Aprentice charges on service, and small jobs

[Mule]

Well perhaps you guys are right, I just need to be more bold about pricing. I just started this business earlier this year, and I guess I dont have the confidence about pricing yet. I guess I have a hangup about overpricing, and running off a customer. I have over 30 years experience in the trade but not nescissarily at contracting.

I dont consider myself competing with contractors who dont do quality work. Although as a newbe contractor, I am finding that one of my competitors does lowsy work, and gets all he can, and he's really easy to compete with. :smile: Most all of the other conctractors in town (I would say 80%) are competent and honest. I know this because I was the electrical inspector for 5 years, and I know all of their work like the back of my hand, including those who dont care.

I think in truth, I need to start doing some larger jobs if I want to work my son-inlaw effeciently. Also be more bold about pricing.

 

[Mule]

Ah Rick, help me out here .... !!! Just kidding

I think the fact is that two people on small jobs is just not always efficient...end of story...as my son-inlaw gets more effecient it will become less of a issue, but he needs to have task in front of him at all times to be of value to the customer.........

 

[satcom]

Also a homeowner who might be making say, $22 per hour will never be able to comprehend $90+ per man hour.

Rick

What they don't understand is a service business can pay out $85 to $90 an hour in overhead and operating expenses, that leaves less they the customers $22 per hour, we are lucky to get $7 to $17 an hour out of every 90.

 

[LarryFine]

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.

Okay, same scenario, except when you tell the customer the cost will be $175 to replace the breaker and receptacle, they say "No, thanks." and hand you the service charge.

How many of those do you have to do in a day to make money?

 

[Mule]

Most contractors around here are one or two man shows, and overhead cost is no where near that. But it wouldnt suprise me a bit for you guys out on the east coast to have that kind of overhead with big shops, and big payrolls, lots of trucks, estimators, foreman, secretary's and the like. Around here you can drive to any place in town in 15 minutes, and I literaly do it all. So its really not a comparable issue, at least it doesnt seem like to me. My overhead is less than $10.

 

[emahler]

Most contractors around here are one or two man shows, and overhead cost is no where near that. But it wouldnt suprise me a bit for you guys out on the east coast to have that kind of overhead with big shops, and big payrolls, lots of trucks, estimators, foreman, secretary's and the like. Around here you can drive to any place in town in 15 minutes, and I literaly do it all. So its really not a comparable issue, at least it doesnt seem like to me. My overhead is less than $10.

Then you never figured it out. Without knowing anything else, I'd bet the farm your overhead is over $10/hr or you aren't running an actual business. Which one is it?

 

[CopperTone]

in eastern massachusetts i charge $120/hr for a lic. guy and an apprentice. Some say we're low, some say we're high. it works well for us.

 

[satcom]

Then you never figured it out. Without knowing anything else, I'd bet the farm your overhead is over $10/hr or you aren't running an actual business. Which one is it?

Yup, he has some kind of hobby there, not a business.

 

[Mule]

excluding payroll taxes and medical insurance, my overhead is below a $1000 a month. And pardon me about it being a "actual business" ??? and where is this farm you are betting, does it have nice trees on it, a pond where I can fish? Come on guys maybe I'm not the one who has to think different..I only bill out 90-100 hours a month or less....knock knock ? AND on top of that, I know for a fact a local uinion shop gets $65 for service, we are talking a town of less than 45,000

 

[emahler]

excluding payroll taxes and medical insurance, my overhead is below a $1000 a month. And pardon me about it being a "actual business" ??? and where is this farm you are betting, does it have nice trees on it, a pond where I can fish? Come on guys maybe I'm not the one who has to think different..I only bill out 90-100 hours a month or less....knock knock ?

Medical is overhead - mine costs me $7/hr for a 40 week for just me and my son.

Add in truck payments, insurance, advertising, cell phone, office phone, continuing education, employee training and a whole host of costs that even a 1 man shop should have. And you are well $10/man hour.

 

[Mule]

Medical is overhead - mine costs me $7/hr for a 40 week for just me and my son.

Add in truck payments, insurance, advertising, cell phone, office phone, continuing education, employee training and a whole host of costs that even a 1 man shop should have. And you are well $10/man hour.

Well Ok, medical to me is a personal expense, but I hear where you are coming from... But look at this...

Truck payment=0
advertising, Yellow Pages=$89
cell phone=$100
office phonee=$24 (roll over to cell only)
Continueing education=$150 every code cycle
employee training=0 I do that during windshield time
Fuel=$400
Vehicle insurance=$80
Licensing=$300 annuallly
Insurance and Bonding=$750 annually

Ok I shooting from the hip, but I aint far off...

 

[220/221]

Your truck and tools are paid for so you let the customers use them for free?

A paid for truck generally has a lot of maintenance issues. What's a set of tires run these days? Brakes?

It costs about $15 bucks to rent a hammer drill. Every time you use yours it gets beat down a little more.

The list goes on and on.

Charge whatever you like but don't kid yourself about overhead and expenses.

 

[satcom]

Well Ok, medical to me is a personal expense, but I hear where you are coming from... But look at this...

Truck payment=0
advertising, Yellow Pages=$89
cell phone=$100
office phonee=$24 (roll over to cell only)
Continueing education=$150 every code cycle
employee training=0 I do that during windshield time
Fuel=$400
Vehicle insurance=$80
Licensing=$300 annuallly
Insurance and Bonding=$750 annually

Ok I shooting from the hip, but I aint far off...

Truck payment=0 you will never have to replace the truck? and it never needs any repairs?

advertising, Yellow Pages=$89 with a ad budget like that don't worry about bringing in too much work.

Fuel=$400 a day week or month or year?

Vehicle insurance=$80 a what week month year?

How about your liability, and workers comp insurance?

Your accounting and legal costs.

Office expenses.

Truck stock.

bank charges, and all the other business expenses

 

[Rich R]

Truck payment=0 you will never have to replace the truck? and it never needs any repairs?

That will probably be another personal expense

 

[Mule]

Ok, I'm done with this discussion, nothing personal to any one person, but I started out by asking about a specific questions trying to be creative for my customers, and we are completely off topic and Im now drilled by how I run my business. I should not have to defend myself for trying to keep my overhead low for my customers. My journeyman rates have to meet the local market and you folks wont except that....sorry Im out of here. If you have something positive to say, I'll listen. but you have to understand, I dont concentrate on growing a big business, I only want to exercise my trade for myself and my son-inlaw and cater to my customers, whats wrong with that.......geez

 

[Sparky555]

Well Ok, medical to me is a personal expense, but I hear where you are coming from...

So...if you were working for someone else you'd be OK with there being no medical benefits? I guess if you run into a major medical expense you're out of business. Are you going to go out of business when your paid-for truck dies?

Your overhead needs to include:
Medical Benefits
Retirement benefits
Vehicle Maintenance, Repairs & Replacement
Contingency Fund to smooth out the slow spells

and your salary should be enough to pay your family's medical care, vacations, and college educations.

Dave

 

[satcom]

Ok, I'm done with this discussion, nothing personal to any one person, but I started out by asking about a specific questions trying to be creative for my customers, and we are completely off topic and Im now drilled by how I run my business. I should not have to defend myself for trying to keep my overhead low for my customers. My journeyman rates have to meet the local market and you folks wont except that....sorry Im out of here. If you have something positive to say, I'll listen. but you have to understand, I dont concentrate on growing a big business, I only want to exercise my trade for myself and my son-inlaw and cater to my customers, whats wrong with that.......geez

I dont concentrate on growing a big business, I only want to exercise my trade for myself and my son-inlaw and cater to my customers, whats wrong with that.......geez

If you really want to help your son, put him in the right direction by checking your costs of doing business.

"My journeyman rates have to meet the local market"

No they do not have to meet what other are charging, they may be loosing money, you just need to meet your own costs.

"I should not have to defend myself for trying to keep my overhead low for my customers"

I do have to defend myself, when my family is put in the street because i was giving away the store.

 

[aline]

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

You're getting many suggestions but you don't seem to apreciate them. You're asking if you're doing it right or if you need to change something. It's being suggested that you're not doing it right but it's not what you wanted to hear.

Do you want people to just tell you what you want to hear or do you want them to speak what's really on their minds?

A lot of the guys on this forum have been in your shoes. They've been there and done that. They're just trying to help you keep from making the same mistakes they've made.

You really should read the article titled "How Much Should A New Contractor Charge?" by Frank Blau.
Here's the link.
http://www.pmmag.com/Articles/Column/12862c49e3fc7010VgnVCM100000f932a8c0____

You would also benefit from reading some of the articles from the below link.
http://www.pmmag.com/CDA/Archives

 

[Mule]

With all due respect.....you dont anything about my family, my competition friends, nor do you care about my job cost, you just want to tear me down, to defend how you do your business. I pay by bills and I know what they are. Can we get back to my original question?

 

[aline]

With all due respect.....you dont anything about my family, my competition friends, nor do you care about my job cost, you just want to tear me down, to defend how you do your business. I pay by bills and I know what they are. Can we get back to my original question?

So, am I doing it right, or do I need to change something?

Thanks .....Mule

I read through your original post and this is the only question I could see.

So my answer is: You're not doing it right and yes you need to change something.

I would suggest going to a flat rate system and giving your customers an upfront price for completing the work whenever possible. Again I would suggest reading some of the articles in the links I posted previously.