T&M Question......Ethics.... [Archive]

JacksonburgFarmer

03-08-2009, 07:44 PM

Rewire

03-08-2009, 07:50 PM

When I invoice it has my markup so I sell a stick of conduit for $5.00 it does not matter if I bought it at $3.00 or $2.50 I still sell it at the set price

jrannis

03-08-2009, 07:56 PM

You will find that you will have to average your pricing. It will all work out.
Some people track the last highest price paid and use that price. Some will only purchase at a targeted price (better have some volume to negotiate that move)

Mule

03-09-2009, 12:04 AM

I have two methods of invoicing....If its a quoted job, they just pay the end price, I dont provide a breakdown at all.......If its T&M I give vendor invoice numbers and show cost and markup
heres an example
(CED#777458 $500.00x 1.25=$625.00)

I dont show individual unit prices, only ticket totals, but my customers have the right to view the vendor invoice upon request on T/M, but (knock knock) Ive not had one soul question my unit prices.....which I find amazing....

I do re-stock alot of un-used materials on the van, instead of returning them, unless of course its an expensive item, or something I just dont want on the van. My theory here is if Im working T/M and they pay me the labor for two men to return the parts, if my material drag was close to start with, they are going to loose money. So, honest? ....maybe, maybe not...I could leave the un-used materials with the customer but I dont. In return, customers benifiet from me having a stocked van and we have minumal return trips to the supply house.

RJohnsonMasterElectrician

03-09-2009, 12:30 AM

they don't need to know what you paid for it. Don't forget you had to travel to two places to get all your parts, who or which mark up is going to pay for your gas and time. Where I was working I was able to charge 50 to 60 an hr and mark up of 1.88. I was told I was even low at those numbers. And then if the people were from Jersey, Mass, Conn, or NY city my mark up and hourly went higher for PIA charge.

kbsparky

03-09-2009, 12:31 AM

If your agreement calls for a specific mark-up on materials, then you need to average your costs before applying your mark-up fairly.

OTOH, if you are merely itemizing your materials on your invoices, then base your price on the highest costs from your supplier invoices. Then, consider the extra amount earned as money in your pocket for having to go to the extra trouble of buying from more than one source.

quogueelectric

03-09-2009, 12:48 AM

Go with the higher number and dont lose a minutes sleep over the few bucks you stand to make. Who helps you out when you run into an unforseen difficulty in a wall or slab. You seem honest enough they are lucky to have you.

LarryFine

03-09-2009, 04:39 AM

Agreed. You should be the one to reap the rewards of your extra shopping efforts.

I rarely buy at the prices I use to quote, unless there's no shopping time available.

iwire

03-09-2009, 05:01 AM

but my customers have the right to view the vendor invoice upon request on T/M,

They have no right to see anything, you can certainly choose to let them see it.

don_resqcapt19

03-09-2009, 08:36 AM

They have no right to see anything, you can certainly choose to let them see it.
That would depend on your contract with the customer. We have contracts that require we submit signed time sheets and vendor invoices with the t&m invoice. This should not be an issue for an honest contractor. If I was the customer and I asked for this type of documentation and there was even the least bit of hesitation on the part of the contractor I would not use that contractor.

Dnkldorf

03-09-2009, 09:24 AM

That would depend on your contract with the customer. We have contracts that require we submit signed time sheets and vendor invoices with the t&m invoice. This should not be an issue for an honest contractor. If I was the customer and I asked for this type of documentation and there was even the least bit of hesitation on the part of the contractor I would not use that contractor.

+1

same here

Mule

03-09-2009, 09:44 AM

They have no right to see anything, you can certainly choose to let them see it.

They have the right, because that's the understanding with my T/M agreement. Or, as you state it, Yes I choose to do it that way.

charlietuna

03-09-2009, 09:51 AM

There is nothing wrong with T&M billing especially if the work your doing has a lot of unknowns! We were never questioned by our customers and built a solid trust in our relationship! If there was something they wanted a contract price on, we gave it to them, but there wasn't many of them. My material markup was high due to the nature of supplying the materials to floors of a high rise office building. This required elevator schedualling with the building management company and supply house co-ordination.

iwire

03-09-2009, 05:55 PM

They have the right, because that's the understanding with my T/M agreement. Or, as you state it, Yes I choose to do it that way.

As I said, it's not a 'right' it is a decision you have made.

Nothing personal but I can see no reason whatsoever to show them your prices. None, never, ever, not their darn business.

Does the grocery store you shop at show you the price they paid? Does the supply house show you what they paid? Does anyone you do business with show you what they paid for what they are selling you?

Why would you want to show them your costs? :-?

NolaTigaBait

03-09-2009, 06:05 PM

As I said, it's not a 'right' it is a decision you have made.

Nothing personal but I can see no reason whatsoever to show them your prices. None, never, ever, not their darn business.

Does the grocery store you shop at show you the price they paid? Does the supply house show you what they paid? Does anyone you do business with show you what they paid for what they are selling you?

Why would you want to show them your costs? :-?

yeah, but for some reason people expect you to show them your materials breakdown....i agree , iwire, you don't ask for a breakdown of your subway sandwich!...so, why should we breakdown our materials?

iwire

03-09-2009, 06:09 PM

yeah, but for some reason people expect you to show them your materials breakdown....i agree , iwire, you don't ask for a breakdown of your subway sandwich!...so, why should we breakdown our materials?

Even when the office does itemize each piece of stock they do not tell the customer our cost of each piece. :smile:

Rewire

03-09-2009, 06:28 PM

Even when the office does itemize each piece of stock they do not tell the customer our cost of each piece. :smile:

Bob is right when I do T&M they are buying the time from me as well as the materials from me why would I give them my cost? If they want a material breakdown then they get it but it reflcts my selling price not my purchase price. We keep alot of material in inventory because we buy in quantity for a better price so on T&M jobs we are pulling from our stock not making daily trips to the supply house.

LarryFine

03-09-2009, 07:36 PM

Bob is right when I do T&M they are buying the time from me as well as the materials from me why would I give them my cost? If they want a material breakdown then they get it but it reflcts my selling price not my purchase price.Absolutely! People seem more concerned with how much our work costs us than how much it costs them.

"Hello, I'm price shopping for some electrical work, and I want to hire whoever will make the least profit."

NolaTigaBait

03-09-2009, 07:55 PM

Absolutely! People seem more concerned with how much our work costs us than how much it costs them.

"Hello, I'm price shopping for some electrical work, and I want to hire whoever will make the least profit."

thats human nature...most people resent me for making a profit off of THEM...if they only knew what it takes to run a successful ONE man shop......i agree 100% with Larry's assessment!

NolaTigaBait

03-09-2009, 07:57 PM

I want to hire whoever will make the least profit."

quote of the day!....i get this alot

dbuckley

03-09-2009, 08:40 PM

Why would you want to show them your costs? :-?

Because on a T&M job the entire risk is with the customer, and the more you can allay a customers fears that he's being ripped off, the greater the degree of trust.

If for T&M you work on fixed margins, then there is nothing to lose by showing invoices if requested.

JacksonburgFarmer

03-09-2009, 08:43 PM

Yeah....

everyone wants you to make a good living....just not off of them!!:D

The guy I am doing this work for is a good guy.....my Father in law does work with him and has known him for 30 years......He isnt trying to beat me down in price at all, I just want to play fair, and do what is right.....but sometimes these ideas beat my profit out of my pocket.....I am not nearly as nice as when I first started....:D

iwire

03-09-2009, 08:47 PM

Because on a T&M job the entire risk is with the customer, and the more you can allay a customers fears that he's being ripped off, the greater the degree of trust.

They either trust me or they don't. If they do not trust me why would they believe that I am showing them the true price?

Again I ask ............ what other businesses show their costs to the customers? Not to many I and I know I would not.

jusme123

03-09-2009, 08:48 PM

don_resqcapt19

03-09-2009, 09:22 PM

They either trust me or they don't. If they do not trust me why would they believe that I am showing them the true price?

Again I ask ............ what other businesses show their costs to the customers? Not to many I and I know I would not.
There is no reason not to show your material costs on a T&M project. You have agreed up front to a specific markup on the material. Why would it be an issue to show them the invoices? As far as mark-up for handling the material, that doesn't really exist for T&M...you charge you normal labor rate for the material handling on these types of projects.
Now this is totally different for a contract job...their they only get an invoice based on percentage of material that has been purchased and percentage of the job that is completed. No material costs or even labor hours show up on a contract invoice and the client does not get to see any of the documents...other than our invoice to them.

Mule

03-09-2009, 09:23 PM

As I said, it's not a 'right' it is a decision you have made.
Ok, just a play on words

Nothing personal but I can see no reason whatsoever to show them your prices. None, never, ever, not their darn business.

If I dont want any risk, and want to enjoy my work by working T/M, the customer has to take the risk. By telling him that he has access to the cost invoices, it at least shows him that I have nothing to hide,

Does the grocery store you shop at show you the price they paid?No, I dont have a cost plus agreement with the grocery store, Does the supply house show you what they paid? Same deal, not T/MDoes anyone you do business with show you what they paid for what they are selling you?Yes, I've had cost plus carpentry work done before, and frankly I liked it.

Why would you want to show them your costs? :-?To show them I have nothing to hide, and I use that as a selling point, to promote T/M, which is 90% of my business

Bob, I've had several corporate clients that demand breakdowns on proposals. They want to know, and compare bids.

So, I have to ask you, "Why would you not want to show a customer, when you have a T/M agreement, that in truth is basicaly "cost plus" ?

But, as you know Bob, it's America, so we have to run our individual business'es the best way we know how. For me I have to rely on alot of repeat business, and my relationship with my customer is paramount, and then my profit seems to always come along with it...

Mule

03-09-2009, 09:29 PM

They either trust me or they don't. If they do not trust me why would they believe that I am showing them the true price?

It's a way of EARNING the trust Bob......trust is a variable element.

LarryFine

03-09-2009, 09:35 PM

You have agreed up front to a specific markup on the material.
How would you respond to "Okay, then, I'll supply the materials. Just give me a list."

Rewire

03-09-2009, 09:36 PM

imo if it is tm they have the right to see the original invoice (if requested)... would u want to see it if u paid bill. charge whatever the invoices where and the agreed upon markup--good and fair business practices never come back and bite u
what if you pull from shop stock? I order conduit several thousand feet at a time and I usually don't wait till I am out to reorder I cannot tell which 10ft piece was purcase at .19 a foot and which piece was purchased at .16 a foot

iwire

03-09-2009, 09:41 PM

There is no reason not to show your material costs on a T&M project. You have agreed up front to a specific markup on the material.

No we have not, only when forced to do that we agree to that.

jusme123

03-09-2009, 09:43 PM

your regular supplier will give u the current price on the conduit and that is the price u use

iwire

03-09-2009, 09:45 PM

It's a way of EARNING the trust Bob......trust is a variable element.

Never been an issue, 99% of the time people trust me. They give me keys and alarm codes for their businesses, tell me to let myself in and out.

bradleyelectric

03-09-2009, 09:51 PM

just tell him if it is between .01-.49 mark up is x6
.50-.99 x 5.75
1.00-1.49 x 5.5
1.50-1.99 x 5.25 ..........

maybe not, just total the bill and give to him to pay

rt66electric

03-09-2009, 09:52 PM

If the customer is a good one with trust , then I would consider giving the actual cost and savings.
I have bought loads of surplus stuff at auctions, etc. Do I sell the do-hickee at $0.10 or less, or do I sell at Home depot single Item price?? If I install a 100 ft of romex ,do I sell at the HD per/ft price ?? or call it a Half roll when the price was $80 a roll??, or at $40 a roll???. WELL IT DEPENDS on the customer and who do they Know?

iwire

03-09-2009, 09:55 PM

To show them I have nothing to hide, and I use that as a selling point, to promote T/M, which is 90% of my business

Or your showing them they can make you jump through hoops.

So, I have to ask you, "Why would you not want to show a customer, when you have a T/M agreement, that in truth is basically "cost plus" ?

Because they are not going to want to see they paid so much for wire nuts, screws etc. The smaller the cost the higher it gets marked up. If you think thats wrong then I assume you don't shop at stores or bring your vehicle to a mechanic?:smile:

But, as you know Bob, it's America, so we have to run our individual business'es the best way we know how.

To keep things clear I am an employee, I don't have the guts or energy to run a business. Besides, I would always be an electrician running a business not a businessman running an electrical shop.

Dnkldorf

03-09-2009, 09:59 PM

Bob, I looked into a particular bid about 1 yr ago, it was for on call electrical service for an Air base. The contract was for 3 yrs with a fourth optional.

These type bids call for you to name your price, per hour, for each of the 4 yrs.

xxxx for yr1
xxxx for yr 2
xxxx for yr 3
xxxx for yr 4

It also calls out, you are limited to 15% mark-up on materials.

They want the reciepts, if they ask.

This is the bid, if you don't like the terms......don't bid it.

Just because you would never do such a thing, doesn't mean this type of arrangement doesn't exist.

And if material is taken out of company stock, ie straps, wire ect, you price out each item and indicate stock item.

It can be a sweet deal if done right.

iwire

03-09-2009, 10:06 PM

It also calls out, you are limited to 15% mark-up on materials.

They want the reciepts, if they ask.

This is the bid, if you don't like the terms......don't bid it.

Exactly, but that is different then always doing it as a 'nice gesture'.

Just because you would never do such a thing, doesn't mean this type of arrangement doesn't exist.

Never said it does not happen or that the companies I have worked for have not done it when it was all part of a contract.

But when I hear T&M I think of regular run of the mill service calls that have no contract. The customer signs a rate sheet and we start.

Mule

03-09-2009, 10:10 PM

Or your showing them they can make you jump through hoops.No hoops here Bob, If I detect a customer like that, he's not my customer any longer

Because they are not going to want to see they paid so much for wire nuts, screws etc.
We have a flat rate fastener charge that is charged to every job per day

The smaller the cost the higher it gets marked up.
Our trip charge covers that cost, if there is little or no materials

If you think thats wrong then I assume you don't shop at stores or bring your vehicle to a mechanic?:smile:I dont thinks its wrong Bob, and I dont think my way is wrong either, just different

To keep things clear I am an employee, I don't have the guts or energy to run a business. Besides, I would always be an electrician running a business not a businessman running an electrical shop.Youve got me titled just the way I like it.......:grin:

:grin: It's ok to be different..........isnt it?

Dnkldorf

03-09-2009, 10:15 PM

But when I hear T&M I think of regular run of the mill service calls that have no contract. The customer signs a rate sheet and we start.

I hear ya. Some of these arrangements aren't so much for making money now, as much as they are taken at cost, and made up after building relationships and trust as mentioned in above posts.

FWIW, I wouldn't break down materials individually. I would just have 2 lines.

time xhrs total
Mat total

And I wouldn't do it as a nice gesture either.

NolaTigaBait

03-09-2009, 10:48 PM

I would always be an electrician running a business not a businessman running an electrical shop.

iwire, i find myself doing this...even when i bid a job with a flat price, i never find myself cutting corners, i go the extra mile and add this or do this, i end up killing my profit margin!

Rewire

03-09-2009, 10:52 PM

iwire, i find myself doing this...even when i bid a job with a flat price, i never find myself cutting corners, i go the extra mile and add this or do this, i end up killing my profit margin!
After I hired an office mananger I stopped doing the billing and sinse I was no longer tweaking the bottom line our profitability went up.

Mule

03-09-2009, 10:55 PM

Exactly, but that is different then always doing it as a 'nice gesture'.

Never said it does not happen or that the companies I have worked for have not done it when it was all part of a contract.

But when I hear T&M I think of regular run of the mill service calls that have no contract. The customer signs a rate sheet and we start.

I guess this day and age, its a luxury to work on a hand shake, or a man's word. I admit, I wouldnt function well in a different environment. 90% of our work is only verbal upfront. Of course with the exception that larger sums of money, are written proposals....

NolaTigaBait

03-09-2009, 11:14 PM

After I hired an office mananger I stopped doing the billing and sinse I was no longer tweaking the bottom line our profitability went up.

funny how that works....you kinda need to be cold-hearted...you can't let your emotions get involved, you want to go the extra mile, but at the end of the day, you screw yourself

don_resqcapt19

03-10-2009, 08:06 AM

How would you respond to "Okay, then, I'll supply the materials. Just give me a list."
I don't have an issue with that. On our T&M projects there is very little profit on the material...it is all in the labor rate. However I would make sure that the owner knows that he will be paying the labor rate while we are waiting for his material to get on sight and that there will be no guarantee on any of the material. Any service calls where the trouble cause is determined to be the owner supplied material will be billed at the normal service call rate.

don_resqcapt19

03-10-2009, 08:11 AM

But when I hear T&M I think of regular run of the mill service calls that have no contract. The customer signs a rate sheet and we start.
A lot of our work is long term onsite work for industrial clients. Most of it is T&M with a set markup and set labor rates. Some times the yearly billing will exceed a million dollars for these clients.

charlietuna

03-10-2009, 10:52 AM

Trust between the customer and the contractor grows with time and i'm sure a customer tests our compitition from time to time! One of the last T&M jobs we did was a $385K printing pressroom. The owner has us remote locate,outside the pressroom, all the supporting equipment to operate his presses! A great job and very interesting. Everyone was happy-the owner, the press installers, the press operators, and us, we made a nice profit. No bickering over extra work or things that required changing as the press sections were assembled. As we were finishing up the press manufacturer's rep called and asked us if we would consider installing one of their presses for another print shop that was to arrive in six months? We told him "no problem". About a month before the arrival date his customer called us for a price, we told him it would be T&M like our customer's! The guy had a fit and couldn't believe our customer hired out this job T&M and actually called our customer to varify it! We didn't do the job -- they demanded a set price and at the time we were too busy............. It takes trust and trust takes time!

weressl

03-10-2009, 12:17 PM

First off, I know some of you dont like T&M, for several reasons......FWIW, I am starting to SOMEWHAT agree with you.....that is another topic.....

Case in point, I have some T&M going now, for a very good contractor (tele/data). We have our contract and agreement, no problem there at all.....

I have noticed that between my supply houses that there is a QUITE NOTICABLE difference on some items.....

Say I order x amount of conduit at supplier a, and they only have half of the amount I need, and I get the rest from supplier b. Supplier B price is 35% less than supplier a. How would you bill this???? List sepreate, or use supplier a price for both, and make a little extra????
I guess it is more of a ethics question....surely someone has been through this before....????

You are correct, it is an ethics issue. So what does YOUR conscience tells you to do? Why would you let your conscience influenced by other's 'opinion'?

This was a VERY enlightening excercise. Some people have no problem 'sticking it to' the customer, but holler to high heaven that the Big Boxes or Companies trying to screw the little man, even when they just engage in open and competitive marketing and pricing.

Capitalism and free market without ethics will doom society. We are just about there.

This was a shameful exhibit of it.:mad:

Kudos tot he ones who exhibited moral fortitude and even more to those who actually practice it.:smile:

Rewire

03-10-2009, 03:38 PM

You are correct, it is an ethics issue. So what does YOUR conscience tells you to do? Why would you let your conscience influenced by other's 'opinion'?

This was a VERY enlightening excercise. Some people have no problem 'sticking it to' the customer, but holler to high heaven that the Big Boxes or Companies trying to screw the little man, even when they just engage in open and competitive marketing and pricing.

Capitalism and free market without ethics will doom society. We are just about there.

This was a shameful exhibit of it.:mad:

Kudos tot he ones who exhibited moral fortitude and even more to those who actually practice it.:smile: its a contract issue and not an ethics issue.If you have a contract that says you mark up at a set % above purchase price then your answer is clear.If your contract calls for a price set by you on material ,then you have your answer.If your contract calls for purchase price then you have your answer.If you have a contract then the only question in ethics is are you following it

weressl

03-10-2009, 03:46 PM

its a contract issue and not an ethics issue.If you have a contract that says you mark up at a set % above purchase price then your answer is clear.If your contract calls for a price set by you on material ,then you have your answer.If your contract calls for purchase price then you have your answer.If you have a contract then the only question in ethics is are you following it

You are correct. It SHOULD be a Contract issue. However OP defined it as an ethics question, as if it was undefined in the Contract. Additionaly when you review the comments, some were commenting on when they are NOT bound by Contract.

petersonra

03-10-2009, 04:01 PM

this seems like something that should be better defined up front.

most times i have been involved in T&M deals it is labor at a certain rate and parts at actual cost plus 15% (typically).

jaylectricity

03-10-2009, 04:51 PM

aline

03-10-2009, 05:00 PM

Say I order x amount of conduit at supplier a, and they only have half of the amount I need, and I get the rest from supplier b. Supplier B price is 35% less than supplier a. How would you bill this???? List sepreate, or use supplier a price for both, and make a little extra????
I guess it is more of a ethics question....surely someone has been through this before....????
If you list a higher price on the invoice for the conduit purchased from supplier a, and a lower price for the conduit purchased from supplier b, isn't the customer going to question why you didn't just purchase all the conduit from supplier b?

Why not just add the costs of the conduit from supplier a to the conduit from supplier b and then add your markup percentage to that total?

Supplier a: Conduit $500/.80 = $625.00
Supplier b: Conduit $400/.80 = $500.00

Total: Conduit $900/.80 = $1125.00

If your profit is based on a set percentage of what the conduit costs you, it would seem to be in your best interest to buy your conduit from the highest priced vendor.

You could just tell supplier b that you would like him to charge you the higher amount that supplier a is charging you. That way you'll still be complying with the terms of the contract and can submit the receipts to back it up. :)

Supplier a: Conduit $500/.80 = $625.00
Supplier b: Conduit $500/.80 = $625.00 (After supplier b increase to match supplier a price) :)

Total: Conduit $1000/.80 = $1250.00

Would the customer offer to do something for you if it meant you saved money at his expense? I have my doubts. :)

If you get your conduit from the cheaper supplier your saving the customer money at your expense. Sure the profit margin is the same percentage but the dollar amount is less. $25 less.

aline

03-10-2009, 05:01 PM

Return the conduit to Supplier A and buy all of it from Supplier B.
And ask Supplier B to match Supplier A's price. :)
This is when you want to call around and find the highest price rather than the lowest.

You're going to go through the trouble of returning conduit to Supplier A so you can save the customer some money at your expense?
Wouldn't it make more sense to just add the two amounts together and base your markup on that?

Rewire

03-10-2009, 05:35 PM

And ask Supplier B to match Supplier A's price. :)
This is when you want to call around and find the highest price rather than the lowest.

You're going to go through the trouble of returning conduit to Supplier A so you can save the customer some money at your expense?
Wouldn't it make more sense to just add the two amounts together and base your markup on that?
We are on a thirty day invoice so I have time to call one supplier and have them meet the price of the other,if my supplier wants more of my business they will work with me.

aline

03-10-2009, 05:50 PM

We are on a thirty day invoice so I have time to call one supplier and have them meet the price of the other,if my supplier wants more of my business they will work with me.
If your contract with the customer states that you'll receive 20% markup on what your material costs you, why would you want them to lower the price to match the other supplier? :)

Unless your talking about them raising their price to match the other supplier. :)

Rewire

03-10-2009, 06:02 PM

If your contract with the customer states that you'll receive 20% markup on what your material costs you, why would you want them to lower the price to match the other supplier? :)

Unless your talking about them raising their price to match the other supplier. :)

I guess alot depends on what kind of relationship you want with this customer

If you never plan on working for them or any of their friends relatives or anyone they may have contact with then by all means nail them for every penny at every chance...but

If you would like to get more work with them have them recommend you to family and friends and provide an overall great reference to other clients then trying to save them a few dollars could well pay off in the end.

the difference in a 20% mark-up between $20.00 and $25.00 is only $1.25 thats not worth my reputation.

cdslotz

03-10-2009, 06:25 PM

Just charge published contractor net from a pricing book. They can't argue that price.
If I bought 1/2" EMT for 13.75/C and Trade Service has it at 26.20/C, that's what I charge.

Fulthrotl

03-10-2009, 06:39 PM

This was a VERY enlightening excercise. Some people have no problem 'sticking it to' the customer, but holler to high heaven that the Big Boxes or Companies trying to screw the little man...

like the saying says.... what goes around, comes around, about 9 am thurs....

most everything i know about being successful at most anything boils down
to..... "it is done unto you, as you believe".

so, if i am "sticking it to" any customer, or anyone for that matter, what i am
really doing is demonstrating that the only way i can have what i think i want
is at someone else's expense.

so, the sponsoring belief is that there isn't enough to go around, and i have
to steal yours to have enough.

and that is what i will have demonstrated in my experience. there isn't enough
to go around. starting with me.

the quickest way to poverty is by stealing.

jaylectricity

03-10-2009, 06:47 PM

the quickest way to poverty is by stealing.

I don't know...it took Madoff quite a while.

aline

03-10-2009, 06:56 PM

If you would like to get more work with them have them recommend you to family and friends and provide an overall great reference to other clients then trying to save them a few dollars could well pay off in the end..
Only if they actually know that you saved them money.
Unless you actually point it out to the customer they're not going to know that you saved them money.

Some people will actually recommend you to family and friends and provide an overall great reference to other clients because of the level of service you provided and quality of work you performed not just because you saved them a few dollars.

For some customers the level of service they receive and the quality of the work performed is far more important than whether or not you saved them a few bucks.

the difference in a 20% mark-up between $20.00 and $25.00 is only $1.25 thats not worth my reputation.
And I don't think the customer should be too worried about the difference either. :)

That's why I think it would be more than fair to just add the cost of the higher priced conduit to the cost of the lower priced conduit and base the markup on that. I don't think it's enough to really worry about.

I wouldn't be too concerned about calling Supplier A to get them to match supplier B's price for a T&M job.

However, I would try to use as much of the higher priced conduit on this job as possible and save the lower priced conduit for a fixed bid job. :)

weressl

03-10-2009, 07:12 PM

Only if they actually know that you saved them money.
Unless you actually point it out to the customer they're not going to know that you saved them money.

Some people will actually recommend you to family and friends and provide an overall great reference to other clients because of the level of service you provided and quality of work you performed not just because you saved them a few dollars.

For some customers the level of service they receive and the quality of the work performed is far more important than whether or not you saved them a few bucks.

And I don't think the customer should be too worried about the difference either. :)

That's why I think it would be more than fair to just add the cost of the higher priced conduit to the cost of the lower priced conduit and base the markup on that. I don't think it's enough to really worry about.

I wouldn't be too concerned about calling Supplier A to get them to match supplier B's price for a T&M job.

However, I would try to use as much of the higher priced conduit on this job as possible and save the lower priced conduit for a fixed bid job. :)

I guess the last part of the OP - ethics - was lost on you.... Perhaps you can peruse a dictionary if you are unfamilar with the word.:rolleyes:

jaylectricity

03-10-2009, 07:33 PM

However, I would try to use as much of the higher priced conduit on this job as possible and save the lower priced conduit for a fixed bid job. :)

I'm assuming you're being facetious when you imply that it makes a difference which of the conduit you are using.

Mr. Wizard

03-10-2009, 08:04 PM

As I said, it's not a 'right' it is a decision you have made.

Nothing personal but I can see no reason whatsoever to show them your prices. None, never, ever, not their darn business.

Does the grocery store you shop at show you the price they paid? Does the supply house show you what they paid? Does anyone you do business with show you what they paid for what they are selling you?

Why would you want to show them your costs? :-?

I agree. I'll tell them my T & M labor rate all day long, but material cost is my business. That's not saying I break it off in them, but my time to get the material, have it delivered to the job or shop, sort it out and store it is worth something. Any retail or wholesale store will tell you that. Ever see a store have a sale and boast of 75% off? Even at those "deep" discounts, the store is still making a profit.

Mr. Wizard

03-10-2009, 08:12 PM

Just charge published contractor net from a pricing book. They can't argue that price.
If I bought 1/2" EMT for 13.75/C and Trade Service has it at 26.20/C, that's what I charge.

That's right. Here's a scenario: you finish a job and have 300' of conduit left over, and you keep it because you know you will use it on another job. Do you charge what you paid for it several months ago when you bought it, plus markup? What if the price has skyrocketed? Call supplier A, supplier B? What to do? Simple answer is charge a set rate for conduit, as cdslotz mentioned. If you can get it cheaper at times, good for you. But even if you have to pay a little more, the set rate should cover it, with room to spare. There is nothing unethical about that.

Rewire

03-10-2009, 08:15 PM

Only if they actually know that you saved them money.
Unless you actually point it out to the customer they're not going to know that you saved them money.

If you buy one 10ft stick of 1/2 emt your going to pay around $3 at our supply hous ,if you buy 1000 ft the price drops to around $1.97 which is close to the shelf price at the blue box.As long as your customer never sets foot in lblue box he will never know you gouged him at $3 a stick.

aline

03-10-2009, 08:46 PM

I guess the last part of the OP - ethics - was lost on you.... Perhaps you can peruse a dictionary if you are unfamilar with the word.:rolleyes:
Some of you take what I post on this forum way too seriously. I'm not being serious about everthing I post so lighten up a little. :)

Believe me I treat my customers very well and I'm very honest with them regardless of what I post here.

I don't know how many times a customer insisted they had a bad ballast in their light fixture because they just replaced the lamps and it still doesn't work.

When I get there I see one of the pins sticking outside of the lamp holder. I could easily just agree with them and replace the ballast but I don't. Sometimes the new lamps they put in didn't work and all I had to do is replace them with lamps from my truck. I've missed out on many a ballast replacement because of my ethics.

One of my biggest problems has been that I would look at a price I'm about to give a customer and feel it was too much so I would lower it and it would end up biting me in the end. :)

If I didn't have any ethics I would have the boats, the ATV's, the hot tubs, the in ground pools, the dedicated home theater rooms, etc. that most of my customers have. I can't afford these things so my ethics must not be too bad. :)

I'm definately not getting wealthy from electrical contracting.

Some that post here have never owned and operated a contracting business and only see it from a customer point of view. Believe me my attitude towards contractors has changed drastically since I became one. I now realize just how difficult it is to operate a contracting business and be profitable at it and know that contactors are not making a killing off their customers.

When I hire a contractor I'm not too concerned that he's going to overcharge me and make a ton of money from me. I know in reallity he's not making much for all the hard work and risk he's taking.

aline

03-10-2009, 09:12 PM

If you buy one 10ft stick of 1/2 emt your going to pay around $3 at our supply hous ,if you buy 1000 ft the price drops to around $1.97 which is close to the shelf price at the blue box.As long as your customer never sets foot in lblue box he will never know you gouged him at $3 a stick.
If I paid $3 a stick at the supply house and sold it to the customer for $3 a stick plus the specified 20% markup in the contract how is that gouging the customer?

If the customer only want's one stick of conduit what's wrong with charging him $3 for it?

Have you ever noticed the difference in price when you buy wire by the foot from the blue box instead of the 500ft roll?

500ft. roll #12THHN Stranded = $40.00
#12THHN Stranded per foot = $00.29 X 500ft = $145.00

Do you think the blue box store paid more for that 500ft. roll they put on the rack that they're selling for 29 cents a foot?

Talk about gouging. :)

I was doing a wire pull at a customer's home and came up short on wire. The nearest place to get wire was the big box store so I went their and loaded up a 500ft roll of black and a 500ft roll of red. At the check out the red roll rang up at the per foot price of $145.00. It took going through several employees to finally leave the place with both rolls priced at the $40 per roll price. Had to get a manager out to overide the price.

The whole reason I went there was so I wouldn't have to drive across town to the nearest supply house saving me some time. This quick wire pull was all I had left to finish this job. I think it would have been quicker to drive across town. :)

With the average net profit of contractors hovering at around 5% I don't think customer's need to be too woried about being gouged by contractors.
I don't think it's a big problem in the industry. We're too busy trying to cut each other's throat. :)

Dnkldorf

03-10-2009, 09:44 PM

With the average net profit of contractors hovering at around 5%

Does this number come from a reliable source you can state for us to check out?

charlietuna

03-10-2009, 09:48 PM

I have always maintained my own material price list which i used on my T&M invoice program which i added 27 percent markup. On specialty things like fixtures and gear it was cost plus 10 percent. When a customer questions any of these figures its due to trust --- and most customers do not know the cost of 1/2 inch steel flex nor what it is!! I have never had a problem justifying my billing because i can look my customer in the eye because i don't play with any figures and try to keep them as accurate as possible. I don't try to split hairs either way on material costs. They only get billed for the material installed each day - extra materials return to our stock--but on their time.

aline

03-10-2009, 10:25 PM

Does this number come from a reliable source you can state for us to check out?
Here's one source.

http://www.bizstats.com/reports/corp.asp?industry=Specialty+trade+contractors&profType=income&var=&coding=23.8

http://www.bizstats.com/index.asp?

aline

03-10-2009, 10:39 PM

Looks like the chart is from the year 2005.

It might be less in today's economy.

http://www.bizstats.com/reports/corp.asp?industry=Specialty+trade+contractors&profType=income&var=&coding=23.8

Dnkldorf

03-11-2009, 10:26 AM

Thank You.

petersonra

03-15-2009, 12:29 PM

Just charge published contractor net from a pricing book. They can't argue that price.
If I bought 1/2" EMT for 13.75/C and Trade Service has it at 26.20/C, that's what I charge.

It all depends on what you agree to upfront. Thats why you should have a paragraph somewhere in your T&C that defines how you handle T&M work.

Our T&M work is XX% markup on parts, and a fixed rate for labor (engineering and shop time). We don't charge for salesman or purchasing agent time. We do charge for all shop and engineering labor that is involved though. Some places have pretty elaborate schemes for T&M. I think it is best to have something simple that both sides of the contract can understand.

Its is very rare that we have a customer ask for invoices to prove what we paid for something, except for expense reports. For some reason, that is a big bugaboo with a lot of companies.

satcom

03-15-2009, 12:59 PM

With the average net profit of contractors hovering at around 5% I don't think customer's need to be too woried about being gouged by contractors.
I don't think it's a big problem in the industry. We're too busy trying to cut each other's throat. :)

5 to 7% had been the average for years on recorded income, however you have to include the side money contractors net form inventments and asset grouth, it is not rare for smart contractors to earn real net returns in the 20 to 30% area.

On costing things like conduit, folllowing some published price, may loose you a bundle, the staging and other site conditions may make that conduit cost 3 times the cost easy, but what the heck do I know.

aline

03-15-2009, 01:31 PM

5 to 7% had been the average for years on recorded income, however you have to include the side money contractors net form inventments and asset grouth, it is not rare for smart contractors to earn real net returns in the 20 to 30% area.

There doesn't seem to be too many smart contractors in my area. Most don't have any side money left to invest after paying the bills.

Their assest growth is buying another beat up old truck. :)

I'm not saying there isn't any out there, just that they are rare.

I believe many would be out of business if their spouse didn't have a good job.
I know this to be true with my friend the siding contractor. If it wasn't for his wife having a good job and being able to pay all the bills he would have been out of business long ago.

brian john

03-15-2009, 06:42 PM

A particular relay we use, differs in price between suppliers from $275.00 to $1,175.00, the manufactures price is the highest. I have to sell at the $1,175.00 price (with markup) as I never know who may have the unit in stock.

Teaspoon

03-15-2009, 07:35 PM

Dnkldorf

03-15-2009, 07:42 PM

aline

03-15-2009, 08:15 PM

Instead of understanding why customers are choosing your competition over you, it is better to just call them cheapskates, be jealous of the other guy for having a spouse who works and wants her own career, or just call the the guy a trunkslamming low life.

That's not going to get you far in business.

Maybe that's what you want out of your business, who knows.
I'm not sure if this is directed at me, but it sounds like it, so I will respond.

In my post I can clearly see where I stated that I just call them cheapskates, I'm jealous of the other guy for having a spouse who works and wants her own career and call the guy a trunkslamming low life.

You sure seem to read alot more into my post than I do and take it a lot more seriously than I do. Am I hitting close to home or something? :)

If customers are choosing someone else over me just because their price is lower then I've got problems with my selling abilities and I need to work on them.

There's nothing great about getting the job because your the lowest price. It's not that hard to do.

My spouse doesn't work right now because she is full time student getting a degree and I support her in this. I'm definetly not jealous of the other guy with the working spouse. It's just a statement that I feel to be true. Nothing more. If you want to read more into it than that feel free.

My friend, the siding contractor, told me he made $25,000 last year and readily admits that if his wife didn't have a good job with health insurance he would be in deep trouble. He says he really doesn't want to work too hard and he's fine with only making $25,000. He can definately bid jobs cheap without worrying about it. I'm not the least bit jealous of my friend. He drinks alot and lacks motivation in my opinion. Not something I'm real jealous about. But he's happy and that's all that really matters. :)

bradleyelectric

03-15-2009, 08:19 PM

aline

03-15-2009, 09:11 PM

Believe me when I say, I'm much more jealous of this guy than the guy with the spouse that has a career and wins his cutomers over by being the lowest price.
http://www.mistersparky.com/

I would feel as if I had accomplished much more if a company like Clock Work Home services wanted to franchise my business rather than getting a job because I was the lowest price.

I'm always wanting to understand why customers are choosing my competition over me.

But if it's because their price is lower I don't want to just lower my price. I would rather try to become better at selling myself and my company as to why they should use me instead of the lower priced guy. If I can't do that than lowering my price would be a last resort and I would not be happy about it. Lowering your price is easy and it's not some great accomplishment when you get a job by doing it.

There are successful companies who prices are far from the lowest.
How do they do it?

That's what I want from my business.

ohm

03-16-2009, 02:13 PM

How would you respond to "Okay, then, I'll supply the materials. Just give me a list."

Larry, I do a lot of T & M and some have actually said that. I say fine, give them a list, they pick up the wrong stuff, it holds the job up, I'm on the clock, they run their legs off, I say I've got the right stuff on the truck, they say OK.

Not only that, if they supply material and it's defective, it's their problem.

Rewire

03-16-2009, 03:53 PM

Believe me when I say, I'm much more jealous of this guy than the guy with the spouse that has a career and wins his cutomers over by being the lowest price.
http://www.mistersparky.com/What is often the case with a franchise is you have a much smaller profit margin

I would feel as if I had accomplished much more if a company like Clock Work Home services wanted to franchise my business rather than getting a job because I was the lowest price.would you like a Mr Rewire franchise? You could be the first but you need to have at least $100,000.00 in cash or credit.

I'm always wanting to understand why customers are choosing my competition over me.

But if it's because their price is lower I don't want to just lower my price. I would rather try to become better at selling myself and my company as to why they should use me instead of the lower priced guy. If I can't do that than lowering my price would be a last resort and I would not be happy about it. Lowering your price is easy and it's not some great accomplishment when you get a job by doing it. Pricees are market driven ,I try and be at the high end of the scale.The idea is to be as close as you can to beingout of the market ,if all bids are close then salesmanship can make the difference.

There are successful companies who prices are far from the lowest.
How do they do it?

That's what I want from my business.The question is will they be able to survive this economy?Last year their was plenty of work in all segments of the market
we had very little compitition in the service end as construction was booming now I see more ECs moving into the small job market because their are no big projects.Some are comming in high some are low I will have to wait and see how their entry into this market will affect me and my business,botton line supply and demand rule.

aline

03-16-2009, 09:27 PM

What is often the case with a franchise is you have a much smaller profit margin
would you like a Mr Rewire franchise? You could be the first but you need to have at least $100,000.00 in cash or credit.Pricees are market driven ,I try and be at the high end of the scale.The idea is to be as close as you can to beingout of the market ,if all bids are close then salesmanship can make the difference.The question is will they be able to survive this economy?Last year their was plenty of work in all segments of the market
we had very little compitition in the service end as construction was booming now I see more ECs moving into the small job market because their are no big projects.Some are comming in high some are low I will have to wait and see how their entry into this market will affect me and my business,botton line supply and demand rule.
I'm not talking about buying into a franchise.

I'm talking about someone franchising your business.
I don't think that Mister Sparky himself is hurting any.
Clockwork bought his business to franchise it and I'm sure he could retire a very happy man any time he wanted to. He has that option. Options are nice to have. :)

That's what I'm talking about the ultimate exit strategy. The ability to be able to sell your business for a lot of money and retire if you want to. Of course if you really love the business you can always keep working.

I don't love this stuff as much as some of you do and don't want to do it right up until the day I die.