Working for a flat rate co.

[SC Bound]

Hi everyone, new to the site but not the industry. I have always worked for electrical contractors that have paid employees an hourly rate. I have interviewed with a contractor that does almost all service work and charges a flat rate price. I have a second interview scheduled to work out some unanswered questions.

My question is for those of you that charge flat rates....how do you pay your technicians? Or if you work for someone that charges this way how do you get paid? The company I interviewed with pays $10.00 an hour plus a percentage of the billable hours after that?? Not sure how all that works as I have been hourly my entire career.

I am just trying to estimate my weekly income as its not as easy as multiplying hourly rate x 40.

Also if you work this way do you prefer it or would you prefer an hourly wage?

 

[Fulthrotl]

Hi everyone, new to the site but not the industry. I have always worked for electrical contractors that have paid employees an hourly rate. I have interviewed with a contractor that does almost all service work and charges a flat rate price. I have a second interview scheduled to work out some unanswered questions.

My question is for those of you that charge flat rates....how do you pay your technicians? Or if you work for someone that charges this way how do you get paid? The company I interviewed with pays $10.00 an hour plus a percentage of the billable hours after that?? Not sure how all that works as I have been hourly my entire career.

I am just trying to estimate my weekly income as its not as easy as multiplying hourly rate x 40.

Also if you work this way do you prefer it or would you prefer an hourly wage?

well, that possibly makes you contract labor, and that changes a lot of stuff.....

my wife is a compensation analyst for a fortune 500 company, i will ask her tonight,
and see what labor law is on this. they are paying minimum wage, so that labor law
dog won't bark, but i bet the short version of this is you get nickel and dimed to death.

so, you have to figure you are gonna get a baseline of $400 a week, and a percentage.
if they are not going to employ you as a full time employee, and just want to pay you
that minimum wage and you are on call, it's probably not going to go well.

 

[growler]

The company I interviewed with pays $10.00 an hour plus a percentage of the billable hours after that?? Not sure how all that works as I have been hourly my entire career.

Also if you work this way do you prefer it or would you prefer an hourly wage?

For the type of person that can go out to change a bad breaker and sell a service change there is a chance to make some good money.

For the type of person that just wants to change the breaker and charge for an hours labor, well, not so good.

Commission work is almost always about sales. If you can sale you make money and if not the company doesn't have much invested in you ($10 an hour ).

Ask what some of the other guys are bringing in and this will give an idea of what is at least possible.

If you are not a sales person do they offer any training? You will probably need it.

 

[cowboyjwc]

One of my questions would be, what if something goes wrong on the job and their price of $100 now becomes $125, what happens?

I worked for one guy, for one day, doing smoke detectors. I got $10 a detector (piece work) which at the time was the going rate and on a good day I could do 20. Sends me out with two guys and by the time we got done doing whatever and got to work, I put in 5. I told him that if that was going to be a normal day, I would starve to death.

 

[SC Bound]

He did say he would put me through a sales training class. I think I could make decent money at this as I tend to hustle, do quality work, and I am a people person so selling more than what they originally called for is an option. Just having never done this kind or work or talked to anyone that had, I'm a little apprehensive.

 

[satcom]

well, that possibly makes you contract labor, and that changes a lot of stuff.....

my wife is a compensation analyst for a fortune 500 company, i will ask her tonight,
and see what labor law is on this. they are paying minimum wage, so that labor law
dog won't bark, but i bet the short version of this is you get nickel and dimed to death.

so, you have to figure you are gonna get a baseline of $400 a week, and a percentage.
if they are not going to employ you as a full time employee, and just want to pay you
that minimum wage and you are on call, it's probably not going to go well.

well, that possibly makes you contract labor, and that changes a lot of stuff.....

The short version of this may be not only be getting nickel and dimed to death, but working for piece work, better know in our history, as sweat shop pay so, he will have to figure on getting a base of $400 a week, and a percentage of some dreamed up number the business owner picks out of his head, as soon as you hear the word tech used, instead of electrician, you can be sure your not going to do well. in my state he has to be a full time employee, no game playing with an employee period.

 

[SC Bound]

So then do most contractors that utilize a flat rate system, and there are a lot on here as I did a search before posting, pay their employees by the hour then? That wouldnt make sense in my
mind. By the responses I have read it seems that no one would want to work for a flat rate
company but yet there many successful ones out there. More confused now then before....

 

[rt66electric]

Whose truck do you drive?

Whose truck do you drive?

Whose truck do you drive?? If you drove a company truck and gas this might pay out.
If you are considered a Contract Employee and provide your own tranportation costs, and billed by a 1099, then the tax laws are completely different.
Depending if you wife has a decent employee/insurance package, being contract employee be advantageous.

Let us know how it works out.

I have heard of EC's, providing a high contract-per-billable-hour and this works well for small rural enconmies.

 

[SC Bound]

Driving his completely stacked van, his gas, take van home. It is considered full time
employment, not contract as he is providing benefits (401k, medical, dental,vision, holidays and vacation)

 

[ceb58]

When I flat rate a job my program tells me how long it should take to do that task.
So lets say after I plug in what it is to be done with mobilization and clean up it tells me 2 hrs to do the job with a price of $250.00. Cool customer knows what to expect. Now if I get in and hustle and do it in 1 hr then that's great its still $250.00. But if I screw around and it takes me 3 it is still $250.00.
That is what this guy is shooting for do it quick and you get a %. Do it slow and you go out the door. Just remember if every thing goes right you wont have but 20 to 30 billable hrs. in a week

 

[SC Bound]

That is what this guy is shooting for do it quick and you get a %. Do it slow and you go out the door. Just remember if every thing goes right you wont have but 20 to 30 billable hrs. in a week

So this is the most important part of the equation....finding out what the percentage of billable
hours I will get.

 

[iMuse97]

So this is the most important part of the equation....finding out what the percentage of billable
hours I will get.

And what kind of billable hours he can provide... I would rather get a percentage of the flat rate he's charging! And your percentage goes up the more work you do in a week. That builds in an "overtime" component, so he can pay if you can make it pay...

Again, what kind of hours and calls can you expect to get from him each week? I know a guy who works for such a company, and he's never home in the early evening, and can't get started too soon either, since most of their work is resi. and people don't want you showing up at 6:30am, and some aren't available to let you in their house until 4 or 5pm.

 

[Okie Sparky]

Ask to 'interview' some of his present employees. Employees of your choosing, not his, from a list, pick two or three and ask them some of these same questions. Find out if their happy, disgruntled-whatever and if so why? Ask if their are getting a fair shake money-wise, how is employee morale, do they enjoy showing up for work every day? They may be the kind of employees that won't be very happy anywhere or they'll have a gripe with whatever deal they have. Find out if he's paying worker's comp. on his employees or if this is his way of getting around worker's comp. If your a contract employee, he may be trying to get around paying for worker's comp. It sounds like he is treating you like a full-fledged employee though, as he is offering you benefits. If you can get some of these kind of questions answered it would help you know more about what kind of employer he is. If he won't let you talk to his employees, I would move on.

 

[Fulthrotl]

So then do most contractors that utilize a flat rate system, and there are a lot on here as I did a search before posting, pay their employees by the hour then? That wouldnt make sense in my
mind. By the responses I have read it seems that no one would want to work for a flat rate
company but yet there many successful ones out there. More confused now then before....

ok... you are getting the worst of both worlds.

you are getting minimum wage, or a bit above it, and
a percentage of the gate.

he's giving you minimum wage, so you are on call all
the time. if he was just flat rating to you, you could
do what you wanted when you weren't on a job.

this way, you have "incentive pay" or a "bonus" instead
of something you can count on.

what it amounts to, is "piece work".... now, we have a
policy on this forum about not discussing any frothy
union / merit shop topics, but the electricians union
has rigorously fought any kind of piecework for generations,
and the reason being is that it's usually a pretty bad deal
for the members.

saddle the guy up and give him a try... you will know in
a week or two if this will work for you.

my gut hunch is that this will be a sub optimum situation
for you.

good luck.

 

[Joethemechanic]

The only way I have seen guys make any kind of money with a pay structure like that is

New construction repetitive type work, like tract houses where you can get a system down and really bang the work out fast.

If you are a high pressure soulless sales type. If you have it in you to convince old ladies that they need a whole new service because their breaker panel is 10 years old and there is a screw missing from the cover, and it is so dangerous that they may all perish in a fire before tomorrow morning,,,,,,,,,,,,,,,,,

 

[renosteinke]

It's definitely a sign of the times - though whether because of the 'economy,' or because of a shift in our culture that seems to value just sitting back and letting the money roll in without any effort on your part.

Whatever the cause, there are all manner of places claiming to 'need' electricians- with a catch. The 'catch' is that -however they arrange it- they're asking you to take on the business risks, expenses, and duties, while offering you less money and none of the traditional obligations on their part.

Some of this seems a direct effort to circumvent those 'pesky' licensing laws. Other element to the structures seem designed to get around the various employment regulations.

Make no mistake as to their intent; I saw one firm attempt to use such an arrangement to claim exemption from workmans' comp requirements. Had they succeeded, the state (in that case) would have presented every worker with a 'past due' bill, fees and penalties added. THAT nightmare came very close to happening. When the ruling went against the employer, he closed the business.

Let's look at some numbers. In one major city, one that is heavily unionized, it's common for non-union journeymen to earn about $28/hr. In that market, there are several operations advertising for electricians who will:
-Provide the truck, ladders, etc.;
-Do all the paperwork from their own home;
-Provide vehicle and liability insurance;
-Have multiple Masters' licenses;
-Stockpile / purchase parts with their own money, and ask for reimbursement from them later; and,
-Do it for $17/hr.

Now, what part of that says 'sucker deal' to you?

Not all of these operations are small-time 'love your home' type places. I look at the ads for the various TV networks and -small surprise here- the sundry 'alternative energy' operations and I see similar arrangements.

And I'm not even getting into the sundry 'referral' services ..... most of which make Service Magic look like St. Peter.

 

[SC Bound]

I am really surprised that I haven't heard from someone that owns their own company and
charges a flat rate, that would breakdown the way their pay scale works or from someone who
works for a company like this and would tell me how they get paid.

I am leaning towards doing this, but I still have another interview to do and maybe I can talk
with some of his employees. He has been in business for almost 30 years and is very established

 

[growler]

I know a guy who works for such a company, and he's never home in the early evening, and can't get started too soon either, since most of their work is resi. and people don't want you showing up at 6:30am, and some aren't available to let you in their house until 4 or 5pm.

Doing residential service work on commission is about as close to being self employed as you can get without starting your own company.

There is a down side just like being self employed. No regular hours and no standard of pay to be expected. Some weeks and months are better than others.

The up side is that it will allow a person to train in sales and there is no boss around so an employee learns to be independent.

Some people will starve to death selling cars and others like it and can make money.

I'm not sure I like the idea of paying for electrical work on commission but there are companies doing it with success and there are techs making money. The thing I see is that it leads to the techs having to much pressure to sell and they may end up being dishonest and actually cheating the customer. They have to make a pay check some way.

 

[satcom]

I am really surprised that I haven't heard from someone that owns their own company and
charges a flat rate, that would breakdown the way their pay scale works or from someone who
works for a company like this and would tell me how they get paid.

I am leaning towards doing this, but I still have another interview to do and maybe I can talk
with some of his employees. He has been in business for almost 30 years and is very established

Flat Rate is nothing more then an estimated price to do a job, we have been in business for well over 30 years, and always priced a job on residential and some commercial work, and when we worked on T&M, we always had a contract in place, with the labor rates and material markup. In our state the electrician has to an employee to comply with the state license and insurance laws. We always operated with electricians that were enrolled in the labor department programs, so our employees could advance in both job positions and pay, we never used street people, and called them tech's.

 

[Fulthrotl]

I am really surprised that I haven't heard from someone that owns their own company and
charges a flat rate, that would breakdown the way their pay scale works or from someone who
works for a company like this and would tell me how they get paid.

I am leaning towards doing this, but I still have another interview to do and maybe I can talk
with some of his employees. He has been in business for almost 30 years and is very established

i went and looked at something almost 20 years ago, and it went like this:

residential service company in socal
paid "$50 an hour", as they saw it anyway.
you provided tools, truck, a standard material stocking of the truck that they gave you a list of, about $5k in material.

you work under their license.

they get a call, they start paging people.. (this was before everyone had a cellphone)
first one to answer the call gets it.
you go do the work... markup on material is 500%

you replenish your stock, and turn in a "package" with your original reciept, and the hours
you bill for.

they cut a check next business day, splitting the profit on the material with you, and
a 60-40 split on the labor.

so, you install an $11 breaker, and bill for $55. they give you back your $11 and $22
on top of it, for $33 total, and they keep $22 of the $55.. and they have write offs
of the $33 and your $11 reicept, so they write off $44 of the $55, leaving them with
an $11 taxable income on a $22 in pocket income. half their income from the sale of
material they didn't buy was tax exempt.

your money comes back to you as W-2 money, with deductions taken out.
you don't have any receipts, cause you had to give them the originals to get paid.

you pay tax on the entire amount you receive, just like earned income. except that
you had to buy all the material out of your income.

they deduct ALL the money they pay you, and they deduct YOUR receipts for the
material YOU bought.

they had over 300 electricians working for them, and i was doing the math based
on their claims of a $450 average call price, fixing a plug or changing a breaker type
of stuff.

they had two hourly guys in shop trucks to handle warranty work that their associates
didn't make good on.

they were grossing it seemed about $800k a month, off a three man shop... the
"superintendent" and the two warranty guys.

and they got to deduct all the material that got bought off the top, without having to
buy it themselves.... that was about $150k a month, tax free.

they weren't even "flat rate"... it was all T&M hourly calls.

i think they are still in business... they had four quarter page ads in the yellow pages,
and they took both halves of two facing pages, so no matter which one you called, it
went to the same call center.

go, with your eyes wide open. there are lots of ways to be hosed here.....