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Posted By: schenimann service pricing - 03/14/13 11:02 PM
I have always charged hourly for service work. I am wanting to change to set prices for most fixes. Obviously some things will always be hourly, However many things can be a set price. I know some of you currently do this. What is the best way to go about setting this up?
Posted By: HotLine1 Re: service pricing - 03/14/13 11:28 PM
Set pricing by item is used by the majority of the plumbers up here, and as you say, some of the electrical contractors.

IMHO, keep in mind your local economy when you are comparing set pricing. Your 'regulars' may have sticker shock.

When I had my business, the last few years, 90%+ was done T&M, with flat fees for all design related work. The 10% was successful bid jobs.



Posted By: schenimann Re: service pricing - 03/14/13 11:36 PM
As of now I do all electrical work. New, remodel, commercial, whatever comes along. I am actually looking at "creating" a new company that only does service work. I will have to work my current customers, many of whom are friends, in at a slower pace. I enjoy that kind of work and think that the profit is better. I am trying to get away from bidding any work.
Posted By: Tesla Re: service pricing - 03/15/13 12:19 AM
I don't know how you can survive on T&M in the retail marketplace.

1) CraigsList quotes -- and the like -- are set by non-businessmen/ tradesmen unaware of their economics.

a) They assume that they'll be able to bill 40 hours/week...
b) They assume that they'll be able to bill for materials runs...
c) etc.

2) The market/ public/ general contractors would rather have trunkslammers take a shot at the task... assuming that, really, anyone can be a wire runner. After all, just how tough can running Romex be?

3) Professional design expertise is expected to come free... right along with a free quotation... and your consequent personal visit -- and jaw, jaw. Obviously, you've got nothing better to do, anyway. All the other guys are advertising free quotes -- and, implicitely, free design.

4) Any sales effort will be used against you. Namely, the prospect simply compiles design advice until he feel comfortable working up his own scheme -- which is to hire day labor talent and have them attempt to pull things together. If and when it does not quite work, he can always pay for a quick service call.

========

The o n l y way that T&M can work out is if the contractor drags his feet -- a lot.

========

Posted By: HotLine1 Re: service pricing - 03/15/13 01:57 AM
Tesla:
Without a bunch of details, T&M worked financially well. Kept 3 men busy, all billable. If I had my tools, my T was billable also. I had long term clients who didn't want to 'shop', 'bid', or 'go cheap'. As for material runs (when necessary) no issue on the T either. Most materials were delivered by a local supplier, or from shop stock. The local supply house had no problem with 'rush' deliveries.

Think of it as a company that outsourced the electric shop, and had a contractor 'on call' at controlled cost agreements.

Posted By: Lostazhell Re: service pricing - 03/15/13 06:32 AM
T&M, service work, bid can all work out well depending on your customer base..

We have large oil producers which we work 30+ wiremen/linemen 40+ hours/week.. on T&M (Well, the T part.. They have their own accounts for material.) But aside for charging out for personnel; trucks, FR, personal H2S monitors and cell phones for foreman and above are charged out as well.

Me, my truck, cell phone, monitor and FR costs our customer $685 for an 8 hour day. I take care of whatever their I&E department requests from motor changeouts to instrumentation troubleshooting to cogen maintenance. Our company has weathered California's ugly economy surprisingly well.. We also have a few guys as part of a call out service department that stay generally busy as well.

Some of you know I used to work for a flat rate service contractor that paid us commission on the jobs we "sold" and completed. (Electure knows ALL about it LOL) Large full page phone book advertizing was their lifeblood and they were constantly busy. I cleared $100K/year working for this company and their yearly profit was upwards of $20M/year.
Their demise came not from lack of work, but from greedy management that refused refunds when someone screwed up and from hiring people who could "sell the job" but didn't know the difference between an I-beam and Jim Beam. They had no business attempting electrical repairs.

Scott (Electure) and I both worked for a company that did predominantly bid jobs. They had good relationships with a handful of general contractors that kept us busy. It wasn't the best paying company, but their checks never bounced and I had a steady 40 hours a week.
Posted By: HotLine1 Re: service pricing - 03/15/13 01:35 PM
Lost:
The 'bottom line' is what you say, a weekly paycheck! Or, if you are a small company, paying your bills, payroll, and yourself.

We have a few of the 'full page ad', shirt & tie, mega service contractors here (Plumb/HVAC/Elec) that operate as you mentioned.
Posted By: schenimann Re: service pricing - 03/18/13 03:24 AM
I am actually going to start a new company that is a flat rate service company. As it grows I will phase out my existing company. I am at the beginning stages and it is quite an undertaking. I have always been a local electrician, no ads, all types of work(new, old, resi, comm, service, whatever needed to be done). I would like to grow my business and don't think that my current model is valid for that. For my new company I am going with full logos, ads, marketing, the works.

I would like to acquire a list, whether book or spreadsheet that lists jobs with a manhour number for each. Does anyone have one or could recommend one that I could purchase. There are lots out there but I would like a recommendation of one that has be used. This will be one piece of the puzzle.

I will be asking more questions along the way and keep posted how progress comes along. Thanks.

Posted By: Tesla Re: service pricing - 03/18/13 09:09 AM
Schenimann...

Cost/Price books much outside of your area -- or this time period have little utility for you.

Build your own.

Start with your specific overhead, do include yourself, too.

Work out what you'd have to charge, per hour, if you worked 2,000 hours per year.

Now figure out how many hours you will r e a l l y be able to bill. It'l be less than 2,000, for sure.





Posted By: dougwells Re: service pricing - 03/18/13 09:40 AM
Originally Posted by Tesla
Schenimann...

Cost/Price books much outside of your area -- or this time period have little utility for you.

Build your own.

Start with your specific overhead, do include yourself, too.

Work out what you'd have to charge, per hour, if you worked 2,000 hours per year.

Now figure out how many hours you will r e a l l y be able to bill. It'l be less than 2,000, for sure.







i would say about 1000 hours
Posted By: dougwells Re: service pricing - 03/18/13 09:53 AM
There are many cost calculators available online.The latest one I use is here just need to register to get access to it.

http://www.electricalflatrate.com/index.php/login-for-cost-calculator
Posted By: schenimann Re: service pricing - 03/18/13 02:10 PM
Doug, that is good looking software for $90/mo. I like the idea of showing up at the house with the Ipad and a price.
Posted By: MarkC10 Re: service pricing - 09/24/13 05:47 PM
This is a good topic .. Billing

I exclusively charge Time and Material, My time is based on a competitive rate which does compensate my necessary overhead which I keep to a minimal.

The customer deserves a fair price, I deserve to earn my cost for every hour worked on a job.

Keep in mind materials usually get marked up to offset the materials labor of pickup also I have a invoice charge regardless which covers tool and vehicle ware.

As I've heard from many successful Electrical Businesses
"you wont get rich in this business, but you will earn a good living"

I use to simply bid the jobs which still I give a range to the customer, although when all is done I bill them for actual time taken and supplies use.

all my stock is paid for by prior projects, I make sure what ever I've purchased becomes reimbursed upon billing, The normal markup is around 30% which covers my time designing and purchasing the supplies.

I do ok .. 3500.00 for a service upgrade is simply a rip off, unless its a 400A or so, or 3 phase. My range averages around 1600.00 to 2400.00 depending on the circuits involved and the bonding ease.

I believe in long term clients not the get in, get out concept.
Posted By: johndaniel Re: service pricing - 10/14/13 03:20 AM
What's up
Schenimann,

Yea, I got caught in that hole too. Back when I ran ad's
in the news paper. I could only run the ad every 4 months.
I'd get so swamp with small service calls. from retired
people, Dr.s, Lawyers, small business owners, people who
own multi-plexs all over the city. Now, each county has its
own sign-up fee's if you have to pull permitts. But, to
make a long story short...I could not keep it up!

You know I've thought about it much these pass years, and
a couple of the guy's I pass the test with. One has his
vans and trucks, using his brother-in-law and sometime he get a younger family member to help do mainly commercial service resturants strip mall, like that.
He handle the books him self and been working steady since 98'
Now, the other guy, has an office mom and wife working it. Has a crew of 7 guys pays near to union wages, got
backhole, cherry picker, service trucks and vans,
fully stocked. He doe's government and commercial jobs.

Neither advertise!

Man, you just need a fully stocked office and at lease
three vans running just to change light bulb or replace
swithches and receptecles, let alone add-ons and 200amp
service installations.

tell me what you think!
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