Service calls and prices of gas.

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Strife

Senior Member
I'd like to know how many of you are considering raising the rates for service calls in particular (and/or all rates in general) due to gas prices?

With gas going over $ 4.00/gallon down here, my vans are becoming real fast my highest expense.
And is not only the price of gas, it's also the time it takes to fill up. With most gas stations having a limit of $ 75.00 per transactions (on cards), I have to fill them up 2-3 times a week, VS 1-1.5 when gas was $2.00/gallon or so.
 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
I'd like to know how many of you are considering raising the rates for service calls in particular (and/or all rates in general) due to gas prices?

With gas going over $ 4.00/gallon down here, my vans are becoming real fast my highest expense.
And is not only the price of gas, it's also the time it takes to fill up. With most gas stations having a limit of $ 75.00 per transactions (on cards), I have to fill them up 2-3 times a week, VS 1-1.5 when gas was $2.00/gallon or so.

Right now I am keeping my prices the same. If the service calls is very far I remind people that they are paying for travel and mileage after a round trip of 20 miles.

Remember gas is $4/gal while water by the 12oz bottle is closer to $12/gal.
 

growler

Senior Member
Location
Atlanta,GA
Right now I am keeping my prices the same.


I read an article that stated in order to keep prices down sereral food items were just reduced in quantity. Smaller candy bars and smaller bags of chips and this gave me an idea.

An hour of labor still cost the same but we have reduced our hours to 45 minutes each.
 

Dennis Alwon

Moderator
Staff member
Location
Chapel Hill, NC
Occupation
Retired Electrical Contractor
I read an article that stated in order to keep prices down sereral food items were just reduced in quantity. Smaller candy bars and smaller bags of chips and this gave me an idea.

An hour of labor still cost the same but we have reduced our hours to 45 minutes each.

I have seen that with dance instructors, etc. Instead of raising prices they charged the same for 45 min. instead of an hour. That works as long as you can get in the hours you want.

Adding $5 to a service call wouldn't be terrible.
 

PetrosA

Senior Member
When I lived in Poland, rising prices were a normal thing. I usually adjusted my product prices once a year, as did most other businesses (some more often, depending on the volatility of their costs). I'm amazed that we've kept prices relatively stable here for so long, despite rising costs. At home we've noticed that our grocery bill is about 15% higher on average than it was a few years ago and that, combined with rising fuel prices, heating costs, electric rates, etc. are enough reason for me to adjust my hourly and service call rates. Aside from that, material costs have gone up , some drastically (Surge protectors have almost doubled in price...) and no one has any option but to deal with it. Do some math and figure out where your prices need to be so you don't feel like you have to make excuses and you'll be fine.
 

GUNNING

Senior Member
Trip fee

Trip fee

I tack on a trip fee of $20 on top of the hourly rate when gas prices go above $3 a gallon. What has happened is that people quit calling because the price of gas is above the luxury price of calling an electrician. If customers balk at the trip fee they just are not going to buy the service fee. It is going to get tuff out there.

Maybe bill in 6 minute increments like lawyers. Thats 1/10 of an hour.
 

satcom

Senior Member
You don't see the national service companies panic when the energy costs start to rise, they have prices established, that cover all their costs of delivering, reliable on time service, and these are usually service fees that have a get to the door and give an quote on the repair cost, call charges start in the $99 area and then usually if the customer accepts the quote they may drop the trip part of the call and this is where they have some play they can adjust the trip cost as energy priced move, and their base charge never changes
Service call and flat rate quotes will not work with the T&M method
And some T&M guys are so down in the mud with prices they would be hard pressed to raise prices, you need to raise prices on a regular basis.
 
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PetrosA

Senior Member
The problem with comparing the average electrical contractor (up to 15 employees) to a national chain service company is that the national chain overcharges to cover costs the same way that Grainger does. Just like very few contractors are using Grainger as their primary source of materials because they're too expensive, the average customer is going to look for a more competitive price for most jobs they want done.
 

petersonra

Senior Member
Location
Northern illinois
Occupation
engineer
Look at it this way. @ 10 MPG, each mile you drive costs you

30 cents a mile worth of gas @ $3 gas
40 cents a mile worth of gas @ $4 gas

Ten cents a mile more.

Most service calls are less then 10 miles, or less than $1 difference. I say eat it for now. If it bugs you, tack on a fuel surcharge of $2 a call.
 

Electric-Light

Senior Member
Do "billing factors" like natural gas company? Metered x factor of 1.08235 or whatever

"fuel surcharge" like UPS & FedEx?

I can't possibly see the direct reflection of fuel cost being that high.

Even at 10mpg, the increase in directly traceable cost increase in gas price from $3 vs $4 for a 50 mile round-trip service is $5 and thats assuming worst case scenario with point A to B and back to A with absolutely no productive activity to add onto that service call. If you start out in the country and go into the city and make a stop at the supply house to buy a bunch of other stuff for other jobs, that counts as a productive stop.

If material goes up, how do address it?
i.e. if your cost was $10 today and you charge $20 for it, and its $20 tomorrow, do you charge $30 to cover the incremental cost or do you charge $40? If the latter, you're actually benefiting from rising material cost.
 

laketime

Senior Member
Do "billing factors" like natural gas company? Metered x factor of 1.08235 or whatever

"fuel surcharge" like UPS & FedEx?

I can't possibly see the direct reflection of fuel cost being that high.

Even at 10mpg, the increase in directly traceable cost increase in gas price from $3 vs $4 for a 50 mile round-trip service is $5 and thats assuming worst case scenario with point A to B and back to A with absolutely no productive activity to add onto that service call. If you start out in the country and go into the city and make a stop at the supply house to buy a bunch of other stuff for other jobs, that counts as a productive stop.

If material goes up, how do address it?
i.e. if your cost was $10 today and you charge $20 for it, and its $20 tomorrow, do you charge $30 to cover the incremental cost or do you charge $40? If the latter, you're actually benefiting from rising material cost.

if your costs rise your price needs to rise, end of story. basic business. cog's+overhead+profit=cost of doing business...
 

satcom

Senior Member
When things get to the point that your thinking about charging a fuel adjustment charge sit down and rethink your entire business and look at everything you must be down in the mud with your current pricing or trying to operate a service business on a T&M rather then profitable flat rates, structure that will balance your expenses and account for non productive hours, adding an adjust charge will only bring attention to your in the mud condition, for every customer that thinks your prices are high there are three or more other customers out there willing to pay for your excellent services.
 

Electric-Light

Senior Member
When things get to the point that your thinking about charging a fuel adjustment charge sit down and rethink your entire business and look at everything you must be down in the mud with your current pricing or trying to operate a service business on a T&M rather then profitable flat rates, structure that will balance your expenses and account for non productive hours, adding an adjust charge will only bring attention to your in the mud condition, for every customer that thinks your prices are high there are three or more other customers out there willing to pay for your excellent services.

It's nothing specific to the industry. Everyone's looking for excuse to raise prices and leave it high. For example, gas prices are fast to go up when oil prices go up, but they don't fall down as quick when oil prices go down.
 

iwire

Moderator
Staff member
Location
Massachusetts
or trying to operate a service business on a T&M rather then profitable flat rates, structure that will balance your expenses and account for non productive hours,

I get so damn sick and tired of hearing this flat rate BS. It is not the answer for every business, if it is the answer for your business great, that is good. But stop trying to sound so superior than those that make fine profits at T&M. I don't see that the OP said what kind of service calls he does.

I have no idea how to 'Flat Rate' the repair of an fire alarm ground fault in a Lowe's store or or what the flat rate is to troubleshoot an fault in a long and meandering site lighting circuit.

I could come up with some rates that would make sure I could not loose but of course I would also not get the work.:roll:

All that said ........... as petersonra pointed out, the actual added cost per call is still minimal at this point.
 

mivey

Senior Member
I get so damn sick and tired of hearing this flat rate BS. It is not the answer for every business, if it is the answer for your business great, that is good. But stop trying to sound so superior than those that make fine profits at T&M. I don't see that the OP said what kind of service calls he does.

I have no idea how to 'Flat Rate' the repair of an fire alarm ground fault in a Lowe's store or or what the flat rate is to troubleshoot an fault in a long and meandering site lighting circuit.

I could come up with some rates that would make sure I could not loose but of course I would also not get the work.:roll:

All that said ........... as petersonra pointed out, the actual added cost per call is still minimal at this point.
ROTFL. You speak from my heart.
 

satcom

Senior Member
He did say service calls, and if you think adding a fuel adjustment will excite a customer try T&M where the cost is an unknown with a residential and even many commercial accounts, the problems are endless, flat rate or contract pricing always lets the customer know what to expect no supprises, and when prices increase, it is better when you have control of your costs.
 

nhfire77

Senior Member
Location
NH
I have no idea how to 'Flat Rate' the repair of an fire alarm ground fault in a Lowe's store or or what the flat rate is to troubleshoot an fault in a long and meandering site lighting circuit.

I could come up with some rates that would make sure I could not loose but of course I would also not get the work.:roll:

.

Ha!

Exactly. The last ground fault I just did was a 26 story high rise. Umm yea, flat rate, that will be $5000!?!?!!

We actually did "flat rate" them. Two men 8 hours a day, 16 hour billing increments. It took 2 days finished around 1pm on the second day. Billed 16 hours x 2 men.

Of course that would be an exception. I cannot troubleshoot for T&M. I could repair only flate rate.
 

satcom

Senior Member
Ha!

Exactly. The last ground fault I just did was a 26 story high rise. Umm yea, flat rate, that will be $5000!?!?!!
.

From you reply it is clear, you may not understand how flat rate pricing is quoted or billed, commercial alarm work is all under contract and your customer knows what they will pay for service calls repairs and maint.

There is a general misunderstanding of flat rate work, it is not a menu of hard prices, nor is it guess work, or overpriced quotes, but rather an assembled estimate based on accumulated actuals data and a knowledgeable electrician.
 
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