price)

Now imagine doing a service upgrade for the jones house, in a specific development. You charge the jones's $X. Their next door neighbor, the smith's want the same upgrade. Same house, same everything. You send a different tech, he quotes 50% higher than the jones' just cause he thinks he can. Think neighbors don't talk?

So, you average items and put them in a book. Sometimes you make more money than average, sometimes you make less money than average. But at the end of the day/week/month/year, you probably made your average targets.

I agree with your general position, however when bidding $300k projects, 10% is a big number. When bidding $300 service calls, adding an addition 20-50% is not that big of a number.

The smaller the price, the more profit you can tack on...

[This message has been edited by mahlere (edited 12-06-2006).]

When I imagine 30 service electricians out in trucks bidding work, I feel a physical shudder run up my spine, as my peripheral vision starts to blur, then I grip my wallet very tightly and take a moment to calm down…

If the book works for you then wax on, I am not knocking how you run your business. However having done this for a while there are a few mistakes I will not repeat, number one of which is NEVER discuss estimates, pricing or billing with your electricians. That practice is how our 3 largest competitors got started in the business, and has cost us a few really good men. My service crew is strictly T&M, and any small bids are done through the office. There aint nothing scientific about estimating.

It is interesting hearing how you do it though.


[This message has been edited by ITO (edited 12-06-2006).]

ITO,

I have yet to figure out how to get one man in a truck to generate $1000+ before materials/day with T&M. (Not counting emergencies or overtime)

The tech earns roughly 25% (total cost to me with burden is about 35%). So he gives me 8 hrs, actually works for 4+/- and earns $1000-1500/week in the pocket. Plus benes, truck, etc.

When we were a union shop, we operated just like you. But we did very little service work. Only for a few customers. They would pay us 4 hr mins (because we installed the equipment and it was cheaper to pay us than to try to get someone new to understand the systems)

But most of our work on installs was T&M as well. warehouses at T&M, it was a different time. So we made money when the guys put things in wrong and we made money when they redid them.

The big difference was we got paid for every hour that the man was paid. With service work, we have too much downtime. With residential service work, we have too many people who don't understand why they have to pay us for 2 hrs when we were only there for "20 minutes". So flat rate alleviates those issues on the resi side. Plus, I end up with a higher hourly rate than I would ever get on T&M...

Sound like it works well for you.