New Commerical Tactics

[Castrovinci]

Got the perfect gig for the last few years or so I though.....

We have been doing our usual service work for our various management companies that service mostly big box stores. We were able to bill travel and have always billed two men. The way were were making money is by the second man. I am in NJ and all of these management companies do not seem to want to pay past $65 per hour. Not a dime over and in NJ this doesn't pay for anything, residential is much higher and less headache. So we would always send two men and that was our profit. Suddenly in the last month or so I am seeing all these companies (5+ different management companies) no longer allow the billing of two men unless it is lift work or bucket truck etc. I am just trying to figure out how everyone else is dealing with this or have seen this new push. I have tried to argue that we need two men to trace or hold the ladder but they don't want to hear it. I looked at osha rules and unless its 600V or higher then two men isn't required (from the quick search I did). I even tried stating that we are not allowed to work on anything live unless it hit the osha exceptions. Their response is then schedule a shutdown. The bottom line is its been basically a take it or leave it kind of response. Their feeling is now that they have negotiated this kind of business model that they are going to provide much more volume. Now I will get twice the volume, twice the headache and twice the risk for the same profit or less. These companies keep going back to the big box stores lower and lower so they can cut throat each other.

My question is any suggestions or work around you guys have come up with?

Because the way I see it this keeps up like this and its going to change the whole industry. Even worse eventually the electrician is only going to come out for large items like new installs and panels and the rest will become handyman work or be 50 bucks and hour. Its kind of scary on where the industry is going.

 

[electrofelon]

I deal with competition every day. If its nor worth my while to try to compete, then Ill go after something else. Nothing lasts forever.

 

[goldstar]

I hear you Brother. It seems like there's always going to be someone who will do the work for a few $$ less. FWIW, I won't even take a ladder off my truck for $65.00. I used to think the low balling problem was an influx of younger guys coming into our trade and not knowing their prices and what the going rates are for various types of work. However, I've found out through the years that even some of the older guys in my contractors association are charging much less than $100.00/hr for a cold service call.

Also FWIW, I find this Forum a really useful tool in gaining knowledge for the electrical industry, for learning how to do a job correctly and what is Code compliant or not. What's missing in our trade (and not necessarily from this Forum) is a working knowledge on how to run our type of business from a financial perspective, how to do a break even analysis, what your mark-up on material should be and what your profit margin on the overall job should be.

Good luck. I hope you get some useful information on this.

 

[roger]

I am just trying to figure out how everyone else is dealing with this

We won't work for these outfits for the reasons you posted and a few more. We had one get pretty mad once after we told them it was our terms or nothing.

Roger

 

[cpinetree]

We won't work for these outfits for the reasons you posted and a few more. We had one get pretty mad once after we told them it was our terms or nothing.

Roger

We have gone the same route. This is our rate, $$ per hour + travel (both ways). We will jump through your hoops - call in, call out etc, but you pay our rate or find someone else. We find the office paper work involved with these companies is way more work than the actual field work.

Seems they all come back around again even after not hearing from them for 6 months or a year.

 

[Castrovinci]

I hear you Brother. It seems like there's always going to be someone who will do the work for a few $$ less. FWIW, I won't even take a ladder off my truck for $65.00. I used to think the low balling problem was an influx of younger guys coming into our trade and not knowing their prices and what the going rates are for various types of work. However, I've found out through the years that even some of the older guys in my contractors association are charging much less than $100.00/hr for a cold service call.

Also FWIW, I find this Forum a really useful tool in gaining knowledge for the electrical industry, for learning how to do a job correctly and what is Code compliant or not. What's missing in our trade (and not necessarily from this Forum) is a working knowledge on how to run our type of business from a financial perspective, how to do a break even analysis, what your mark-up on material should be and what your profit margin on the overall job should be.

Good luck. I hope you get some useful information on this.

Couldn't agree more!!!! We need a book like the plumbers and we don't deviate from it!

 

[Castrovinci]

We have gone the same route. This is our rate, $$ per hour + travel (both ways). We will jump through your hoops - call in, call out etc, but you pay our rate or find someone else. We find the office paper work involved with these companies is way more work than the actual field work.

Seems they all come back around again even after not hearing from them for 6 months or a year.

I agree with you and that's what we have normally done, but these few management companies feed us 500K plus a year so its hard to just simply walk away. That may be the route though if it stays like this.....

 

[kwired]

When they find it doesn't work out with those they pay the low rate to, they will be looking again, if they want cheap again they may start same cycle all over. You need to sell the value of what you will do for them, if they still don't want your service then you have to either let them go or find ways to reduce your overhead costs.

Not everyone has same overhead costs. Those with low overhead cost can afford to charge less, but may have more limitations on what services they can provide or how quickly they may be able to respond when a need for immediate service comes up.

 

[Cow]

I don't understand, why do you feel every service call always takes two electricians? Why can't you make any money with just one? Have you taken any business courses?

The only thing I gather from your post is, you'd rather send two man teams out and have half the scheduling, rather than scheduling work for each electrician you employ. If that's the case, I think you're in the wrong line of work.

We only send one out the majority of the time, when that person gets on site, if the call turns out to be something major, the first guy can call for more help.

 

[Castrovinci]

I don't understand, why do you feel every service call always takes two electricians? Why can't you make any money with just one? Have you taken any business courses?

The only thing I gather from your post is, you'd rather send two man teams out and have half the scheduling, rather than scheduling work for each electrician you employ. If that's the case, I think you're in the wrong line of work.

We only send one out the majority of the time, when that person gets on site, if the call turns out to be something major, the first guy can call for more help.

In my post I stated that one man is $65 per hour for this type of client. In NJ this goes no where so adding a second man (cheaper labor rate) makes up for it since you are billing two men $65x2 (plus travel). If I only send one man it doesn't cut it. Not to mention most times you do truly need two men especially in 50-300K square foot buildings. Do you know what its like walking from one end of the building to the other trying to trace a circuit with one man ...lol


Every business model is different so if your business model is smaller then maybe you can cut it on $65 an hour. In the places most of the management companies are in $65 an hour goes far. I know I can't when I carry a bucket truck and shop. As I mentioned earlier the going rate in resi here is $85, you get paid instantly and little paperwork.

 

[kwired]

I think part of the problem is you are dealing with a pimp, ahem, I mean a management company. Their client is probably squeezing them a little on what they will pay them, yet they need to mark up your price so they can profit.

Big box store probably will pay much more then 65 an hour when the computer system is down and no cash registers are functioning. They probably are losing much more then that for every minute it is down. Then comes the tech and simply reboots it and it works again, that will be $1500 plus mileage, $3000 if after hours, holiday or weekend

 

[Fulthrotl]

Every business model is different so if your business model is smaller then maybe you can cut it on $65 an hour. In the places most of the management companies are in $65 an hour goes far. I know I can't when I carry a bucket truck and shop. As I mentioned earlier the going rate in resi here is $85, you get paid instantly and little paperwork.

ellen rohr

http://ellenrohr.com/the-bare-bones-biz-plan/

seriously. read it and do it.

 

[Castrovinci]

I think part of the problem is you are dealing with a pimp, ahem, I mean a management company. Their client is probably squeezing them a little on what they will pay them, yet they need to mark up your price so they can profit.

Big box store probably will pay much more then 65 an hour when the computer system is down and no cash registers are functioning. They probably are losing much more then that for every minute it is down. Then comes the tech and simply reboots it and it works again, that will be $1500 plus mileage, $3000 if after hours, holiday or weekend

Big Pimpin! Gotta love it

Yes these companies squeeze anything they can. Thankfully there are emergency rates which aren't too bad ( seems they should be the norm). Majority of these big box stores use these "pimps". You can get added to Service Channel or their vendor list without them, but they will rarely call you since they have negotiated better rates with the pimps except in emergency which is good, but isn't enough steady volume. We see 5k plus Service calls a year.

 

[Castrovinci]

ellen rohr

http://ellenrohr.com/the-bare-bones-biz-plan/

seriously. read it and do it.

Thanks but trying to understand what that has to do with two men suggestions?? I don't care how bare bones you get $65 an hour doesn't cut it in Northern NJ.

 

[Cow]

The bottom line is, if your customer is only willing to pay $65/hour and you've figured out that your hourly rate needs to be higher than that, you either negotiate better terms with the customer or drop the customer. Seems simple to me?

We have management companies call us on a regular basis telling us how much work they have for the right contractor as well as the price they are willing to pay for our services, which is usually low. At this point our office guy lets them know what we charge, take it or leave it. It's really that simple.

 

[Fulthrotl]

Thanks but trying to understand what that has to do with two men suggestions?? I don't care how bare bones you get $65 an hour doesn't cut it in Northern NJ.

it has a fair amount to do with making money, which interests some
of us in an abstract way....

when you said $65, my first thought was *FORK*, he's gonna starve to death.

i'm not addressing one man, two men, or three men and a small boy....
i'm addressing how you price and sell your work.

median sparky cost in hackensack is $51k a year. so, $1k a week.
$25 an hour. no healthcare, zip. that is home depot parking lot wages
here. discussing how to make a living for yourself with $40 on top of
that, less expenses, is like trying to figure out how to rearrange the
deck chairs on the titanic. do we want a glittering white view of ice,
or the drama of the life boats attempting to launch?

i've been at $85 an hour since 2006, and i'll do hourly only with a gun to
my head. i just put that up there, sort of in theory, if someone asks.

the only difference between me and you, i'm willing to bet a cheeseburger,
is that i did ellen's weekend biz plan a few years ago, right after 2009,
when my net taxable for the year was under $200. no comma, no typo.

just a suggestion.... what else you got going on this weekend that is better?

 

[highlegdelta]

When I worked for a company that serviced for these management companies, we always just waited until the maximum hours on the paperwork to call out. Paperwork said four hours, we finish in 2 and wait 2 more to call out.

It's kinda shady and is asking for problems but that's the way our boss dealt with them being stingy. Honestly now that I think about it, the management company probably likes it because they get to bill more

Sent from my SAMSUNG-SM-G930A using Tapatalk

 

[Castrovinci]

it has a fair amount to do with making money, which interests some
of us in an abstract way....

when you said $65, my first thought was *FORK*, he's gonna starve to death.

i'm not addressing one man, two men, or three men and a small boy....
i'm addressing how you price and sell your work.

median sparky cost in hackensack is $51k a year. so, $1k a week.
$25 an hour. no healthcare, zip. that is home depot parking lot wages
here. discussing how to make a living for yourself with $40 on top of
that, less expenses, is like trying to figure out how to rearrange the
deck chairs on the titanic. do we want a glittering white view of ice,
or the drama of the life boats attempting to launch?

i've been at $85 an hour since 2006, and i'll do hourly only with a gun to
my head. i just put that up there, sort of in theory, if someone asks.

the only difference between me and you, i'm willing to bet a cheeseburger,
is that i did ellen's weekend biz plan a few years ago, right after 2009,
when my net taxable for the year was under $200. no comma, no typo.

just a suggestion.... what else you got going on this weekend that is better?

Thanks again for the lesson and I'm not trying to sound to good to hear advice, but I was looking for an answer on some crafty ideas for a two man sell. I don't want to turn this thread into how I should redesign my business, as we are doing just fine in our many ventures.


I think maybe I didn't explain the model fully as it works out to 65x2 plus 60 in travel. (For simple talk not including payroll cost medical yada yada yada )If the first man is 25 per hour and the second man is only 12 I make my money only on the second man. So reality is we are billing 130 per hour plus 60 for travel. Adding a second man opens up so much more (potential) profit. Take away that second man and you remove 65 bucks more an hour. The second guy cost so much less then the first since not only is he lower rate, lower workman's comp cost and still riding in the same truck. While the cheeseburger sounds good your net profit is what counts not just your tax liabilty. Did I mention this was a 500k a year issue I want to try to fix rather then just walking away. I understand it's easy to say just don't do the job's anymore or tell the inspector he is wrong show me the code, but the bigger picture is you may loose in the end. It's similar to telling a doctor he is only going to make 50 an hour......he is going to find a way to navigate the health care system to continue to make 300 buck's and hour.

 

[Castrovinci]

When I worked for a company that serviced for these management companies, we always just waited until the maximum hours on the paperwork to call out. Paperwork said four hours, we finish in 2 and wait 2 more to call out.

It's kinda shady and is asking for problems but that's the way our boss dealt with them being stingy. Honestly now that I think about it, the management company probably likes it because they get to bill more

Sent from my SAMSUNG-SM-G930A using Tapatalk

This is how I feel everyone has been doing it, and in my opinion the industry standard but now good old technology is killing such an opportunity. Calling from store phones and GPS apps or the best one yet is the store checks you in/out. So this option is closing fast. Hiding in the broom closest or bathroom ceiling becomes real lol

 

[kwired]

If customer only wants to pay a certain amount for a product or service and someone is out there that will sell it for that amount, I don't see you have much choice other then to try to sell them the idea that your price has an overall better value then those others. If price alone is all that matters to them you will not make the sale.