Billing for service work

[JES2727]

I'd like to know how other contractors set their rates for service work. For instance, I charge a higher fee for the first hour. This fee is almost double my regular hourly rate, but not quite. Then it's my regular rate for the rest of the job. This would be for service calls and easy installs. I don't charge a "trip charge" or a "truck charge" or anything like that. I just call it my "show-up" fee, and it includes the first hour. This seems to be working for me, except that I've had to raise my show-up fee several times, because I wasn't making enough money on the short calls to make it worth my while. I think I've got a good number now, although if there's a fair amount of drive time involved I get very close to the break even point. I don't charge for travel time, the show-up fee usually covers it.
My other problem is that I haven't always been consistent with this. If the call takes half a day, usually I'm inclined to just charge four hours at the regular rate. The show-up fee is to cover the expenses and hassle of a quick and easy call, because it's already been established that even the quick hits take more than an hour when everything is figured in ( drive time, restocking the truck, etc.) But if I'm there for half a day or more, I figure I'm making enough money at the regular rate that I don't need to charge the show-up fee. Maybe I should stop thinking this way?
I'm toying with the idea of dropping the show-up fee and just charging a two hour minimum. This is essentially the same thing of course, except that all the hours get billed at the same rate. But some customers won't be happy about paying me for two hours if all I did was reset a GFI recep.
I think I'll just stay with the show-up fee.
I'd really like to know what works for other contractors, and what doesn't work. Straight fee? Trip charge? Travel time? Please let me know.

 

[480sparky]

It doesn't matter whether you call it a 'trip' charge, 'show-up' fee, or 'dispatch' fee, it's all the same thing. You're charging for the cost of driving your truck to & from the job. Tomayto, tomahto.

I charge for service calls so much for the call, and that includes the first hour. Each hour after that is my hourly rate.

 

[CA_Electrician]

I too charge a minimum fee that reflects a two hour minimum at higher that hourly rate, then reduce the rate for over the two hours. No travel or other fees are included and built into the minimum.

 

[Dennis Alwon]

I too charge a minimum fee that reflects a two hour minimum at higher that hourly rate, then reduce the rate for over the two hours. No travel or other fees are included and built into the minimum.

I had a customer try and make me stay the whole hour, since she paid for it, and rake leaves. Sounds like you could be raking leaves or cleaning gutters for some time.:grin:

 

[stickboy1375]

I had a customer try and make me stay the whole hour, since she paid for it, and rake leaves. Sounds like you could be raking leaves or cleaning gutters for some time.:grin:

I would have told her my rate for raking leaves is ALOT more than my electrical rate... :grin:

 

[LarryFine]

I too charge a minimum fee that reflects a two hour minimum at higher that hourly rate, then reduce the rate for over the two hours. No travel or other fees are included and built into the minimum.

I had a call two days ago, with a request to replace an intermittent bath-light switch. I told the nice lady that, if it was just the switch, I'd charge only the $95 hourly and even throw in the switch.

She balked and said she'd find a handyman to do if for half the price. I offered a no-problem, and an invite to call me back if necessary. Needless to say, she didn't call me back. $95 is too much.

 

[aline]

I had a call two days ago, with a request to replace an intermittent bath-light switch. I told the nice lady that, if it was just the switch, I'd charge only the $95 hourly and even throw in the switch.

She balked and said she'd find a handyman to do if for half the price. I offered a no-problem, and an invite to call me back if necessary. Needless to say, she didn't call me back. $95 is too much.

Why is it we can't get $95 to come out and change out a switch and yet the Geek Squad charges $100 for estimates or $150 to program a universal remote control. (See the link in the Geek Squad thread)

I guess electrical is so easy a caveman can do it.

The last time I gave a customer a price to change out a switch over the phone I quoted him a $135. He thought I was nuts.

 

[satcom]

Neighbor lady, just had a handyman string holiday lights, around the door $150

 

[Energy-Miser]

I had a customer try and make me stay the whole hour, since she paid for it, and rake leaves. Sounds like you could be raking leaves or cleaning gutters for some time.:grin:

Dennis, I thought this was hilarious. I was laughing so hard, my wife stopped her TV watching and asked me what was up. I told her about your raking experience, got her LHAO too. Did it really happen, or you're just extrapolating on some customer attitude? e/m

 

[emahler]

residential work at T&M is quickly becoming a losing proposition...give them a fixed price, do the work, collect the money...no muss, no fuss, happy customer...

 

[Energy-Miser]

I'd like to know how other contractors set their rates for service work. ...

You know you opened up a very good discussion, as I am struggling with this issue too, and hoping to learn how everyone else handles it. I found out that customers don't like to hear the words travel time. They simply believe that the EC should eat the travel time along with the gas and vehicle expense, etc. I am leaning toward charging a higher first hour rate, but don't know what to call it and how to set it. Should it be 1.5 x hourly rate? Twice, or what? Also, even with that, in my experience, it is hard to remain consistent as circumstances are often very different. Sometimes I think maybe I should just ask a lot of quesions on the phone, judge the travelling distance, and then give a flat rate on the phone and take a chance. As you can see I have not made up my mind on this one. So far I have been charging one way travel time, and have set my minimum charge for one hour. e/m

 

[mdshunk]

I actually had a lady almost 6 months ago threaten to call the police on me when I presented her the bill for resetting her garage GFCI. I guess she thought it should be illegal to charge a senior citizen $65.00 to "just press a little button". I guess she forgot I moved 5 million boxes to find what I suspected was a buried GFCI someplace and meggerred out the load side to see if there was a real problem. I just left and promised to send the bill in the mail, which I did several times. We'll go to the district magistrate soon over that (small claims court), and I'll win my stupid 65 dollars.

 

[GilbeSpark]

You know you opened up a very good discussion, as I am struggling with this issue too, and hoping to learn how everyone else handles it. I found out that customers don't like to hear the words travel time. They simply believe that the EC should eat the travel time along with the gas and vehicle expense, etc. I am leaning toward charging a higher first hour rate, but don't know what to call it and how to set it. Should it be 1.5 x hourly rate? Twice, or what? Also, even with that, in my experience, it is hard to remain consistent as circumstances are often very different. Sometimes I think maybe I should just ask a lot of quesions on the phone, judge the travelling distance, and then give a flat rate on the phone and take a chance. As you can see I have not made up my mind on this one. So far I have been charging one way travel time, and have set my minimum charge for one hour. e/m

How would it work for you if you set a base minimum price just for showing up, say, $65, and then an hourly rate on top of that? That seems like it would be a good way to cover your travel fees without calling it a travel fee.

 

[ItsHot]

$95

$95

I had a call two days ago, with a request to replace an intermittent bath-light switch. I told the nice lady that, if it was just the switch, I'd charge only the $95 hourly and even throw in the switch.

She balked and said she'd find a handyman to do if for half the price. I offered a no-problem, and an invite to call me back if necessary. Needless to say, she didn't call me back. $95 is too much.

I bet that she pays $95 to have her "blue" hair done up real pretty!

 

[S Carpenter]

We charge a 2 hour min. on any service call within 25 miles and a 4 hour min within 50 miles and the clock starts at our hourly rate after the 1st hour, this is all explained upfront on the call, ( no wonder Mr. Handyman is always hiring) We also have a contract with the POCO for inside wiring repairs in which we bill the same way

 

[frank_n]

Why is it we can't get $95 to come out and change out a switch and yet the Geek Squad charges $100 for estimates or $150 to program a universal remote control. (See the link in the Geek Squad thread)

I guess electrical is so easy a caveman can do it.

The last time I gave a customer a price to change out a switch over the phone I quoted him a $135. He thought I was nuts.

Dealing with two different types of customers. The type that doesn't want to pay for a switch would never have a remote control, or a computer in the first place.

 

[Tiger Electrical]

There are a variety of ways to charge. The key is to cover your expenses. We all have travel expenses which make the smaller jobs of residential service more expensive. It can be a trip charge, additional early hours charge, minimum charge, higher standard rate, or whatever. Different practices can be better in some areas. One of my competitors charges a $150 service charge, another a $75 s.c., some do free estimates with higher hourly rates. Many do free estimates with low hourly rates and last a few months or a year before going back to paying work for employers.

In general, residential service works better with the charges agreed to in advance. I have a service charge which we agree to on the phone, and repair charges for installations which I write up in a Service Work Order (Contract) prior to installation. It's easier to cover your costs when it's a $500 repair, rather than a T&M at whatever/hour plus materials. Sometimes more information doesn't lead to a happy client. They really want to know the final cost, not the hourly rate. T&M can often lead to a shocked client at pay-time. Not good business. My clients know the final bill the whole time I'm installing. Most are writing a check as I'm cleaning up.

Dave

 

[Mountaineer]

Charging Rates

Charging Rates

I agree with the last input. Give them a fixed price if at all possible. You can do this 90% of the time. Sometimes you cannot. For instance, I have went into homes where the previous homeowner did several wiring projects himself, he is now deceased and his widow is asking if I can check out the entire home for electrical code violations. This is tuff to quote. You have to do T&M on this. Many reversed polarities, open j-boxes, overloaded circuits etc. She even had her washer outlet (20 amp) wired downstream from the outside WP GFI recp. That was a tough one to find especially when the GFI was tripped before I arrived. I had to think outside of the box.

 

[ishium 80439]

I just recently started charging an hours time for the 1st half hour and than having the clock start after that. I tell the HO on the phone that its a trip/ diagnostic fee. I've been doing a bunch of new work lately with only a few service calls thrown in so I don't have enough info yet to say it works definatively. I know there was a larger company in town that was using this structure and it seemed to work for them.

 

[growler]

But some customers won't be happy about paying me for two hours if all I did was reset a GFI recep.

You should never reset a GFCI receptacle and just leave. GFCI receptacles don't just trip, there is normally a reason for it. I have found everything from a sprinkler system spraying water on an outdoor receptacle to bad hair dryer cord causing the GFCI to trip. Take a few minutes and find out what they were doing when the receptacle tripped.
If the receptacle is old then change it out for a newer and better type.

If you spend 30 minutes or an hour there trying to solve the problem people don't mind the two hour minimum so much. Always ask if there is anything else you can check out while you are there. Some people will show you a loose receptacle that they wouldn't otherwise bother with. Many of these can be repaired with an box extensioin and longer screws ( 10 minutes ) and now they feel that they have gotten an added service for their money.