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Thread: Flat rate pricing

  1. #1
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    Flat rate pricing

    I am a new EC starting out, an up to this point I have been doing service jobs with time and material. I have been looking into flat rate pricing, and was wondering how it has worked for some. How to come up with a good set of solid prices to use and be able to quickly and confidently quote to customers.

  2. #2
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    Sep 2016
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    I only do flat rate pricing, unless it's a trouble shoot, or something stupid like they just want me to change bulbs. Doing time and material is a good way to start developing your per job pricing. For example, a can light install (for just one in this example) might cost you $15 for the can, $15 for the trim and bulb, and $10 in wire. The install might take around 45 minutes. So, you have 45 minutes of time, and $40 in material. Add %20 into materials, and add what you would charge for an hour of your time. This usually puts me between $175 and $250 for a typical can light. Keep in mind that this would be off of an existing light point in the ceiling. If that doesn't exist, then you can then charge them for the switch leg as well. The best way, in my opinion, to develop your prices is through experience. Once you know how long a job should typically take, and the materials needed. Getting that price figured out per item will start to come naturally. Over estimate the time you think you need. That'll help you with not getting screwed when you run into trouble and have to totally change your plan of attack for the job.

    I've also taken a look at bigger residential companies price books. I know some guys with companies like mr. Sparky. That will help you see just how detailed they can get on itemized pricing. Best of luck out there on your own.
    Quote Originally Posted by StephenKG View Post
    I am a new EC starting out, an up to this point I have been doing service jobs with time and material. I have been looking into flat rate pricing, and was wondering how it has worked for some. How to come up with a good set of solid prices to use and be able to quickly and confidently quote to customers.
    Sent from my SM-G950U using Tapatalk

  3. #3
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    Quote Originally Posted by StephenKG View Post
    I am a new EC starting out, an up to this point I have been doing service jobs with time and material. I have been looking into flat rate pricing, and was wondering how it has worked for some. How to come up with a good set of solid prices to use and be able to quickly and confidently quote to customers.
    here is a good suggestion, in my experience.

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

    get the plan. i think it's all of $10.
    take a weekend, and do what she says. it isn't any fun.
    i don't care. do it anyway.

    you will end up with a spreadsheet that will tell you how much
    you need to bring in each hour to not have to eat cat food.

    the number will make you gasp. this is why you need to flat rate
    the jobs. if you tell someone what you are going to make an hour
    from their job, they will throw up.

    case in point. service change, overhead feed, from 60/100 amp to 200 amp.
    $2,275.

    i'll do them all day at that price. $700 in materials, $1,500 for you. a days work.

    i'll quote it over the phone, after a discussion, and a photo from the customers
    cellphone. let's say one out of ten sucks, and i have more work than normal, or
    more material expense. so i only make $1,000 instead of $1,500.

    i've saved TEN round trips to look at chit i don't need to look at to give a price.
    around here, southern california, ten round trips is three days.

    with the three days i've saved, i can do three service changes, making $4,500
    and losing $500 on that one job.

    so i'm $4,000 ahead, and have cut my hours worked to do it.

    if i'm doing T&M, i'm making $85 an hour nominal, and 25% on the material.
    and the only time i'm doing that is if i cannot determine the scope of the work.
    ~New signature under construction.~
    ~~~~Please excuse the mess.~~~~

  4. #4
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    FR is basically reducing everything to a bid, usually sight unseen

    Lots of contractors aim high doing it, assuming they'll have to eat the unforseen few.

    ~RJ~

  5. #5
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    Quote Originally Posted by Fulthrotl View Post
    here is a good suggestion, in my experience.
    https://ellenrohr.com/the-bare-bones-biz-plan/

    get the plan. i think it's all of $10.
    take a weekend, and do what she says. it isn't any fun.
    i don't care. do it anyway.

    you will end up with a spreadsheet that will tell you how much
    you need to bring in each hour to not have to eat cat food.

    the number will make you gasp. this is why you need to flat rate
    the jobs. if you tell someone what you are going to make an hour
    from their job, they will throw up.
    Let me put a sharper point on what Fulthrotl is saying. There are two separate issues here:

    1) You don't know what the correct labor price to charge is until you add up ALL your costs (it's easy to forget some), divide by the number of billable hours available, and add an appropriate hourly profit. Ellen's book will walk you through doing that. (The correct price has NOTHING to do with whatever anybody else is charging.) Materials and travel expenses are additional.

    2) The correct price will be higher than most customers want to hear, so don't tell them. Quoting a fixed price avoids giving then an hourly rate. For some reason, if you give them a fixed price, they are much happier and you will be much happier too.

  6. #6
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    Quote Originally Posted by romex jockey View Post
    FR is basically reducing everything to a bid, usually sight unseen

    Lots of contractors aim high doing it, assuming they'll have to eat the unforseen few.
    It's very expensive to go look at jobs (typically $100-200 when you consider labor time and vehicle expenses). Therefore you learn to ask the correct questions over the phone and quote from that. I generally will not go look at a job unless it sounds like about $1500+. People who are new at estimating will go look at almost every job, they have to. Once you have enough experience it's not necessary.

    Even customers who are paying T&M want an idea of what the total might be. It's not a fixed rate thing. However, since fixed rate jobs compensate the EC better, it's easier to take a risk if you guess wrong. If I feel like I don't have a good handle on the job, I can schedule the work with the understanding that I will give a fixed price after I look at it and they are under no obligation to accept. This is even easier if there is a troubleshoot component. I give them an upfront troubleshooting cost and offer to give them the full fixed price once I figure out what the problem is.

  7. #7
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    I argee, and basically operate in step with what your saying Copperdude.

    I've been at this a long time, and am not some philathropic entity, nor am i out to save the planet

    As ex, Thursday i did 30' of #2 seu,w/head and plastic clips, all on a 1 story dwelling

    Took me a hr, coordinate w/poco prior (email)

    quote= $800 , happy customer, paid on the spot

    but here's the kicker, he didn't shop around

    ~RJ~

  8. #8
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    Aug 2018
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    North Carolina
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    At the company I work for now our labor is based on the operating costs of the estimate that van for that day plus the overhead of the office divided by number of vans we are running a day. For example we maybe about $1350 a day and $439 per service hour. Now we do have a price book and that has pre done prices in it that has been adjusted for our market. You can’t just charge but so much for certain tasks. But I would still recommend looking at every job because they are all different. At every job we go to we do a safety inspection, we check panel, age of smoke detectors, bonding of gas line, etc. This will help you sale more, and adds value to your customers. We do have a diagnosis fee so that some of our time is covered as well. We tell every customer we do up front pricing. If the customer doesn’t go with any work we charge a dispatch fee. Plus we charge a dispatch fee to each job just to cover some of our expenses. If the work is over a certain amount we will wave dispatch fee, just so we don’t lose a sale or to make the customer feel like they are getting a better value. I’m setting up my company on the side now and I’m going to do it this way. Now there are times when flat rate pricing does bite you in the butt. In the end it’s all about the law of averages.
    Last edited by Rdcowart; 10-21-18 at 12:33 PM.

  9. #9
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    Quote Originally Posted by Coppersmith View Post
    . For some reason, if you give them a fixed price, they are much happier and you will be much happier too.
    Because there are no surprises for the customer with a fixed price. My mother never wanted to pay anyone by the hour, but by the job.

    Taking something like a panel change, probably 9 out of 10 people would come out slightly ahead if going by time and materials versus a flat rate. Those nine people will be happy, and maybe two of them will tell two of their friends what a good job you did. The 10th person though with the nightmare job that winds up paying substantially more for hourly than he would have with a flat rate will not be happy and will tell 5 to 10 people about how bad you are. In the end you wind up hurting yourself financially and reputation wise even though you save 90% of your customers money over the next guy.

    With the aforementioned panel change, they're usually not a lot of surprises to mess up a flat rate, so I'm curious as to how you guys accommodate the inevitable time spent finding crossed up neutrals tripping afci Breakers. With the construction methods here and rather relax code on the breakers, it's not a big deal, however I could see it being a massive headache in areas on the 2014 or 17 NEC.
    Electricians do it until it Hertz!

  10. #10
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    Quote Originally Posted by JFletcher View Post
    so I'm curious as to how you guys accommodate the inevitable time spent finding crossed up neutrals tripping afci Breakers.
    Most panel changes do not extend the branch wiring more than six feet so no AFCI's are required. Before that rule was in place, I would bend over backwards to not extend the branch wiring to avoid AFCI's.

    ETA: If I did quote a job where the panel was being relocated and required AFCIs be added, I would quote high and use a (yuk!) GE panel for their non-gfci AFCI's.
    Last edited by Coppersmith; 10-21-18 at 01:29 PM.

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