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Thread: Definition of a Service Call

  1. #11
    Join Date
    Apr 2016
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    Tampa, Fl
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    Service Calls

    Quote Originally Posted by JFletcher View Post
    Keep in mind if you charge $xxx for a service call that includes an hour of labor, and the problem takes five minutes* to find and fix, the customer is well within their right to want you to hang around another 55 minutes to get estimates on adding recessed lights, a spa, inquiring about other problems, and so on. For those reasons and others, my service call includes up to thirty minutes labor. Past that, I charge in fifteen minute intervals*.

    *Even if it takes me two minutes to find the problem, and it sometimes takes just that, I will check other things on that circuit... sometimes there is more than one problem, or concurrent problems.

    I did a 6' post light last year that didnt work. Bad photocell found, replaced, the lights flickered, and the pole shocked me... found the empty sockets full of bugs, one of the center tabs sacked out, polarity reversed, corroded connections at the wirenuts, and a skinned piece of UF inside the pole causing the shock.

    *I believe the cable, phone and power companies here charge based on fifteen minute intervals too. I think it works out better for the customer as they arent paying for an entire hour that may not be used, and seeing, say, "19.50/15 min" is better than "$75/hr".

    I'd think your service call price has to include some amount of labor on site, even if it's 15 minutes to tell the customer "you need a new panel" or other extensive/pricey work, and write up an estimate for them.

    "ptonsparky
    I do the first hour included but it doesn't matter what you call it. 85 + 90 = 175 for the first hour on the job."

    Based on those numbers my service call would be $130. If my labor rate, overhead, etc were the same as yours, on calls that take an hour or less, you're making $45 more per call than I, tho you may not have as many calls or repeat business. It would be interesting to see where the breakpoint is on profitability.
    Mobilization Labor (2 men, 1/2 hr ave.).....$24.50 w/Burden
    Install Labor (2 Men, 1 hr)...............$49.00 W/ Burden
    Overhead (45% of COGS)............$73.50
    Total Cost (less materials/equipment rentals.$147.50

    Income $175.00
    Costs....$147.50
    Margin..$27.5
    % Profit. 19% (based on Margin/COGS

    Breakeven..$147.50

  2. #12
    Join Date
    Apr 2016
    Location
    Tampa, Fl
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    Quote Originally Posted by Unbridled View Post
    Mobilization Labor (2 men, 1/2 hr ave.).....$24.50 w/Burden
    Install Labor (2 Men, 1 hr)...............$49.00 W/ Burden
    Overhead (45% of COGS)............$73.50
    Total Cost (less materials/equipment rentals.$147.50

    Income $175.00
    Costs....$147.50
    Margin..$27.5
    % Profit. 19% (based on Margin/COGS

    Breakeven..$147.50
    Unfortunately, we don't do as much T&M work as I would like. I am however ready to increase my profit percentage to 50-75% here soon. What do you all think?
    Last edited by GoldDigger; 06-19-17 at 10:19 PM. Reason: Fixed QUOTE tags

  3. #13
    Join Date
    Oct 2007
    Location
    New Jersey
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    Quote Originally Posted by Unbridled View Post
    Quote Originally Posted by Unbridled View Post
    Mobilization Labor (2 men, 1/2 hr ave.).....$24.50 w/Burden
    Install Labor (2 Men, 1 hr)...............$49.00 W/ Burden
    Overhead (45% of COGS)............$73.50
    Total Cost (less materials/equipment rentals.$147.50

    Income $175.00
    Costs....$147.50
    Margin..$27.5
    % Profit. 19% (based on Margin/COGS

    Breakeven..$147.50
    Unfortunately, we don't do as much T&M work as I would like. I am however ready to increase my profit percentage to 50-75% here soon. What do you all think?
    All good if you can get that. I think the simplest rule of thumb about what to charge is "how busy are you?" All things being equal, if your phone is ringing off the hook and people are lining up outside the office, you're probably charging way too little. Likewise, if it's crickets, you're charging too much. Don't ignore your market, pay attention to what EC's around you are doing for comparable work.
    Last edited by GoldDigger; 06-19-17 at 10:20 PM. Reason: Fixed QUOTE tag

  4. #14
    Join Date
    Jun 2006
    Location
    NoDak
    Posts
    125

    Link included has interesting perspective

    Quote Originally Posted by Unbridled View Post
    I found this article to be somewhat informative in discerning service calls and when not to charge and what to include in a service call.
    http://bdappliance.com/understanding...ll-charge.html
    What I gathered from perusing the link;
    - Initial service charge is fairly low for the initial visit (probably just covers the cost of driving to the site and looking over the situation)
    - Once the problem is diagnosed an estimate is given for the total cost of the repair
    - If the customer chooses to proceed with the repair, after having knowledge of the repair cost, the initial dispatch fee is deducted from the cost and they only pay the amount of the estimate
    - If the customer chooses not to pursue the repair (maybe appliance isn't worth repairing) they only pay the dispatch fee so the service company can recoup the cost of showing up to look at the job
    - The invoice includes itemized costs of Labor, Parts used, and a deduction for the initial dispatch fee. I assume the total cost adds up to the estimate amount?

    It's an interesting business plan for service calls. Something worth contemplating...

  5. #15
    Join Date
    Apr 2005
    Location
    Atlanta,GA
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    5,249
    Quote Originally Posted by JFletcher View Post
    Keep in mind if you charge $xxx for a service call that includes an hour of labor, and the problem takes five minutes* to find and fix, the customer is well within their right to want you to hang around another 55 minutes to get estimates on adding recessed lights, a spa, inquiring about other problems, and so on.
    Is that really a bad thing? If you give an estimate on future work with time that is already paid for.

    You don't get most of this estimated work but it's time that's already paid for so it's not a loss.

    Plus it would be very rare for me to find and fix a problem in 5 minutes. It normally takes that long for the customer to show me the original problem.
    The 95% of people that you can't trust give the other 5% a bad name.

  6. #16
    Join Date
    Aug 2004
    Location
    Northern illinois
    Posts
    15,048
    I think you guys are making a profit mistake if you do any service work for free.

    IMNSHO, there should be a charge to send someone out to diagnose a problem and figure out what it will take to fix it.

    We used to get burned for that kind of thing where our sales guys would send us out to look at a problem. We would figure it out and then they would just get someone to fix it for them "cheaper" or fix it themselves.

    now engineers no longer do free service calls. P.O. first.
    Bob

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