Hi All: Great Forum!! I would like your advice as my peers. I am just starting out on my own. I have been in the business for over 20 years. I would like to know how do you handle an agreement between you and your customer regarding hourly cost for small jobs?
Now I am talking about the small work that you do which take a day or two to finish. I usually let the customer know how much its going to cost verbally. When I send the bill I get call backs saying I charged too much etc... I just received one of those calls tonight and I am fuming!! I need your help in how to handel this situation.
Do you have your customer sign a contract for anything small you do, even if its a ceiling fan? I always get signed contracts with larger jobs due to the complexity of them in general but for the smaller ones, I haven't.
If you would also be so kind as to refer me to what type of forms you use for T&M jobs as well as Estimated Jobs.
I know my questions sound very basic but I never really had anyone take me through the business side of a this trade when it came to money issues with customers. I would always handle everything from inception to completion then hand it over to the boss.
I apreciate your time and please excuse the spelling. Kids want to play Blue's Clues!!
JoeBart: I find it best to give a "written estimate" to the customer, prior to doing the work. This helps to prevent "misunderstandings", and keeps you "legal" with the Board. (You're in NJ). CCheck within the Laws & Regs booklet you received with your Lic. & Business Permit. Without going into all the legalities here, if you play by the "rules" you have a better chance getting compensation if you go to collection or small claims court. T&M work we bill with an excel spreadsheet, and QB invoicing. We track all jobs with excel spreadsheets. PS: I'm in NJ also.If you need further info, you can e-mail me direct, or continue thru ECN John
Thanks for the info. I could use help in this department. I have always trusted people and learned to go with the flow but now I'm in a position where I need to be sure I get paid in a resonable amount of time. Any help will be most apreciated!!! Thanks Joe
JoeBart: There's a lot of info that you need to explain: Do you have employees? Can/do you do all the estimates?
For T&M type work, you could prepare in advance a "price" guide to present to your client. With an hourly rate, materials cost (with your mark-up). It should say something like "Labor:3 hrs at $65.00 p/hr; Materials = $ xx.xx; Saleses Tax (6%) You can indicate that this is a "base" price, and rates are as stated. You may also elect to state an estimated amount of time; or a Not to Exceed Total. Be sure you detail the proposed work, and that anything "extra" will be billed accordingly. Have the client sign a copy for you, and a copy for them.
The details are a pain, but you stay out of trouble.
There are generic forms available at stationary stores, in multi-copy format. Put your company name and license & business permit number on them! (Staples; Office Depot, etc)
Actual contract documents (proposals, agreements, etc.) are more detailed. THere are also "blank" generic forms. Fill it out carefully, watch the details. You may consider a lawyer to review any contract type docs that you plan to use, before you use them.
I can delve deeper, but this forum may not be the place.
Hello everyone. In response to the topic here posted. I'm a Contractor, and through the years I've learned that not all customers will pay in a timely manner. There will be customers that even a $ 40.00 invoice will seam beyond belief and will try not to pay you for it. Your best bet is to know your competitors. Beat their price without doing the work too cheap for yourself. Try to give yourself some parameters. Or let's say you have a small job, such as a "ceiling fan". And been that is a Residential customer. You will encounter things that will increase your cost, like a nail on box, a rusty box, a short wire inside the box, or a malfunctioning light switch. Keep these items in mind and see how long it will take you on a normal basis to change the light to a fan. Also, keep in mind how long it could take you to repair these other problems. Chances are that a customer (residential) will call the electrician, when their friend ( the unlicensed one) has turn them down, due to the difficulty of the job. So when you do estimates (small jobs) follow these simple rules: 1) let the customer know how long it usually takes. 2) What parts may be needed. 3) how much it could cost them. So if you sell your parts at cost. This is the best way for you not to let the customer go to the store and buy their own parts, because chances are they will buy the wrong ones. So if you have changed ceiling fans in the past, you know that in "regular basis" it could take 30 minutes or up to 2 hours. So depending on the type of dwelling, you get an idea of how long it will take you to do the work. With this in mind, how much are you going to charge the customer for something they can do themselves… not much. If the customer asks you how much it will cost them. You can give them a more accurate bill. If you charge $ 50.00 an hour. You know the customer will pay $ 25.00 to $ 100.00 plus parts. Then have a cellphone with Electrical Stores numbers and give them a quick call to find the current price of the items you will need. THIS WORKS FOR ME! Remember your first estimate is your most important one. This will make the customer give you the work or call the next guy, if you let the customer know about any possible discounts with a minimum bill, then you can do more things in the same house and give yourself more work and money. In other words. Let's say you will do the ceiling fan, but then you offer the customer a discount if their bill exceeds $ 100.00-- 9 out of 10 will take you around the house or shop and give you more work. Also this is a good idea, especially if you had to travel 15 minutes and up to the customer. This keeps your cost down and profit up. Now that you know how to manage your cost, is time to learn how to get your money. First time customers like "catalogs with pictures, vehicles with company logos, warranties" These give the customer the sense that this is a legitimate company and that they will not be ripped off. Customers dislike "signing contracts, down payments, or salesman" So, if you only stick to what the customer wants, it will get you their trust. Unfortunately, just like I'd mention at the beginning of this… there are some that will try not to pay you. If your estimate is small, being under 100 dollars. I recommend you use verbal agreements. If it is between small and medium, being 100 to 1000, then you may use "typical service/repair orders" These you will find at your local Office Stores. And if you get anything over $1000.00 Then you may use with the advice of your Attorney a Custom made form. That, for example will give the customer 90 days to pay same as cash. This will keep the competition far away. Finally; clean up, and put everything away, then re-check the finished work with the presence of your customer, offer an apology if anything is found to be wrong and offer to fix it at no cost to them. Be sure the customer is completely satisfied… stand behind your work with a warranty (six month) and always, always, always give your customer a receipt. Good luck! And email me any comments =o)
Having found out the hard way, the verbal agreement between is worth the hot air that you can capture and take to a court for the judge to hear. If it's not in writing and signed by both parties all you have is a version of he said/she said. Get every thing in writing even if it a work order/reciept. These are available at office stores and any business supply type of printing company. The write up of the job does not have to fancy, just accurate enough to allow some one else to read it and understand what was done and at what price. Collecting bad debts is enough of a pain without having a judge tell you " You do not have a valid contract, pay you opponents legal fees and court costs."
I don't ask small customers to sign a contract or agreement and I've never had a customer complain about the final bill being higher than expected. The reason is simple, I quote a fair price up front and charge that amount or less. For small projects you need to be a good enough estimator to come up with a fixed price rather than an hourly rate. Nobody complains if you tell them upfront that it will cost $200, even if you finish in an hour. But if you tell them it will probaby be $200 and then give them a final bill of $350, everybody will complain, even if it takes you all day. Yes, there are exceptions to these examples, but they hold as a rule. I have a basic price list for most basic items and can quote most small jobs over the phone. Most of the time I come out ahead, but occassionally we work all day on a project that I quoted for a half days price, but I don't change the price. Sure I could explain the difference to the customer and they might pay, but they wouldn't call us back or refer us to friends and family. It all averages out.
Also, don't work for customers you don't trust. You have to learn to turn down jobs if the customer doesn't give you a good "feel".