How do you charge your customers?

[shepelec]

After getting my books all up to date, P+Ls and doing my taxes, I took a look at my profitability. Now I've known all along that not every hour can or should be billed, if they could I'd be on a cruise right now instead of posting here.:roll:

With that said, I found it difficult at times to charge for travel to some service calls.
With this "challenged" economy it would seem that we would need to increase our profit margin as much as possible with out running our selves out of a job and with the cost of fuel recently...well we all feel that.
Most of my work is T&M and I'm a sole prop with no employees.

So the questions become,
How do the rest of you handle travel time for the customer or maybe a 2 hour minimum ?
What about a fuel surcharge?

Anything I missed? Feel free to add on.

Paul

 

[Transportation Guy]

Charging Customers

Charging Customers

That is the question of the year/decade. I find it difficult to charge every customer the same rate every time. If there is travel time involved, I try to get a trip charge for the travel time along with the service call but some customers baulk at that. Then they find someone cheaper. In this economy which is getting worse again due to fuel prices, we cannot work for free. I am a small 2 man shop and sometimes bend over to help the customer even at my expense because of being afraid of loosing the work. I keep saying not anymore but when licensed electrical contractors work for what hourly employees work for, its hard to charge what is required.

 

[bradleyelectric]

I don't charge by the hour I charge by the job. When the call comes in I act as if they want me to do the job not as if they are price shopping.

Hi this is Steve.....how can I help you? Hi I have a widget that needs fiddled. Hold on please so I can get to where I can get your information... Ok what is your name? What is the best phone number to reach you at? What is the address? When would be convenient for you for us to take care of that? Well, can you come tomorrow? We can be there at 8AM (or Friday at 8AM or whenever the soonest we can arrange that would be convenient to the customer).

Things are to expensive now a days to charge by the hour. We do the job and charge for the job according to what is in our price book. I would like to be able to charge a lot less than we do but the wouldn't be fair to me, my family or customers that need me to be able to stay in business so I can do their electric work.

 

[Transportation Guy]

Drive time

Drive time

But.... you are charging for drive time and a pre determined hourly rate. This has to be figured in your "charge by the job".

 

[laketime]

That is the question of the year/decade. I find it difficult to charge every customer the same rate every time. If there is travel time involved, I try to get a trip charge for the travel time along with the service call but some customers baulk at that. Then they find someone cheaper. In this economy which is getting worse again due to fuel prices, we cannot work for free. I am a small 2 man shop and sometimes bend over to help the customer even at my expense because of being afraid of loosing the work. I keep saying not anymore but when licensed electrical contractors work for what hourly employees work for, its hard to charge what is required.

If you are not charging what you need for gross profit (within reason) then you might as well not even take the job. Nothing worse than getting so much work you got out of business.:roll:

 

[mtfallsmikey]

Your hourly rate should include all expenses/overhead/non-billable time, such as vacations, etc. I used to charge a flat trip charge , based upon a mileage radius of my hometown.

 

[bradleyelectric]

But.... you are charging for drive time and a pre determined hourly rate. This has to be figured in your "charge by the job".

Of course it does. Along with every other expense. I really do enjoy doing electric work. I do have to make enough to pay my bills and have some left over for living expences.

 

[Teaspoon]

Of course it does. Along with every other expense. I really do enjoy doing electric work. I do have to make enough to pay my bills and have some left over for living expences.

I enjoy Electrical work too. I also enjoy being able to pay my bills & Living a comfortable life style. In order to do this I have to get paid for my work.If I can't make money on a job I don't need It.
I usually charge a minimum service Call of $60.00 plus time spent on the job & Materials.

 

[JES2727]

For service calls, we charge $140 for the first hour, $85 each additional hour. Sometimes we'll discount this to $125 for good customers and non-profits. Lately we've just been charging $85 for the first half hour, $ 85 each additional hour. This seems to be easier to swallow for some people.
We've pondered the idea of just using the hourly rate and applying a "trip charge" or "dispatch fee" or something.
When the bucket truck goes out it is billed from the time it leaves the garage until the time it returns.

 

[GUNNING]

Supply and demand.

Supply and demand.

I charge 65 plus a 20 trip fee. I had a company from NY tell me the trip fee was unacceptable. Im pretty sure they wont pay when th job is done and Ill have to chase my money. If there isn't a respect for your fees they aren't going to respect what you are going to charge for. Value is equated with cost. If you tell people you are charging $5 an hour they expect a $5 job. If you tell someone that you charges $50 an hour, they expect a higher quality job. Even though its an equivalent product.

Thats why you will buy a $5 cup of coffee at Starbucks instead of a $1 cup of coffee at hardee's.

Its the perception of quality.

The more you charge, the less work you get but you will make the same amount of money. Its called supply and demand. The trick is keeping on the sweet point of the the curve.

 

[Sparky555]

We charge by the job, not the hour. Travel time is rolled into overhead with other non-billed time. Most of that expense is eliminated by having a small trip charge that is discounted if work is approved on the same trip. It works in residential service.

 

[LarryFine]

For service calls, we charge $140 for the first hour, $85 each additional hour.

We've pondered the idea of just using the hourly rate and applying a "trip charge" or "dispatch fee" or something.

You already have one: $55.

 

[bradleyelectric]

You already have one: $55.

It's like it was hidden in plain site.

 

[PetrosA]

I'm not sure I understand how you can charge by the job for a service call. Let's say you get a call from a business that the breaker is tripping that feeds the telephone system. You say it will cost $250 to fix it but when you get there, it turns out after two hours of checking wiring that you have two thirty year old HPS lights (fed from same circuit) that filled with water during a recent storm and both need new ballasts and bulbs. One of them is 25' up and there's only one cover screw that didn't break off in the housing, the other is ground mounted and has a cracked junction box. Total time for service and repair and travel - 5 hours. So now you're earning $50/hr and paying for materials out of your own pocket?

On the other hand, you could have gotten there and found that the wire was loose in the breaker and tightened the screw up for $250

 

[Sparky555]

I'm not sure I understand how you can charge by the job for a service call. Let's say you get a call from a business that the breaker is tripping that feeds the telephone system. You say it will cost $250 to fix it but when you get there, it turns out after two hours of checking wiring that you have two thirty year old HPS lights (fed from same circuit) that filled with water during a recent storm and both need new ballasts and bulbs. One of them is 25' up and there's only one cover screw that didn't break off in the housing, the other is ground mounted and has a cracked junction box. Total time for service and repair and travel - 5 hours. So now you're earning $50/hr and paying for materials out of your own pocket?

On the other hand, you could have gotten there and found that the wire was loose in the breaker and tightened the screw up for $250

You have a diagnostic fee that covers the two hours. Then you know the repair needed and quote the repair. If you find the problem in 5 minutes and fix it, you discount the diagnostic. It's much easier to give money back than it is to ask for more than what was agreed to.

 

[LarryFine]

You say it will cost $250 to fix it but when you get there, it turns out after two hours of checking wiring that you have two thirty year old HPS lights (fed from same circuit) that filled with water during a recent storm and both need new ballasts and bulbs.

You have a diagnostic fee that covers the two hours. Then you know the repair needed and quote the repair.

In other words, you quote the first hour or two as diagnosis time, during which you'll either find and fix the problem, or find it and be able to quote the entire repair.

I explain that work is required to determine the problem, and that sometimes it's fixed as it's found, and sometimes it requires more time and materials to accomplish.

Added: After all, if they're with the problem and can't tell you the cause, how can you be expected to know exactly what the fix is over the phone? We're only human.

 

[petersonra]

Somehow you have to charge enough to make a living.

I think you need to look at your travel time and see just how much time is involved and what the costs are of getting to the site.

Everyone seems to have a different idea on this.

Some charge a fixed amount for travel time - like $50. Others for time and mileage, often charging less for travel time than for actual work.

The truck costs a lot of money. Fuel and some maint costs are variable costs. The capital cost of the truck, insurance etc, are more or less fixed. I would not be surprised to find that a typical service van or truck costs the company $20,000 a year just to have, without driving it so much as a mile. Thats $80 per business day that somehow the business has to pay for. Ten bucks an hour. By the time you add in the variable costs, it probably costs you as much to have the truck as a helper.

Would you give away your helper's time for free?

 

[LarryFine]

Would you give away your helper's time for free?

No, but I have had helpers I've felt like giving away. :roll:

 

[Sierrasparky]

I explain that work is required to determine the problem, and that sometimes it's fixed as it's found, and sometimes it requires more time and materials to accomplish.

Larry I like those words. well stated!

Thanks

 

[readydave8]

No, but I have had helpers I've felt like giving away. :roll:

I've had helpers that I would have given you a dollar for taking him.