Price for Profit OR Price to "Win" Work

[Sparky555]

There seems to be a general fear about raising rates to increase profitability, especially when times are tough. There's also a lot of focus on what other ECs charge instead of what we need to charge to have a profitable business.

I heard from a friend on the right coast who has much more business sense than I. He said this year was slow, but with higher gross sales. He's always had the highest profit numbers I've ever heard in this business.

If I had to describe my year I'd say it's slow, sales are flat, but profits are up. The market here is similar to other areas. The new residential market crashed. Some big ECs are out of business. A new crowd of out-of-work electricians are taking a shot at working cheap to keep food on their table. English-challenged workers are taking over the trades.

It doesn't mean we're going to reduce our rates and cut the profits to be "competitive". Less work, more profit. Still in business.

Dave

[360Youth]

We have gradually started raising our prices to compensate for rising costs. No complaints so far. If I am going to go broke I would rather be for lack of work than for working for nothing. Thankfully we have not been put in that situation to have to make those kind of decisions.

[480sparky]

I found the times I raised my price, I got more jobs. Funny how that worked out.:-?

[powerslave]

We raised our prices 20% in the last couple of months. We actually have expanded our advertising/marketing budget. I'm working less but making about the same as last year.

I guess it's just a knee jerk reaction to lower prices and tighten your belt. But if everyone else is cutting back on advertising, the ones who expand will get that much more exposure.

[bradleyelectric]

I heard somewhere that if your slow to raise prices to make up for the lose of volume. It does jive with punching the numbers into a formula.

[mdshunk]

There's never a reason to lower your rates. There are three reasons to raise your rates. 1) Your costs have increased 2) You don't have enough business 3) You have too much business. If things are otherwise steady, keep your prices where they're at.

[powerslave]

I heard somewhere that if your slow to raise prices to make up for the lose of volume. It does jive with punching the numbers into a formula.

Sometimes it just goes against what might seem to be logical. But if you think about it, if you lower your prices when times are slow it could be a recipe for disaster. Now you are working less for less money.

[masterinbama]

I recently raised my service call and mileage rates (my hourly was raised at the first of the year). So far no one has complained.

[480sparky]

If you lower your price just to get the work, you'll end up working for nothing. Why beat yourself silly and go broke at the same time? Just sit at home, watch Judge Judy and Oprah, and go broke. You'll be broke just the same, but you'll be a helluva lot more comfortable.

[quogueelectric]

We are just taking this job so you guys can keep working steady so you are really going to have to put out for this one. I have been hearing this one for years and the boss keeps getting richer.

[brantmacga]

. . . . if you lower your prices when times are slow it could be a recipe for disaster. Now you are working less for less money.

Oddly enough, most residential GC's I've dealt with expect you to lower the price when things are slow, because "everyone else does." Which is unfortunately true in my area.

When things pick up, its "with all this work I'm giving you, shouldn't you be lowering your price?"

[mivey]

Oddly enough, most residential GC's I've dealt with expect you to lower the price when things are slow, because "everyone else does." Which is unfortunately true in my area.

When things pick up, its "with all this work I'm giving you, shouldn't you be lowering your price?"It is odd how that works isn't it?

Add: I like the part where they want you to provide the "extras" for free since you are doing work for them already.

[hardworkingstiff]

We are just taking this job so you guys can keep working steady so you are really going to have to put out for this one. I have been hearing this one for years and the boss keeps getting richer.

You know this because you get to see the books?

Do you know if the 'boss' has other investments? Maybe he/she knows how to trade stocks well and makes his wealth there and just runs the EC business out of habit?

[ptonsparky]

I, for one have gotten richer or it may seem to someone just starting. My house is paid for, the kids are gone and self supporting. My wife makes more than I do:grin: . Yup, richer by the minute, ignoring investment losses.

However, we have gone up 10% on our rates in the last month or so. Wages, anticipated benifit increases and of course fuel costs. Plus I figured out the local gal who cuts what hair I have was charging more per hour than I.

[emahler]

You know this because you get to see the books?

Do you know if the 'boss' has other investments? Maybe he/she knows how to trade stocks well and makes his wealth there and just runs the EC business out of habit?

nah...the cow is the boss:D

[bradleyelectric]

nah...the cow is the boss:D

I knew that cow was getting rich!! Could see it in the utters.

[tyha]

we have raised our rates slightly on upcomming work because our cost have increased and I think the reason our margins our higher is because our work load has slowed and we are running more efficiently. I could go on for days about the cycles we have been in and out of and what we have learned from past mistakes.

[powerslave]

Plus I figured out the local gal who cuts what hair I have was charging more per hour than I.


Ain't it the truth. Fantastic Sams haircut $16.99. Takes about 10 min. That's over $100/hr. But some ECs are charging $50/hr.:roll:

[aline]

A few years ago I called some ECs in the phone book and asked what their hourly rate was. Recently I decided to call them again and ask the same question.

What did I find?

Almost all of them have lowered their hourly rate. Business expenses have gone up yet they've lowered their hourly rate?

One company used to charge $79 for the first half hour and $49 for each additional half hour. Now they say they charge $35 per half hour and the minimum charge is $35. Huh?

They're the only one that quotes their rate by the half hour instead of by the hour. I think they do this because they feel $35 per half hour sounds better than $70 per hour to the customer.

[hardworkingstiff]

It really seems simple to me. Charge what you need to charge. The market will tell you whether you are allowed to keep your business.

Protectionism (this is what I hear when I read the complaining about prices) is not the way our capatalistic economy works best.

[480sparky]

Ain't it the truth. Fantastic Sams haircut $16.99. Takes about 10 min. That's over $100/hr....

And that right there is the exact same attitude HOs have towards us. $16.99*6=$101.94. But they, just like us, HAVE OVERHEAD!

Do you think WalMart takes their daily income, divides it by the hours they pay their help, and says everyone makes $65/hour?

[iwire]

I agree, they also are not busy all hours they are open which brings us back to billable hours.

[LarryFine]

Ain't it the truth. Fantastic Sams haircut $16.99. Takes about 10 min. That's over $100/hr. But some ECs are charging $50/hr.:roll:How many of those $16.99 haircuts do they actually do per hour, or per day?

[powerslave]

And that right there is the exact same attitude HOs have towards us. $16.99*6=$101.94. But they, just like us, HAVE OVERHEAD!

Do you think WalMart takes their daily income, divides it by the hours they pay their help, and says everyone makes $65/hour?


You didn't get it. This is my exact point. I'm saying take a tip from Fantastic Sams. I'm happy to pay there price. I understand they HAVE OVERHEAD!:smile:

[powerslave]

How many of those $16.99 haircuts do they actually do per hour, or per day?


I couldn't tell you that. Sometimes they're busy when I go in there sometimes they're not. I would hope they figure into they're overhead for non-billable time. I'm also not sure what a barber/hairstylist gets paid.

[LLSolutions]

There will always be "Ankle Biters" to undercut you, and I know how hard it is making that "Do i price it to make more money or to get the job?" decision but nothing is worse than doing the math at the end of a job and all you did was break even or worse. Remember your time is valuable and nobody starts a company with the intent of breaking even. You may lose some small ones but hopefully the price increase will cover the lost jobs. I think you may be surprised at how many people will still use you.

[quogueelectric]

You know this because you get to see the books?

Do you know if the 'boss' has other investments? Maybe he/she knows how to trade stocks well and makes his wealth there and just runs the EC business out of habit? Yes he does it out of the goodness of his heart and to keep us working. Yeah Right. Out of habit. Where did he get all that money to invest?? Vegas?

[wawireguy]

Welcome to a free market economy.. We need some big changes to turn things around..

[Teaspoon]

The ankle biters or low ballers hurt us all.
But if I can't make a profit on a job i don't need that job.
I can go broke sitting at home, and it is a lot easier.
Less expensive too.

[ItsHot]

The ankle biters or low ballers hurt us all.
But if I can't make a profit on a job i don't need that job.
I can go broke sitting at home, and it is a lot easier.
Less expensive too.
"Better to be broke and rested"!! than "broke and tired"!:smile:

[macmikeman]

"Better to be broke and rested"!! than "broke and tired"!:smile:

Or even worse, "Broke and tired, and now at risk, since any undertaking we do has a certain potential for disaster that only electrical work and skydiving instructors get to experience, even the most careful and experienced of the both. That is the other reason we had better be sure to be making a good profit at what we do, cause insurance and corporate shields be nice and all that, we are in a risky business. Lets make it worth the effort.