Too high or too low

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I am a small contractor just really starting off and I charge a flat rate of 80 per hour 25 per hour drive time any distance over 45 minutes I always get told that my final price is shockingly affordable. Minus the material which receipts back up. It makes me wonder if A I'm doing the work cheaply or B I'm able to get the work done quickly and the final bill is "too low" should I be charging more or should I take advantage of the repeat referrals and let it ride. Not asking for amounts. Just thoughts and past experiences thanks guys
 
Do you have a minimum charge? I think a 1/2 day or even full day minimum charge is reasonable. If you often hear how cheap it is, then yes prob you should charge more. It should "hurt' a bit to have a professional come to your house and fix something - I don't mean like angry never call you again hurt, but it shouldn't be cheap. I had to have a surveyor come flag one of my property lines. It was $150/hr billed from the time they left the office till the time they got back.

Fixed price can work out real well, as some people get immediately freaked out hearing some "high" per hour figure. Services are a good example. $2500 or whatever doesn't seem like that much for what you get, but break it down per hour people are more likely to think its high.

How much you need work/money and your security level is a big part of it too.
 

readydave8

re member
Location
Clarkesville, Georgia
Occupation
electrician
keep it simple, adjust your prices so that customer doesn't know how you're charging drive time, just charge enough to include

and if some jobs are out of your normal territory, charge drive time at full rate, tell customer when quoting prices so no surprises later
 
Location
NE (9.06 miles @5.9 Degrees from Winged Horses)
Occupation
EC - retired
I am a small contractor just really starting off and I charge a flat rate of 80 per hour 25 per hour drive time any distance over 45 minutes I always get told that my final price is shockingly affordable. Minus the material which receipts back up. It makes me wonder if A I'm doing the work cheaply or B I'm able to get the work done quickly and the final bill is "too low" should I be charging more or should I take advantage of the repeat referrals and let it ride. Not asking for amounts. Just thoughts and past experiences thanks guys
It is relative to where you live and who your customer base is.
 

Cow

Senior Member
Location
Eastern Oregon
Occupation
Electrician
We don't reduce our rates for drive time. Secondly, we add travel charges based on distance to cover fuel and vehicle expenses.
 

Coppersmith

Senior Member
Location
Tampa, FL, USA
Occupation
Electrical Contractor
The short answer is way too low. Double those numbers and you will be about right. Obviously a customer is going to freak out if you quote the doubled numbers in a T&M rate. That is why you don't quote T&M rates. You quote fixed rates. Customers like fixed rates. Don't believe me? Check prices of electricians who advertise on TV like Mr. Sparky or Mr Electric. They are very successful franchises and charge the prices I mentioned.
 

LarryFine

Master Electrician Electric Contractor Richmond VA
Location
Henrico County, VA
Occupation
Electrical Contractor
I provide free estimates, which gets rolled into the pricing, except for troubleshooting, when you don't know how long the job will take. For that, or any hourly rate quote, I charge 1.5 times the hourly for the first hour, which covers the 'dispatch' costs. Materials get at least a 25% mark-up.
 

kwired

Electron manager
Location
NE Nebraska
You should also be marking your material up. Customer NEVER sees your receipts.

-Hal
Correct. How often do you see other businesses reveal what their costs are when they bill you?

Retail sales you typically pay what they ask for an item, though negotiation is still possible, but they never break down the sale price into individual overhead costs

Same for other professional services. They may itemize items on an invoice, but usually at what they intend to charge you for those items and no details of how they arrived at that price.
 

busman

Senior Member
Location
Northern Virginia
Occupation
Master Electrician / Electrical Engineer
This is what I have posted before and it's what I give my customers if they start comparing my material prices to those at the box stores. You really NEED significant markup to cover the REAL costs of providing the right materials at someone's home/business.

1) My level of knowlege of product quality/usefulness/ease-of-install was bought with trial-and-error (my time and money) and is worth quite a bit. In other words, I know what to use/not-use.

2) When you buy it from me, it's right there at your house. The things involved in that happening include:

a) Vehicle expense to drive to supply house/store
b) My time to travel and shop
c) Bookeeping and Accounting costs
d) Inventory time to make shopping lists (to make sure the truck is always stocked properly)

3) Other factors

a) Waste (if I buy a 250' roll and have 15' left over it goes to waste)
b) Items involved in installation that are not itemized on the bill
i) Nails, screws, anchors
ii) Connectors, staples, pig-tails
iii) Caulk, duct-seal, tape

4) Warranty - Buying from me means that I warrant the item for a reasonable period of time. If something is defective, then it costs me the following:

a) Labor and Travel to replace the part
b) Time and Travel to return the part

5) Tools - The cost of replacing tools is really proportional to the amount of material installed and not time spent on a job. Five hours of troubleshooting is no wear on my tools, but virtually every part I use puts some wear on a tool.

6) Time Cost of Money - All the money I have tied up in materials is NOT in a bank earning interest
 
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