Charge “Half-Day” or “Full-Day”

[sw_ross]

Kind of a continuation of the Handyman thread that evolved into a debate about what people charge...

Regarding bidding a job/task I’ve been thinking about the concept of using the “half-day“ or “full-day” concept for figuring a price rather than hours.

Take yesterday’s job for example, I ran a new circuit for a new mini-split going in. Normally, When estimating my time to do the task I try to estimate (conservatively) how long it will take me and tack on material costs, markup, etc., to come up with a bid price.

The thing I’m coming to realize (I’m still kinda new to my business and bidding jobs) is that if you have a job that takes you say, from 8am- 2pm to complete, by the time you’re cleaned up, packed up, etc. you don’t have a lot of time left in the day to chase down other jobs that might also be a “half-day” type of job. I don’t like starting a job at 3pm, knowing that you don’t have enough time in the day to finish and that you’ll have to return in the morning to finish.

So again, take yesterday’s job, I estimated about 5 hours (this is more than normal for the task but there were added routing challenges for the circuit). It actually took me about 5.5 hours which affected my bottom line for a smaller type job.

What I’m thinking about doing in regards to jobs like this, for bidding purposes, is using a “Half-day”or “Full-day” concept. Obviously I wouldn’t be telling the customer the specifics of how I come to my price.

My justification for using this model is the fact the by the time I finished yesterday’s job (for example) even though it didn’t take a full day, from a job that I could’ve charged a full-days amount for.

Yesterday’s job, if I used a “full-day” method, the bid price would’ve been $174 more than my actual bid.
This would’ve compensated me for NOT doing a full day’s of work at another location to accommodate the customer’s needs for two-thirds day task.

How do you handle bids like this?

 

[petersonra]

I don't I don't think it really matters. Charge the customer or whatever you can.

 

[gadfly56]

When I quoted fire alarm jobs for my last employer, I used this concept. If a job takes 3 hours, it's quoted for 4. Six hours, it's quoted for 8. On installations of anything but the simplest possible for fire alarm you can't get more than 2 per day, taking travel time, set up and break down into account. The jobs need to cover the hours in a day. This also makes sure your daily overhead is covered. If you estimate your overhead costs based on a 40 hour week, but you're consistently billing ~30 or so, you are going to see your profit severely pinched.

 

[Dennis Alwon]

I charge travel time so between all of that I would charge what the hours were that I worked. I would not add 2 extra hours as you will hear about it.

 

[480sparky]

...........So again, take yesterday’s job, I estimated about 5 hours (this is more than normal for the task but there were added routing challenges for the circuit). It actually took me about 5.5 hours which affected my bottom line for a smaller type job..............

How often does this happen, compared to bidding a job at 5 hours and it actually took you 4½? If it's a close race, then you're on track with estimating hours. If it typically takes you longer, then you need to change your benchmark hours.

 

[hbiss]

You should know how much you have to make per day to be profitable. With T&M service work we charge by the hour and travel time. The hourly rate more than meets the requirement if a job goes beyond half a day.

When bidding a larger job, always bid to the day. Anything smaller should be time and material.

-Hal

 

[petersonra]

If you are going to take these kind of jobs on you need to make sure they pay enough to be worthwhile.

You need to cover the actual costs plus some profit and overhead.

I kind of agree with the poster who said you can't really start another job late in the afternoon. Just not worth the effort.

I think a callout fee that is the approximate cost of travel time and expenses to and from the job site should be part of the price. Maybe $300. If you can get another call in afterward, that is good, and you make more money, but sometimes it won't work out that way.

 

[electrofelon]

I just said this in the other thread, but I think a minimum half day is perfectly reasonable. Think about it, how often does a job take much less than half a day? Sure there are those textbook ones where its close or on the way to something else, you dont have to run out for parts, and it takes 45 minutes on site, but really how often does that happen? Besides even if it does, there is a liability you accept by showing up. Who knows what you are getting into. Sometimes maliciously, sometimes not, the HO will claim XYZ stopped working since you were here, you drop you drill and put a nice dent in the hardwood floor, get into a can of worms with some stupid thing you now own becasue you touched it. for a $100? No thanks, Ill stay home and play on my tractor.

 

[electrofelon]

Oh, here is an example of a stupid thing I now own. This was a min half day/$300 job moving a thermostat and the other part was moving two circuits to an adjacent panel/meter so the account could be cancelled (POCO charges $15 month for the meter). An hour of work, HUGE fiasco afterwords that is still going on. POCO says I need an inspection to remove the meter. ITs not going to pass current standards. Talk to HO, talk to inspector, fight with POCO. Change story to POCO saying nothing was moved, space is being gutted. Drop by to see if meter is gone. No. Wait. Call. Phone tag. Rep finally calls, bad reception can only make out every third word. Doesnt call back. I leave message. Not even worth $300, but at least it was that and not $100.

 

[paulengr]

I’m a service tech. Most customers are industrial or municipal and the jobs are fairly large most of the time.

So we tell customers we schedule technicians with one job a day which is generally true. Especially on service calls you never know how long a job can take. So do you do a crap job for your morning customer then rush over to the afternoon call ticking off the morning guy or show up late and tick off the afternoon customer? No winning here. Only time we do this is if we make the second guy aware we are in a jam and doing everything we can.

We do have a half day rate but unless it’s obviously a quick job we don’t mention it.

On project jobs I just estimate man days. If it’s a big job with lots of takeoffs then use hours but we have a lot of jobs where I can estimate hours almost without even a site visit.

Also on very large jobs (hundreds of thousands) you start to have to include more overhead labor and your normally non billable hours become billable but you can drop the actual rate for that reason.

 

[sw_ross]

Yeah, I’m mostly referring to bidding smaller type jobs.

Rather than guesstimating that it will take 4 hours (not telling the customer how long I think it will take) and then racing your way through the job, and maybe cutting corners, in order to try and finish at 4.0 hours exactly, with the idea that you’ll schedule another half-day job for the afternoon, I’d rather treat it as a “full-day” job.

If I think it’s a 4 hour job I think I’d rather price it as a “full-day” job, which adds $170 to the price. That way I can focus on doing a good job, leaving a clean worksite, maybe having some social chit-chat with the customer, and leave the customer with a good impression at the end of the day, rather than being too busy to talk and racing off to the next job.

As much as it would be nice to scrunch as many jobs as possible into a day, like Paulengr said, I’d rather schedule a particular task for the day, and if I happen to finish a little early maybe having a small task that I can do to finish out the day, or go back to the office and finish the day with some paperwork (never ending), or organizing the work trailer and prepare for the next day.

 

[kwired]

I charge travel time so between all of that I would charge what the hours were that I worked. I would not add 2 extra hours as you will hear about it.

If this is estimate or bid you shouldn't itemize hours, just a lump sum for labor if you are even itemizing anything on the bid.

$10 parts and $490 labor = $500 for the project.

$490 parts and $10 labor = $500 for the project.

$500 includes all parts and labor = $500 for the project.

Make sure you accounted for as many unforseen things as possible. If customer is expecting to pay $500 they can balk at "but we ran into some trouble with..." and you are asking for more than the bid or estimate. If you do run into trouble that creates a lot of other expense, probably best to bring it up as soon as discovered and not on final billing after work is done.

 

[sw_ross]

Also forgot to add, I’m a 1-man shop so I don’t have to worry about employees milking the clock, turning a 4 hour job into a 7 hour job just because that was how it was bid.

Also, I’d rather give the customer a “discount “ because the job was easier than anticipated rather than smack my head against the steering wheel after finishing the job, taking 6 hours to do the job, when it was only bid as a 4 hour job.

 

[sw_ross]

If this is estimate or bid you shouldn't itemize hours, just a lump sum for labor if you are even itemizing anything on the bid.

$10 parts and $490 labor = $500 for the project.

$490 parts and $10 labor = $500 for the project.

$500 includes all parts and labor = $500 for the project.

Make sure you accounted for as many unforseen things as possible. If customer is expecting to pay $500 they can balk at "but we ran into some trouble with..." and you are asking for more than the bid or estimate. If you do run into trouble that creates a lot of other expense, probably best to bring it up as soon as discovered and not on final billing after work is done.

Yeah, no I’m talking about how I come up with the final price that I present to the customer. I don’t itemize anything out.

 

[paulengr]

Also forgot to add, I’m a 1-man shop so I don’t have to worry about employees milking the clock, turning a 4 hour job into a 7 hour job just because that was how it was bid.

Also, I’d rather give the customer a “discount “ because the job was easier than anticipated rather than smack my head against the steering wheel after finishing the job, taking 6 hours to do the job, when it was only bid as a 4 hour job.

If you do it “perfectly” you should “lose money” on about half your jobs. As in miss your estimate 50% of the time and beat it 50% if the time, including profit.

There are some jobs where there really aren’t any unknowns. I pretty much know walking into it how long it will take and how much it costs. There are sometimes surprises but not very often.

There are some jobs where the potential is high or a lot of unknowns.

Then there are the ones you can’t even guess at.

So for the first two that’s what contingency is for. You estimate the job then add 10-50% based on the job “blowing up” on you. That 10% counts for the little extra wire or a piece of flex or an extra trip back to fix a minor issue. 50% is when you know it’s going to be a money pit job.

Worst case is when you switch to T&M work. As in no fixed bids because you can’t even begin to get an idea of what is needed such as repairs to a burned out building.

 

[kwired]

If you do it “perfectly” you should “lose money” on about half your jobs. As in miss your estimate 50% of the time and beat it 50% if the time, including profit.

There are some jobs where there really aren’t any unknowns. I pretty much know walking into it how long it will take and how much it costs. There are sometimes surprises but not very often.

There are some jobs where the potential is high or a lot of unknowns.

Then there are the ones you can’t even guess at.

So for the first two that’s what contingency is for. You estimate the job then add 10-50% based on the job “blowing up” on you. That 10% counts for the little extra wire or a piece of flex or an extra trip back to fix a minor issue. 50% is when you know it’s going to be a money pit job.

Worst case is when you switch to T&M work. As in no fixed bids because you can’t even begin to get an idea of what is needed such as repairs to a burned out building.

And if doing it correctly you should seldom lose money. Experience helps tremendously in keeping this from happening.

Small projects can be the ones that are easier to lose money on, there is less there to help make up for losses should something unforeseen happen.

Small project can have different meaning for a 1 man crew than for large company with multiple crews scattered around different sites as well though.

Some may not mark up materials at all. Some may only mark up 10-25%. Some might double price of materials.

Those that have little or no markup might counter that with higher labor rates, mileage or other surcharges.

I remember some contractors (not necessarily EC'S) telling me they give a pretty high price on bids because they didn't really want to do the job then get rewarded the job anyway. That much more to make on a job they didn't necessarily want in the first place.

One mechanical contractor told me a sports car he has had the cost of it added into a job he didn't care if he won the bid for - he driving it because he got that bid anyway. Think it was a Camaro, been long enough ago I don't remember and he wasn't a local guy, but worked on a project with him and his crew most of a summer.

 

[drcampbell]

Keep in mind that you might lose some customers. I once had a guy ask me to come out for a one-hour job (his estimate, not mine) at a site that was more than a hundred miles from home, then balk at the idea of covering my mileage and travel time, saying he wasn't about to pay for unproductive time.

I sure wish I had a method for losing every customer like that.

 

[kwired]

Keep in mind that you might lose some customers. I once had a guy ask me to come out for a one-hour job (his estimate, not mine) at a site that was more than a hundred miles from home, then balk at the idea of covering my mileage and travel time, saying he wasn't about to pay for unproductive time.

I sure wish I had a method for losing every customer like that.

They got you that time, maybe. Next time you hopefully smart enough to tell them up front what the minimum charge just to show up will be.

If you know they are likely to be someone you don't want to work for you can also just tell them you don't know when you can schedule them in at this time. Or at least tell them you are not driving that far until enough other stops are scheduled to make it worth the trip, then maybe if you actually do just that, give them some break on what you charge them.

 

[480sparky]

Keep in mind that you might lose some customers. I once had a guy ask me to come out for a one-hour job (his estimate, not mine) at a site that was more than a hundred miles from home, then balk at the idea of covering my mileage and travel time, saying he wasn't about to pay for unproductive time.

I sure wish I had a method for losing every customer like that.

I had a lady tell me to go to ____ because I was going to charge her more to install the light fixture she bought for $25.

 

[ActionDave]

Yeah, I’m mostly referring to bidding smaller type jobs.

Rather than guesstimating that it will take 4 hours (not telling the customer how long I think it will take) and then racing your way through the job, and maybe cutting corners, in order to try and finish at 4.0 hours exactly, with the idea that you’ll schedule another half-day job for the afternoon, I’d rather treat it as a “full-day” job.

If I think it’s a 4 hour job I think I’d rather price it as a “full-day” job, which adds $170 to the price. That way I can focus on doing a good job, leaving a clean worksite, maybe having some social chit-chat with the customer, and leave the customer with a good impression at the end of the day, rather than being too busy to talk and racing off to the next job.

As much as it would be nice to scrunch as many jobs as possible into a day, like Paulengr said, I’d rather schedule a particular task for the day, and if I happen to finish a little early maybe having a small task that I can do to finish out the day, or go back to the office and finish the day with some paperwork (never ending), or organizing the work trailer and prepare for the next day.

That is a winning strategy right there IMO. I'm not a contractor but I pay attention and I know for sure that the only contractors that are not going broke are the ones that put a strong emphasis on customer satisfaction, and the only way to do that and not go broke is to charge enough.