Drive time and $$$$

[In Charge Electric ,INC.]

I currently have two different rates. One for a smaller county and one for the bigger city. My rates are $75 for the 1st hr and $55 for additional. In the the big city its $100 and then $75. Question 1, Does that sound right for central Fl? Question#2. When does time start? when I leave what ever I was doing or when I get there? Question #3 Should I charge for small estimates when someone wants me to come over at there house? I think I should but I got in a debate with one of my friends about that one!

[brian john]

Depends on how busy you are and if you are actually making any money.

We charge portal to portal, but the men are expected to get to the first job on their time same getting home, except for overtime and emergencies.

Emergencies are 4 hours minimum. Overtime we give them 1-2 hour travel depending on job and location.

For myself I charge 2 hours drive time plus minimum 4 hours on job, for most jobs (depending on customer), I also have variable rates depending on customer a regular or one time.

[satcom]

I currently have two different rates. One for a smaller county and one for the bigger city. My rates are $75 for the 1st hr and $55 for additional. In the the big city its $100 and then $75. Question 1, Does that sound right for central Fl? Question#2. When does time start? when I leave what ever I was doing or when I get there? Question #3 Should I charge for small estimates when someone wants me to come over at there house? I think I should but I got in a debate with one of my friends about that one!

The firs thing you need to do is change the same of the company from in charge electric, to out of control electric.

Service calls will burden a company at a much higher rate, usually twice or more then your normal burden, lets say your normal cost per man hour in $75, then your service rate would be $150 for each and every hour, and even at these rates, you may notice a loss on doing service calls, many guys never track their real costs, and live in ly ly land, thinking they are making money on service work.

Free estimates are not free, they can cost you plenty, you can't go to a customer to price a service call for minor repairs or small jobs, it will break your business, faster then any other bad practice. Rule of thumb free estimates for jobs over $2000 give or take a little.

"I think I should but I got in a debate with one of my friends about that one!"

Your right you should charge, so when your friend goes bust, you can help him out!

[chris kennedy]

One for a smaller county and one for the bigger city. Does that sound right for central Fl?
I didn't know there was a small county left in central Fla. You are right on with the srcond rate. We charge slightly more for our service guys.

Can't help with the estimate thing, we don't take new costumers. If we have to go look at something, we try to find someone thats going by and thats a courtesy.

Nice to see another Floridian join the Forum, Welcome.

[In Charge Electric ,INC.]

thank you guys! Satcom take it easy on me. I'm very new at this! I'm wearing alot of hats here.

[ItsHot]

Pricing seems to be the biggest concern and reason so many little guys are dropping out of the business. A part of one members signature here is...$75 an hour,if you watch, $100 an hour ..if you help $150!!! I guess this is why so many refuse to do residential work. So much squabbling about prices. Why do homeowners not blink an eye to pay a painter $700 to paint a couple of small bedrooms and go ballistic when I tell them it is $150 to add a additional outlet(recptacle)?

[satcom]

thank you guys! Satcom take it easy on me. I'm very new at this! I'm wearing alot of hats here.

No I will not go easy on you, I don't want to see you make the dumb mistakes I made, and had to pay for, the rest of my life.

[romexking]

In Charge,

First, take off for a couple of weeks and catch up on so light reading regarding pricing. Just do a search on this forum, and you will find plenty.

In regards to charging for estimates, if you don't charge for them, who is paying for your time to give them? Someone is...and it is either YOU or the customers that actually use your services. You will have to charge the customers that you perform work for more money per hour to make up for all of the "free" estimates. That doesn't seem fair to those people.

As for your hourly rate, well that is for you to decide. However don't just guess at a number (as it seems you are doing). As it's been said a thousand times before, perform a break even analysis to determine your true cost of performing service work, and then add in your desired profit. Search here or the internet for "break even analysis" and you will find some worksheets to help you. If you don't do this first, there will be absolutely no sympathy given if your business quickly fails.

Although I use it, I won't "demand' that you price by flat rate, but you should seriously consider it. It will make it easier sell a job to a homeowner when you give them the total price instead to telling them $125-$200 an hour. And yes, that is what you will probably come up with if you perform a break even analysis. Let us know what you come up with if you do this.

Rich

[In Charge Electric ,INC.]

Okay well said and thank you

[Rewire]

Look at your market and what your competitors are doing. Price to your market.As for estimates ,nothing is "free" but you can give the customer the illusion that it is.

[satcom]

Look at your market and what your competitors are doing. Price to your market.As for estimates ,nothing is "free" but you can give the customer the illusion that it is.

Just remember every one of those competitors may not know their true cost, so looking at them willl not help you find your price.

[bclumen]

Are you talking 125 -200 per hour for a licensed electrician? What if you add a helper?

[Rewire]

Just remember every one of those competitors may not know their true cost, so looking at them willl not help you find your price.
Prices are market driven ,you can price yourself out of the market so having a knowledge of what is being charged by other electricians is a determining factor in what you charge.

[bclumen]

Prices are market driven ,you can price yourself out of the market so having a knowledge of what is being charged by other electricians is a determining factor in what you charge.


I aggree with this. I price our Labor at what I feel is on the high side. I spend no money on advertising and we get all of our work through word of mouth and refferals. I love to see that others are charging the same. I am just curious about helper/apprentice rates.

[emahler]

Prices are market driven ,you can price yourself out of the market so having a knowledge of what is being charged by other electricians is a determining factor in what you charge.

that's only partially true, and easily avoided...

It's completely true if you charge by T&M...

Flat rate allows you to avoid much of this issue. Complete job prices are much easier to sell to a residential customer at a higher rate than T&M.

Residentially we average about $230/billable hour/truck (1 man, 4 billable hrs avg in a day...do the math) This works out to about $115/hr/man for an 8 hr day. I'd have a hard time getting $115/hr/man (including travel time) in my area. Guys are still billing out at $60/hr/man.

But with flat rate, we get it everyday. So, my market really doesn't concern me. By the way, there are a couple of companies that are not from our area, but work here, who are over $300/billable hour.

But I'd hazzard to guess that approx 50% of our market still operate T&M for $60/hr or less....

[In Charge Electric ,INC.]

On a couple of small jobs that I happened to do I had a helper and I charged an additional $ 40.00 for him.

[Rewire]

that's only partially true, and easily avoided...

It's completely true if you charge by T&M...

Flat rate allows you to avoid much of this issue. Complete job prices are much easier to sell to a residential customer at a higher rate than T&M.

Residentially we average about $230/billable hour/truck (1 man, 4 billable hrs avg in a day...do the math) This works out to about $115/hr/man for an 8 hr day. I'd have a hard time getting $115/hr/man (including travel time) in my area. Guys are still billing out at $60/hr/man.

But with flat rate, we get it everyday. So, my market really doesn't concern me. By the way, there are a couple of companies that are not from our area, but work here, who are over $300/billable hour.

But I'd hazzard to guess that approx 50% of our market still operate T&M for $60/hr or less....
What do you do if your material cost is over 230.00 and your time is only 1 hr seemsd you would be loosing that way?

[satcom]

What do you do if your material cost is over 230.00 and your time is only 1 hr seemsd you would be loosing that way?

If you include all your labor, and all your material, how can you loose, you can only loose if you charge T&M.

Whatever the cost is that in the price of the job. That simple and you never loose, the customers that don't want want to pay what the job costs, are not customers you want.

[emahler]

What do you do if your material cost is over 230.00 and your time is only 1 hr seemsd you would be loosing that way?

those number don't include any material.

can you explain what you mean in the second part? are you saying that if I only charged $230 and my material was more than that and it only took an hour, that I would make nothing on labor and actually pay out of pocket for material?

[emahler]

On a couple of small jobs that I happened to do I had a helper and I charged an additional $ 40.00 for him.

including downtime? or only for time on the job? 4 hrs travel, 4 hrs billable...$160 billed out...$20/hr billed...how much paid? how much made?

[cadpoint]

Your time, plus 35%(@ least pay your taxes), plus profit + other expenses !

[In Charge Electric ,INC.]

including downtime? or only for time on the job? 4 hrs travel, 4 hrs billable...$160 billed out...$20/hr billed...how much paid? how much made?
I charged $75 for myself and 40 my help which made 115 Total but for only the time I was on the job, I need to start to charge for drive time!

[4x4]

does anyone have any links to a free "break even analysis" worksheet?

[tufts46argled]

Just curious how do you flat rate troubleshooting?

[boboelectric]

I still advertise "Free Estimates" The ones i get are worth it ,the jobs i don't get are usually price shoppers,cheapsters.

[emahler]

Just curious how do you flat rate troubleshooting?

diagnostic fee of $X (we charge $165.00)
usually find the problem in 30 mins or less
once you find the problem, quote the repair fee (if it's large...i.e $1000+, we wave the diagnostic fee...if it's small, we add it to the diagnostic fee)

Typical problem - loose connection on a duplex receptacle...
diagnostic $165
Repair - $65
Total - $230
Material - $1
Total time on job (not including travel) - < 1 hr


if you can't find 75%+/- of the problems in less than 30 mins, go back to installations...

[tallguy]

I charged $75 for myself and 40 my help which made 115 Total but for only the time I was on the job, I need to start to charge for drive time!Maybe you do... but customers might start heading for the competition if that isn't the norm in your area.

Here is a question: Is your service area geographically spread out? i.e. does your drive time vary a great deal from job to job? If it's not, you might want to consider just rolling it into your hourly rate or your up front flat charge. Check out what the (legitimate) competition is doing by having the wife/girlfriend/POSSLQ (http://en.wikipedia.org/wiki/POSSLQ) call around.

[LawnGuyLandSparky]

Some of the discussion here either pointless or inapplicable. Many people (residential) and smaller business find themselves needing an electrician or a plumber rarely if ever. I don't think they're spending too much time comparison shopping the ads or cold-calling various contractors to get the best price. Competition can't inform them over the phone how much it's going to cost or how long it's going to take either.

I think it's better to say "we'll be there in under an hour" than "we're 12% cheaper than the leading competitor." People comparison shop for paper towels and toothpaste, not so much electrical service contractors or transmission shops. They know going in it's gonna cost and it's gonna hurt.

[emahler]

Some of the discussion here either pointless or inapplicable. Many people (residential) and smaller business find themselves needing an electrician or a plumber rarely if ever. I don't think they're spending too much time comparison shopping the ads or cold-calling various contractors to get the best price. Competition can't inform them over the phone how much it's going to cost or how long it's going to take either.

I think it's better to say "we'll be there in under an hour" than "we're 12% cheaper than the leading competitor." People comparison shop for paper towels and toothpaste, not so much electrical service contractors or transmission shops. They know going in it's gonna cost and it's gonna hurt.

don't discount the 'hourly rate' mentality...to the customer, we should all be the same. we should all work at approx. the same pace and have the same knowledge.

so, calling 20 guys in the phone book and getting an hourly rate should mean that the lowest hourly rate will be the cheapest, no?

[growler]

so, calling 20 guys in the phone book and getting an hourly rate should mean that the lowest hourly rate will be the cheapest, no?


It's really hard for a customer/homeowner not to be taken in by a low sounding rate. I'm doing a remodel at the present and the homeowner wishes that they had went with a different HVAC company but it's a little late in the game for that now.

These are highly educated customers, she is a registered interior designer and her husband is an engineer ( run his own sucessful business for 30 years ) but the lure of a cheap contractor was just to much for them.

If I hadn't done other work for them before they would have put the electrical out for bids and taken the cheapest electrician they could find ( they had problems with that once before, some people never learn).

The idea of a cheap rate has always been able to lure in the suckers. That's why advertisers use it so much.

[brian john]

If I have only learned one thing on this web site it would be:

There are a variety of methods (one method for every contractor in the business) of billing, making money, marking up material, drive time, tools and on and on. Just because it works in your area or for you does not necessarly mean it will fly and/or work in another area or with another contractor, or a different end of the business.


In the end you better have more in your pocket than you paid out or you are in deep trouble...

80.00 and hour may make you money and 100.00 an hour would make you happier, but in New York you could be bankrupt with this rate or wealthy beyond your wildest dreams in middle America.

[emahler]

i that were really true, there would be no chains or franchises. no national retailers selling at the same price, the same way, all across the country...everything we be priced strictly on local economy...gas...milk...etc.

[tallguy]

i that were really true, there would be no chains or franchises. no national retailers selling at the same price, the same way, all across the country...everything we be priced strictly on local economy...gas...milk...etc.I can't speak to all national chains, but I know that grocery stores, orange & blue stores, and even Wal-Mart -- believe it or not -- all price locally, or at least regionally.

[tallguy]

Competition can't inform them over the phone how much it's going to cost or how long it's going to take either.True... My point was that if the norm in his area is "we charge $xxx service charge and then quote a fixed price if it goes beyond 1 hour" and he has a completely different pricing structure, it might be a problem for customers who care to compare and make an informed choice. On the other hand, they might just like his way better!
I think it's better to say "we'll be there in under an hour" than "we're 12% cheaper than the leading competitor."Of course that shouldn't be one's basic selling point.People comparison shop for paper towels and toothpaste, not so much electrical service contractors or transmission shops. They just pick someone at random from the phone book and don't bother to check price & terms? I don't bother asking with my regular plumber since I already know his rates and I know I can trust him. If he's not available though (which is often, because he's very good and under prices himself -- shhhh! :smile:) I'm surely going to check first.

[growler]

Ever here of the " Big Mac Index " ?

It's real not a joke.

[tallguy]

Ever here of the " Big Mac Index " ?It's been a while... but yes (http://en.wikipedia.org/wiki/Big_Mac_Index). I used to read The Economist religiously...

[growler]

It's been a while... but yes (http://en.wikipedia.org/wiki/Big_Mac_Index). I used to read The Economist religiously...


Should we use the local price of a Big Mac to determine the the cost of a service call? It seems to work on the international level.

Edit: tall guy I'm just useing your link. Not a question for you.

[tallguy]

Should we use the local price of a Big Mac to determine the the cost of a service call? It seems to work on the international level.

Edit: tall guy I'm just useing your link. Not a question for you.
Can I answer anyway??

I suggest moving to Iceland (or Norway):
http://www.economist.com/images/20070203/BigMac.gif

[In Charge Electric ,INC.]

Maybe you do... but customers might start heading for the competition if that isn't the norm in your area.

Here is a question: Is your service area geographically spread out? i.e. does your drive time vary a great deal from job to job? If it's not, you might want to consider just rolling it into your hourly rate or your up front flat charge. Check out what the (legitimate) competition is doing by having the wife/girlfriend/POSSLQ (http://en.wikipedia.org/wiki/POSSLQ) call around.
Yes Sir it does I'm in cental Florida. It can a take sometime an hour to get to one place or the other but good advice Thank you