Rates - How to decide?

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ScooterB

Member
Location
NW Arkansas
I'm new at doing my own thing and am interested in how you guys/gals go about setting your rates. I'm a small time guy, mostly residetial but some small commercial. But I do carry a Masters License (have for a long time). It would seem that in many situations, I am forced to compete (rate wise) against a company that may send out a Journeyman. His rates would be lower than mine. I would love to talk with some of the locals, but they seem to be pretty tight lipped about what they charge. I usually charge $50 per hour for T & M. Does this seem outrageous? Some customers are okay with it, others want to bitch.

How does one go about finding a legit rate that I won't lose my butt and the customer won't feel like I am trying to buy the next new boat?

Thanks for any and all help!
 

480sparky

Senior Member
Location
Iowegia
Simply crack open the phone book and look under "Electricians" or "Electrical Contractors." Call 'em up and ask what they charge!
If some b***h, and others are OK, you're in the ballpark. If everyone b***hes, you're too high. No complaints at all means you're too low.
If the other guy is sending out a journeyman, and you're a Master, inform people you can't compare apples with oranges.
As for the people who like to complain about the price, I tell them to go down to Wal?Mart if they want a cheap electrician.
 

ScooterB

Member
Location
NW Arkansas
i agree with you as far as the comparison, but many people just look at the bottom line. Not the quality. Don't get me wrong here though, I'm not slamming Journeyman, we were all there sometime, but I've been doing this for 30+ years and feel that my experience is worth something. But all they see is a bill from me that is higher than we they got "last week" from another company. It is very frustrating.
 

celtic

Senior Member
Location
NJ
480sparky said:
Simply crack open the phone book and look under "Electricians" or "Electrical Contractors." Call 'em up and ask what they charge!
I fail to see the correlation between what one EC charges and what another one charges.
Everyone's overhead and finacial situation will vary..trying to nail the "going rate" is pointless.


ScooterB said:
How does one go about finding a legit rate that I won't lose my butt and the customer won't feel like I am trying to buy the next new boat?
By doing your homework.
Who cares if Joe is charging $25/hr and works 100hr/wk?
Likewise, who cares if Jim is charging $100/hr and works 25hr/wk?
The real question:
How much does ScooterB need to charge?

Here is a good place to start:
If you need x amount of dollars per period, what good is accepting a lower number?

 

cadpoint

Senior Member
Location
Durham, NC
480sparky said:
Simply crack open the phone book and look under "Electricians" or "Electrical Contractors." Call 'em up and ask what they charge! .

Most modern phone services broadcast your Caller ID number
For goodness stakes don't call from the Office, home, go to uncle Earls house...:roll:
 

emahler

Senior Member
actually, i've become a huge fan of the 'dial a rate' method.....

i mean, some of these guys have been around for well over 3 yrs, so they must be charging right....

plus, i've run the numbers....if you don't spend all the valuable time trying to figure out what yto charge....you will have lower overhead....
 

JES2727

Senior Member
Location
NJ
celtic said:
I fail to see the correlation between what one EC charges and what another one charges.
Everyone's overhead and finacial situation will vary..trying to nail the "going rate" is pointless.

I respectfully disagree. I think it's important to know what others charge. If I can manage to keep my overhead down and my costs calculate to, say, $50 an hour, is that all I should charge? Meanwhile, my competition is charging anywhere from $65 to over $100 in this area. Knowing that, I can charge around $80 and still be competitive, AND make more money. And there's nothing wrong with that.

celtic said:
Who cares if Joe is charging $25/hr and works 100hr/wk?
I care, because too many people just look at the bottom line. If Joe is lowballing everyone, then he's getting most of the work and I may need to lower my prices to compete. Lowballers like Joe can potentially drive rates down across the board and that's bad for business.
 

aline

Senior Member
Location
Utah
You must first do a breakeven calculation to determine your breakeven hourly rate.
Then you add your desired profit to this breakeven hourly rate and you will have your hourly rate.
You can call around and find out what other hourly rates are and raise or lower yours if you would like, but keep in mind if you lower your hourly rate below your breakeven hourly rate you're going to go broke. :)
Make sure to include all overhead including your pay when calculating your breakeven hourly rate.
The breakeven hourly rate is the minimum you need to charge just to stay in business.
Here's some links that may help.

http://content.monster.com/articles/3483/16870/1/home.aspx

http://www.amazon.com/How-Much-Should-Charge-Pricing/dp/0966571916

http://www.barebonesbiz.com/catalog.html

Breakeven Calculator
http://www.mrhvac.com/becpl.htm
 
Last edited:

jimport

Senior Member
Location
Outside Baltimore Maryland
Occupation
Master Electrician
Why do you want to compete only on price? People can get coffee at Mickey d's for a buck a cup. Starbucks certainly seems to make money at $4 a cup. Heck, some places charge the same price for an empty cup as they do for one filled with coffee.

Do you want to charge the going rate and remain on the treadmill, or charge what you need to and get somewhere?
 

JES2727

Senior Member
Location
NJ
jimport said:
Why do you want to compete only on price? People can get coffee at Mickey d's for a buck a cup. Starbucks certainly seems to make money at $4 a cup. Heck, some places charge the same price for an empty cup as they do for one filled with coffee.

Do you want to charge the going rate and remain on the treadmill, or charge what you need to and get somewhere?

What if I only need $50 bucks an hour? I may want more, but if I don't know what my competition is doing then I may be afraid to raise my rates for fear of losing work.
I'm not saying compete only on price. I'm saying it's one thing to consider.
 

LarryFine

Master Electrician Electric Contractor Richmond VA
Location
Henrico County, VA
Occupation
Electrical Contractor
celtic said:
Who cares if Joe is charging $25/hr and works 100hr/wk?
Likewise, who cares if Jim is charging $100/hr and works 25hr/wk?
I would care whether I am Joe or Jim, because I'm not going to keep employees very long if they're only working 25 hrs/wk.
 

celtic

Senior Member
Location
NJ
LarryFine said:
I would care whether I am Joe or Jim, because I'm not going to keep employees very long if they're only working 25 hrs/wk.

At the end of the week the number is the same ;) 100 x 25
 

satcom

Senior Member
LarryFine said:
I would care whether I am Joe or Jim, because I'm not going to keep employees very long if they're only working 25 hrs/wk.

25 hours a week on service work, is a 40 hour week!
 

khixxx

Senior Member
Location
BF PA
I wonder how Mc Donalds would do if they bump the price of coffee up to $4? I wonder if they would make the same amount of money but work less making it?
 

emahler

Senior Member
math is not a strong concept:D


if i were to work for someone, I'd rather work 25 hrs a week for $30/hr, than 40 hrs a week for $15/hr....but that's just me:)
 

emahler

Senior Member
khixxx said:
I wonder how Mc Donalds would do if they bump the price of coffee up to $4? I wonder if they would make the same amount of money but work less making it?

if they upped their atmosphere, and gave you a better experience, maybe...but if they didn't change anything in their system and just raised the price, not so good....
 

emahler

Senior Member
JES2727 said:
What if I only need $50 bucks an hour? I may want more, but if I don't know what my competition is doing then I may be afraid to raise my rates for fear of losing work.
I'm not saying compete only on price. I'm saying it's one thing to consider.


but what if you only need $50 and hour? but the going rate in your area (you know this from calling around) is $45/hr.....do you drop your price and take a loss? or do you figure out a way to get $50/hr?
 

ScooterB

Member
Location
NW Arkansas
I have been around long enough to understand the concept that there is a difference in quality. But, I have always tried to find a way to translate that concept into something the average homeowner can understand. Many don't care that I have been to school for twelve years (actually have a EE degree), have worked in nuclear power instrumentation, and have taught school for four years. All they care about is the bottom line on the invoice.

I will definitely check out the links you guys provided. Just starting out on my own, I can use all the tools that I can get to try and be successful. One of those tools is this forum and I appreciate all you folks here at the forum.
 
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