rates, winter, and the economy

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Mule

Senior Member
Location
Oklahoma
Trying to be proactive, stay busy, and trying to think ahead here. We're currently busy but, I have one or two T/M clients that provide alot of work for us. Im considering dropping my rates to ensure that I stay somewhat busy through the remainder of the winter....Im considering this because there's been a management change and I just have a hunch that I need to do this, due to some politics among the management......

Question is, If I cut the rates, it needs to have a closure date where it reverts back to the previous rates....Kinda like a "winter sale" ...

Do most of you think that our market will recover "some what" during the spring reguardless of the economy, or not? like April or the middle of march? what time typically in the spring do things break loose? I dont expect things to pop back to normal due to the economy, but at least the spring pop back?

and comments apreciated.......
 

jmsbrush

Senior Member
Location
Central Florida
Trying to be proactive, stay busy, and trying to think ahead here. We're currently busy but, I have one or two T/M clients that provide alot of work for us. Im considering dropping my rates to ensure that I stay somewhat busy through the remainder of the winter....Im considering this because there's been a management change and I just have a hunch that I need to do this, due to some politics among the management......

Question is, If I cut the rates, it needs to have a closure date where it reverts back to the previous rates....Kinda like a "winter sale" ...

Do most of you think that our market will recover "some what" during the spring reguardless of the economy, or not? like April or the middle of march? what time typically in the spring do things break loose? I dont expect things to pop back to normal due to the economy, but at least the spring pop back?

and comments apreciated.......

Mule my friend, If I were you, I would keep my rates where they are.
Your overhead has not changed, The wage you pay your helper has not changed. Your personal bills have not changed.
Keep doing what you are doing until someone says something to you. If they have a problem with your price, they will tell you on this one. TRUST ME.
 

Mule

Senior Member
Location
Oklahoma
Mule my friend, If I were you, I would keep my rates where they are.
Your overhead has not changed, The wage you pay your helper has not changed. Your personal bills have not changed.
Keep doing what you are doing until someone says something to you. If they have a problem with your price, they will tell you on this one. TRUST ME.

Well that's just it, there has been the little birdy whisper in my ear. And from a person I trust......So Im thinking its time..I been ringing their cash register at a good rate for quite a while now.....Its not a huge deal to me as the balance of our work makes us good money. But Im looking for a bit of a "insurance policy" for the lack of a better term....so if other jobs shut down...Ive still got work...
 

jmsbrush

Senior Member
Location
Central Florida
One more comment, If EC's bid work to make money, instead of doing it at cost or right at cost we all good make good money again.
EC's in general are scared to death right now that they are bidding work below cost just to keep money flowing in the shop. Thats the crazy thing I have ever heard.
I have bid several jobs lately and my competitors our bidding below cost. I'm getting great deals on material as well. So I know there not beating me on that one.
 

quogueelectric

Senior Member
Location
new york
Well that's just it, there has been the little birdy whisper in my ear. And from a person I trust......So Im thinking its time..I been ringing their cash register at a good rate for quite a while now.....Its not a huge deal to me as the balance of our work makes us good money. But Im looking for a bit of a "insurance policy" for the lack of a better term....so if other jobs shut down...Ive still got work...

I always felt half a loaf is better than no loaf when absolutely neccesary.
 

Mule

Senior Member
Location
Oklahoma
One more comment, If EC's bid work to make money, instead of doing it at cost or right at cost we all good make good money again.
EC's in general are scared to death right now that they are bidding work below cost just to keep money flowing in the shop. Thats the crazy thing I have ever heard.
I have bid several jobs lately and my competitors our bidding below cost. I'm getting great deals on material as well. So I know there not beating me on that one.

I hear you loud and clear brother, but supply and demand is a real thing...and right now there is a increasing amount (Supply) of EC's looking for work, and the (demand) or available customers in diminishing at a constant rate.

I have room in my rates to work for less, but I dont have room in my savings account to not be working for very long....
 

JES2727

Senior Member
Location
NJ
I say "no". Contractors don't have "sales". You're not suggesting a loss leader, where you sell something at cost or less just to get your foot in the door and upsell something else. You're suggesting cutting your prices just to stay busy. I think thats ill-advised. You've set your rate, with your profit figured in, and thats your rate. Stick to it. There's a value attached to what you do, don't sell yourself short.
 

fisherelectric

Senior Member
Location
Northern Va
So how many jobs do you have to get under bid on, and how many customers tell you they're going to shop rates and never call you back, and how many days are your employees willing to sit home before you decide to adjust your rates some?
 

RHJohnson

Senior Member
Mule, in my opinion you are at least a step ahead of those not thinking about their future. To not CONSIDER possibilities now may not leave you the time to change fast enough later.
This is not the 1st downturn in the economy. Various industries and regions of the country have suffered in various business cycles.
I worked for an industrial company going through a tough business cycle in the 1970's, and EVERYONE took a 10% pay cut. In the end it did not save us, but we did operate for 2 more years.
Another company down the road had 2000 employees. All except the pipefitters agreed to take a 10% cut. Two days later the company said they were closing down at the end of the month. The pipefitters immediately met, and decided to take the 10% cut. It was to late... The company said they already started cancelling all contracts, and they were going to shut down permanent on the last day of the month. They did close, and sold off all assets for ten cents on the dollar.
Ever live in a small town where when you walk down the residential streets every other house is for sale, at 25% or less than it was worth a year before.
In a county of 20,000 (men, women and children) about 4,000 people lost their job in about a 1 year period.
Mule, get your ducks in a row, and be prepared. I don't mean you have to act immediately, but be alert to what is going on with those you have been working for. That management change may because of problems they are having, and the new management will definitely trying to improve the company profit.
 

Mule

Senior Member
Location
Oklahoma
Mule, in my opinion you are at least a step ahead of those not thinking about their future. To not CONSIDER possibilities now may not leave you the time to change fast enough later.
This is not the 1st downturn in the economy. Various industries and regions of the country have suffered in various business cycles.
I worked for an industrial company going through a tough business cycle in the 1970's, and EVERYONE took a 10% pay cut. In the end it did not save us, but we did operate for 2 more years.
Another company down the road had 2000 employees. All except the pipefitters agreed to take a 10% cut. Two days later the company said they were closing down at the end of the month. The pipefitters immediately met, and decided to take the 10% cut. It was to late... The company said they already started cancelling all contracts, and they were going to shut down permanent on the last day of the month. They did close, and sold off all assets for ten cents on the dollar.
Ever live in a small town where when you walk down the residential streets every other house is for sale, at 25% or less than it was worth a year before.
In a county of 20,000 (men, women and children) about 4,000 people lost their job in about a 1 year period.
Mule, get your ducks in a row, and be prepared. I don't mean you have to act immediately, but be alert to what is going on with those you have been working for. That management change may because of problems they are having, and the new management will definitely trying to improve the company profit.

Thanks ...That's exactly what Im doing ...If I ride the value of the market, I will stay busy IMO.....So you guys are missing my question that I ask in the first post, it was about the spring timing
 

electricmanscott

Senior Member
Location
Boston, MA
I would not be totaly against the idea of cutting rates, I've done it myself.

With the situation we are in you have to decide what is best for you. Sure your "overhead" certainly has not gone down but no matter what you have to pay it. If that means taking some work just to cover that overhead what other choice do you have?


Charging what you want and staying firm with your price right now pretty much means you will NOT get the work. That is just the reality. Those that adapt will survive those that don't.........
 

Mule

Senior Member
Location
Oklahoma
I say "no". Contractors don't have "sales". You're not suggesting a loss leader, where you sell something at cost or less just to get your foot in the door and upsell something else. You're suggesting cutting your prices just to stay busy. I think thats ill-advised. You've set your rate, with your profit figured in, and thats your rate. Stick to it. There's a value attached to what you do, don't sell yourself short.

I've got a extra can of soup for you when you need it....:)
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
If you ask me, I say it is a mistake to give reduced prices in the way you are suggesting.

OTOH, if they were to buy a block of your time that is to be used during a certain time frame and you get paid whether it is used or not, that would warrant a decent discount, especially if paid in advance.

I would keep in mind that a large part of the expenses of almost every business is actually acquiring that business. There is nothing wrong with taking the money saved from not having to hunt down replacement business and rebating some of it in the form of lower prices.
 
Lowering rates is a tricky concept and I definately can see both sides of this arguement. I have bid some jobs lately that went to guys that were essentially paying to work there which is bizarre to me. I refuse to do work knowing for a fact that I am going to lose so that kind of stuff for me is non-negotiable. However I can see some logic in trying to tighten the belt a bit. I think the bottom line is to be very in tune w/ what your overhead is what you can afford to work for. With T&M work I think this will be a bit easier than w/ set prices. To paraphrase a statement made on this board a while ago "If you can't get the steak at least hotdogs will keep you from starving".

In answer to your question about timing that is the old crystal ball trick. I don't know that anyone truly knows what to expect in the coming months and perhaps even years. For me personally it seems that February into March has been a dead zone with things picking up at the end of March into April. Historically how does your ebb and flow work (assuming there is one)?

A potential problem that I see w/ making a set policy in terms of a date you are going to start back to full rates is convincing the customer that it's OK that they are paying "X" today when last Friday they payed "X-12%" for essentially the same work. Perhaps a plan of being more fluid as jobs come in and judge them individually in terms of which ones you can afford to be lean on.

If you find the magic bullet let us know. I think many people would pay a king's ransom to find the way to weather this and come out the other side strong.
 

emahler

Senior Member
the answer is simple.....

reduce your hourly rate by 15%, then always take 30% longer to do the work...

win-win:D
 

satcom

Senior Member
We are not in a slow market, the demand for every product and service is trending down, the problem is, our operating costs remain high, my phone company rates went up, my insurance rates went up, my material prices are going up, the only way I can go down in prices is to borrow the money, ( good for a short turn slow down) but not a cure for this mess we are in, long term slide. I think we will see a slow noch up in recovery this comming spring, it will be a long and hard up hill fight, but it will be in the right direction.
 
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