Aprentice charges on service, and small jobs

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Mule

Senior Member
Location
Oklahoma
Greetings, and thanks for this wonderful forum.....My situation is this. My first year aprentice is a fireman and works for me two out of three days. We do mostly small jobs, say 6-8 hours or less, and alot of service calls since my knees and back are not what they used to be.

My aprentice is also my son-inlaw I pay him $20 per billable hour as I'm trying to encourage him to become a journeyman and become a business partner as I slow down a bit, and by paying him per billable hour I'm trying to give all of his proceeds to him, and at the same time not assume much financial risk of any dead time between jobs. This is his first year and he's really catching on, as he's a pretty smart cookie. We do a lot of code discussion while riding from job to job and he's learning fast.

So...Average local rates for our area is $60 (Journeyman) and up to $40 (for 2-3yr aprentice). While a select few shops get $65, we try to stay with $60 for journeyman rates.

My situation is this, when I charge for both of us on these smaller jobs, I keeping thinking "I could have done the job myself at a much lower cost to the customer". When I hand them the bill (charging for both of us) I get this shocker look. So, I tried everything from $90, $85, $75 for both of us and I cant seem to find the niche. My "son in law" does a good job at being productive and staying on a billable task, but it always comes up with a really big bill for the customer and I'm pretty tender about that, (maybe too much). He's not near as fast as I am but he's learning.

I'm 50 and only work around 20-25 billable hours per week, and I'm just trying to maintain a equivalant, to around, $50 per hour after overhead for myself after paying overhead and taxes.

Any suggestions would be apreciated, Also forgot to mention, that I'm charging 20% markup on materials. So, am I doing it right, or do I need to change something?

Thanks .....Mule
 

aline

Senior Member
Location
Utah
Mule said:
So...Average local rates for our area is $60 (Journeyman) and up to $40 (for 2-3yr aprentice). While a select few shops get $65, we try to stay with $60 for journeyman rates.

When I hand them the bill (charging for both of us) I get this shocker look.

So, am I doing it right, or do I need to change something?
Why try to stay with $60 for journeyman rates?

Why not try to provide better service and higher quality of work than your competitors and charge more than them?

If a select few shops get $65 I would be striving to do better than them and get $70.

Consider going to a flate rate system and give the customer a price upfront.
This will eliminate the shocker look when they receive the invoice.
 

Buck Parrish

Senior Member
Location
NC & IN
Prices on every thing have gone up lately. You have to be much faster with two people. $95 is okay.
An other thing you may flat rate prices on jobs you are familiar with.
Then the customer knows before you start the job.
 

Mule

Senior Member
Location
Oklahoma
Thanks aline !...I dont want to skew the direction of this discussion but I take alot of pride in providing a quality product for a fair price to my customer. My customers satisfaction means more to me....And what I don't want to do is be the highest priced contractor in town is this soft economy. I'm just looking for creative ways to solve this situation.

The flat rate thought is a good thought......But I'd still like to know what other folks are doing in this situation.
 
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aline

Senior Member
Location
Utah
The reason you get the shocker look is that customers think they know how long the job is going to take but they really don't have a clue.

I got a call the other day from a guy who wanted a hot tub wired.
He said the wire was already sticking out of the back of the house and he just needed a breaker box put on and some conduit ran along the house over to where the hot tub was and then underground about ten feet to the hot tub.

He wanted to know how much per hour I charged. I told him I don't charge by the hour but will give him a price upfront for the total cost of completing the job. He wanted a ballpark price and told me he figured it shouldn't take more than an hour to do the job.

He said you could just come and bam, bam, bam throw this stuff in and be done.

I told him that's a lot of work to do in an hour.
 

SEO

Senior Member
Location
Michigan
Small jobs are so competive that when you give a price for a 2 hour job and add the time that you spent driving there and the time spent estimating the job to the price you usually won't get the job whether you charge $50.00 per hr or $85.00 per hr. It't hard enough to figure the time knowing how to install work let alone have a customer tell you not knowing how to install. Have you ever had a customer figure more hours than you?
 

aline

Senior Member
Location
Utah
Mule said:
So, I tried everything from $90, $85, $75 for both of us and I cant seem to find the niche.
You're trying to win the customer over with the price and not your services. The niche for doing this is to be the lowest price contractor in town so the customer cannot find anyone that will do it for less. Good luck with that.
 

Mule

Senior Member
Location
Oklahoma
Your absolutely correct, most customers dont have a clue what a job done right, or a job threw together looks like. For me I'm not going to sacrifice my quality.....Im not perfect, but I try to do good work, and just have faith that I will maintain customers that know the difference.

So....What here's what Im hearing so far..

1)Work faster, or smarter

2)Consider flat rate pricing on repetitive jobs
 

jmsbrush

Senior Member
Location
Central Florida
Mule, Here is some advice that is talked about allot on this forum, Do a cost calculation. There is no way you can make a living billing out at $75.00 for two guys . I used to think you could. I have been in business almost a year and learned so much from these guys on the site .http://www.masterplumbers.com/utilities/costcalc/
I went to a flat rate system and it has helped out allot. You might get the shock up front but at least they know the price, and you will make money.

If they don't like the price ,oh well move on. $20.00 an hour sounds expensive to me for a 1st year guy, We pay our jws that.
 

Mule

Senior Member
Location
Oklahoma
Yes, Ive used that link and come up with around $75 for journeyman rates....and your right I'm paying my son-inlaw too much at $20....but, when you factor in he only gets paid for "billable hours" its probably more like 12-15.

Seems like the truth is that I need to be doing larger jobs with two people, and if I want to pay him $20, I have to sacrifice some of my pay to stay in the local market prices...? wrong? or right?

also we recectly (last friday) changed service vehicles from a pickup to a van with bins, in order to stock more material to avoid un-nessecary trips to the parts house....
 

jmsbrush

Senior Member
Location
Central Florida
Mule said:
Yes, Ive used that link and come up with around $75 for journeyman rates....and your right I'm paying my son-inlaw too much at $20....but, when you factor in he only gets paid for "billable hours" its probably more like 12-15.

Seems like the truth is that I need to be doing larger jobs with two people, and if I want to pay him $20, I have to sacrifice some of my pay to stay in the local market prices...? wrong? or right?

also we recently (last Friday) changed service vehicles from a pickup to a van with bins, in order to stock more material to avoid un-necessary trips to the parts house....
You Pay you're help for what he is worth, Based on Experience and so forth. You do not take a cut in pay because you want to grow and become successful. You can get a green helper and teach him starting at $8.00.
You're not just paying $20.00 an hour for him its more like $33.00 to 36.00 even more if depending where you are, Those are my burdens there.

For example on flat rate, You get a call. The customer says a rec is not working. You tell them there will be svc charge to show up, if they choose for you to do the work then you will waive the charge if thats what you want. After 5mins of trouble shooting you find that its a bad breaker and you need to change out the Rec. Charge to replace brk, for example $100.00. Price for changing out Rec $75.00. You change out brk ,helper does the Rec.
 

Mule

Senior Member
Location
Oklahoma
You guys have alot of good comments.....

Had a thought the other day....

I purchased a estimating book that gives unit material cost/ and labor cost........I thought about paying my son in law by the book, but not to exceed the $20/billable hr.... then he would understand, and have a greater respect for the market, which he will ultimately have to deal with, when he becomes a full partner in the business. I know auto mechanics have worked with the "Flag rate" for years.
 

220/221

Senior Member
Location
AZ
am I doing it right, or do I need to change something?

You need to change your way of thinking and your t&M practice.

I have your same feelings when I give a customer a hefty T&M bill but not so much if it is a contract price. On the other hand, when I give a customer a SMALL T&M bill, I feel cheated.

There are those cases where you drive 15 minutes, work an hour and a half doing an extremely difficult/dangerous repair that COULD have taken someone less experienced twice as long to do....and you can only bill for two hours.

The obvious thing is to quote all of your work. It is not as easy in the short term but the rewards are there in the end.
 

aline

Senior Member
Location
Utah
Mule said:
So....What here's what Im hearing so far..

1)Work faster, or smarter

2)Consider flat rate pricing on repetitive jobs
Working faster or smarter when billing T&M will gain you nothing. You will make less money for doing the same job. When working T&M slower and less effiecent is better. Not having parts stocked on your truck is a plus so you can charge while you run around getting the parts. :)
 

Mule

Senior Member
Location
Oklahoma
aline said:
When working T&M slower and less effiecent is better. Not having parts stocked on your truck is a plus so you can charge while you run around getting the parts. :)

With all due respect for differences in opionion....my focus has been on a balance between, meeting a consumers needs, and a fair and honest price, not finding ways to jack up the price. I would think that finding ways to be MORE effecient and keeping cost DOWN, would be a road towards growing a company....I always try to think of the customers value recieved in balance with the cost they paid.

I did ask for opinions and I apreciate and encourage more, but that one disturbs me a bit.....:smile:
 

emahler

Senior Member
My favorite thing in this industry is guys who pride themselves on quality, then attempt to compete on price with guys who don't give a crap about it....

if you are gonna sell on quality, stop selling on price...
 

aline

Senior Member
Location
Utah
Mule said:
With all due respect for differences in opionion....my focus has been on a balance between, meeting a consumers needs, and a fair and honest price, not finding ways to jack up the price. I would think that finding ways to be MORE effecient and keeping cost DOWN, would be a road towards growing a company....I always try to think of the customers value recieved in balance with the cost they paid.

I did ask for opinions and I apreciate and encourage more, but that one disturbs me a bit.....:smile:
I was only joking. I didn't think you would take me seriously. :)

My point is that with giving a price upfront the faster and more effiecent you become the more you are rewarded. Shouldn't you be rewarded for being faster and more effiecent with higher profits? Becoming faster and more effiecent shouldn't mean lowering your prices.
 
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wolfman56

Senior Member
I have the same situation as you.

I have the same situation as you.

I'm in my 50s also and I'm teaching my son the trade. As far as rates I've done it all different ways depending the situation. At first I thought to charge less for him. That was OK his first year.
But I then rememberd a problem a former employer had. He had me doing T&M work along with a trainee. The contractors began requesting that I never come to their job without the helper! They wanted those lower rates!
Plus as he gets time in he needs more money, I don't want the customers to get used to lower hourley rates. What about when he's a journeyman and we want to work togather?
I've found that a firm quote or bid prior to starting, works best. That way I can be fair and competitive, factoring in our needed combined hourley rate, but the customer isn't aware of what I require per hour.
People don't care what your rates are, just how much to do the job. Also a homeowner who might be making say, $22 per hour will never be able to comprehend $90+ per man hour.

Rick
 
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