Electrician's Success International???

[emahler]

Not to divert the topic, but if an ESI company started a second company to use ESI's techniques and avoid the vig, do they prohibit that?

i don't believe so, but you are paying for ongoing education...you are not paying a % of sales fee...so you can take the basic principles and start another company, but you wouldn't benefit from the continuing education.

 

[chris kennedy]

I have never owned a business

Me neither brother. I'm licensed but have no interest in chasing money. I live comfortably twisting tools. At the end of a bad day, I know I've at the very least I've built something or fixed something. I sleep well.

 

[mdshunk]

So how do you keep the doors open?:-?

I never said it was easy, or even fun. Resi, from the business end, is a very tough gig. From a pure business standpoint, commercial work is a good bit easier in my opinion. Admittedly, cash flow becomes an issue in commercial sometimes. There's tricks to that too, like install stuff out of order to get a nice check.

 

[George Stolz]

i don't believe so, but you are paying for ongoing education...you are not paying a % of sales fee...so you can take the basic principles and start another company, but you wouldn't benefit from the continuing education.

Maybe I wasn't clear. Both companies remain open under the same ownership. There isn't any % of sales fee?

 

[JohnConnolly]

If 289 per hour is the rate and to change out a GFCI takes 1/2 hour then the cost to the cusomer is $144.50. I do not think that this is taking advantage of the customer

I am talking about the quoted price of 289 to change the GFCI outlet or breaker. I have SEEN the book and that is what they charge. Even if should just be a simple reset they will change it.


Again, I UNDERSTAND the process...I just have trouble justifying charging 200/300 an hour. It's never too late to learn though.

 

[quogueelectric]

only 150 large?

only 150 large?

ESI is "Mr. Sparky". Do you have a spare 150 grand?

Here's the man behind the curtain: http://www.clockworkhomeservices.com/pressrelease/ESI%20Formed%201Q04.pdf

thats all it is well order me two of them

 

[electricguy]

To each their own but please don't try and tell me the reasons are for the benefit of the customer and the employee, it's for the owner....and there is nothing wrong with that.....just admit that is the reason.



I have never owned a business and I do not live in NJ but that number seems really inflated to me.

I listed some of my monthly overhead here. http://forums.mikeholt.com/showpost.php?p=609095&postcount=3
that is a little low now plus I am not paying a Customer service Representative yet or have uniforms either I am working on that though

 

[satcom]

I am talking about the quoted price of 289 to change the GFCI outlet or breaker. I have SEEN the book and that is what they charge. Even if should just be a simple reset they will change it.


Again, I UNDERSTAND the process...I just have trouble justifying charging 200/300 an hour. It's never too late to learn though.

I think everyone is hung up on what they perceive as a fair price, What appears as fair is not realistic in operating a business, you need to operate on facts and figures, not emotions or perceived ideas, knowing you trade is just a part of operating a business, before anyone can establish a selling price, there are things they have to know as a fact, what does it cost me each day to open the doors, these are my overhead and operating expenses, they will vary greatly from one business to another, one area to another area, but you will be able to find your break even cost, if you include all your fixed expenses, just remember one contractor may have a bare bones, wiring within buildings policy which covers next to nothing, and he is paying $700 to $800 a year, while another contractor doing the same work may have a policy that covers al the hazards, and be paying $3500 to 6,000 a year.

All the other expenses vary in the same way, one contractor may be paying WC payments, where another may not have any WC payments, but you can bet, anyone building a business to grow, and produce assets, and income, has good insurance coverages, not min, and pays their employees well, and usually with some benifits, they also have budgets set up for equipment replacement, both shop equipment and trucks.

So what it comes down to is, are you really in business or do you just think you are. If your really in business, you already know what it costs to operate, If you think you in business, it might be a good time to review your real costs and think what is the reason your in business, is it to work for a pay check, or do you really want to build something to grow on.

$150 to $200 an hour is not a high figure for a service type business, considering all the non productive hours involved, however, it may be a bit high for bidding work, or scheduled longer term jobs, there is no set price for any business, every business has to find what it cost to operate, how much their labor costs are and just how much profit they desire.

 

[emahler]

satcom I agree...Frank Blau originally made an offer (and I think since then other PHC contractors have also extended that offer) for anyone performing strictly resi/lt commercial service using T&M to show him their P&L.

He made this offer around 15 yrs ago, with the caveat that no one could show him a profitable P&L if they were doing service work T&M for the "going rate"

I believe he offered a fairly substantial sum of money, in the thousands...Just to show your P&L

to this date, no one has taken any of them up on the offer.

 

[emahler]

Here is a good article on the different pricing methods.

http://www.foundation.phccweb.org/Library/Articles/ComancheResolutions.pdf

What many guys fail to realize is that you can not just raise your prices and switch your formats overnight, and continue to operate the way you always have.

In addition, being flat rate doesn't lock you into anything. You have the power to change your prices daily if the circumstances dictate it.

 

[emahler]

and as I've said before, one of the main reasons that flat rate companies are generally more expensive than T&M companies is simple....

when setting up a flat rate system, you have to do a break even calculation...once you know your break even point, you would be a fool to charge any less.

most t&m companies have never performed a break even calc, they simply charge the "going rate" and make due with what they get for as long as they can.

If this wasn't the case, you would see more T&M shops billing service at $100+/hr/man

 

[romexking]

I am talking about the quoted price of 289 to change the GFCI outlet or breaker. I have SEEN the book and that is what they charge. Even if should just be a simple reset they will change it.


Again, I UNDERSTAND the process...I just have trouble justifying charging 200/300 an hour. It's never too late to learn though.

John,

Which "book" have you seen? Do you recall the name of the contractor? If you do, please pm me with that info, I would like to look into this. Any flat rate contractor can make up their own "book", but since we are discussing ESI, I am a member and have the "book". I can assure you the charge for replacing a GFCI is not $289. I'm not saying that a contractor didn't present an invoice for that, but there may have been other things included, like a trip or travel charge. A GFCI should take about 20 mins to replace...that would put their hourly rate at $867. I don't think anyone would condone that hourly rate for electrical work.

I respectfully suggest that you were mistaken about the book cost of a GFCI replacement.

 

[aline]

That's the thing. You ARE charging that kind of money for your labor but you are hiding it.

I've never been able to hide my labor charges for replacing a GFCI receptacle.
Home Depot advertises GFCI receptacles in the newspapers all the time for $12.00. Sometimes they've already bought the GFCI. Half the time the customer watches me change it out. They know how long it took and how much the GFCI cost. In their mind they deduct the $12 from the $289 and figure they were charged $277 for the labor.
I'm lucky if I can get $150 for replacing a GFCI.

In my opinion you're hiding you labor when you charge T&M. The customer may know your hourly rate but doesn't know how much the jobs going to cost until you're done. Also what the customer doesn't know is that the slower and less effiecent you are the more they're going to pay you. So if your hourly rate is lower than another contractor that doesn't necessarily mean you're going to be cheaper. If the other contractor charges $10 more per hour than you do but is twice as fast he's going to be cheaper in the end even though his hourly rate is higher.

That is what you try and sell to the customer but the fact is that when I do a service call it will ALWAYS be cheaper @ T&M.....ALWAYS.

Is this a good thing or a bad thing?
I sure wouldn't go to a flat rate system to make less than what I was making working T&M. I've never heard a contractor complain they were making too much money.

I can and do but it is based on the specific job, not pulled from an inflated price sheet.

If you take all of your invoices for a GFCI replacement and averaged them what would they be?

If you found on average you invoiced for $120 per GFCI replacement doing these T&M you could start charging $135 per GFCI replacement using a flat rate. Who says you need to double your price to use a flat rate system?
Now if you get faster and more effiecent at replacing GFCI receptacles you still get the $135 instead of making less money for working faster and more efficiently.

But if it's costing you $150 to replace a GFCI receptacle you're still losing money. Just $15 less than what you were losing before. You determine your price with a flat rate system based on how much it cost you to do the job and how much profit you want to make. No one does it for you. You can charge as much or as little as you want. If after figuring out how much it cost you to replace a GFCI and you don't want to charge that much you can still charge less than it cost you if you want.

 

[aline]

From what I understand the net profit for service contractors using a flat rate system runs between 10% to 20%. This doesn't sound like over inflated prices to me.

Here's a link to an article about a service contractor that I believe uses these over inflated pricing sheets.
http://www.qsc-phcc.org/snowBio.html
Note the line about double digit profitability reaching a high of 15.7%.

Is 15.7% profitability considered over inflated?
Doesn't sound over inflated to me. Wouldn't that be about $45 net profit if you sold a GFCI replacement for $289.

Here's a link to a cost calculator where they recommend 25% net for labor and 10% net for material.
http://www.mrhvac.com/bec.htm

 

[emahler]

one thing to bear in mind...I'd bet that 90%+ of the companies that currently use flat rate, started their company using T&M.

I would bet that less than 10% of the companies currently using T&M have ever used flat rate. Of those that have, I would almost guarantee that 100% of them only raised their rates and did nothing else.

I have also noticed that most guys who are anti-flat rate base their arguement on opinions and feelings.

When facts get presented, they suddenly lose interest and move on to another subject.

Good luck

 

[macmikeman]

I have also noticed that most guys who are anti-flat rate base their arguement on opinions and feelings.

Speaking of opinions and feelings, I'm " feeling" pretty darn good about residential service ever since my "opinion" about going flat rate for it changed. I also used to do t+m, for service work, but never again. I like to call it "upfront" pricing. My customers respond so much better to that simple wording. Aline and Mahlere are telling us some pretty decent points here fella's. It pays to stop and listen for a bit.

 

[emahler]

Speaking of opinions and feelings, I'm " feeling" pretty darn good about residential service ever since my "opinion" about going flat rate for it changed. I also used to do t+m, for service work, but never again. I like to call it "upfront" pricing. My customers respond so much better to that simple wording. Aline and Mahlere are telling us some pretty decent points here fella's. It pays to stop and listen for a bit.

since we are talking about "opinions and feelings"...i have a feeling that my opinion of you would be even better if I were to recieve a few royalty check from the islands

 

[macmikeman]

What? You mean you never received the checks? I've sent thousands. Please, please Mr. New Jersey don't send one of the boys out to "take care of the problem" :grin:

 

[iwire]

I have also noticed that most guys who are anti-flat rate base their arguement on opinions and feelings.

When facts get presented, they suddenly lose interest and move on to another subject.

Good luck

I have not lost interest.

I have grown tired of talking to a brick wall, I don't care how anyone runs their business....it's their bussiness, more power to them.

What I have a real problem with is those that feel their way is the only 'right' way.

My 'right way' is to work for others, I get to pick and choose who I work for and I personally would never work by the piece, which is where this discussion started for me, for those that want to work by the piece great for them.

 

[satcom]

I have not lost interest.

I have grown tired of talking to a brick wall, I don't care how anyone runs their bussiness....it's thier bussioness,more power to them.

What I have a real problem with is those that feel their way is the only 'right' way.

My 'right way' is to work for others, I get to pick and choose who I work for and I personlly would never work by the peice, which is where this discussion started for me, for those that want to work by the piece great for them.

Bob you did bring up an intresting point, one of the fallbacks in some that are operating a flat rate, are also trying to pay piece work, or some form of it, and in my opinion, that can cause a piece worker to become aggressive in selling, not the type of thing you want any consumer to be exposed to, I am probely going to get some flack for bringing this out, but let the chips fly. IMO, these are the companies that are giving flat rate a bad name.

We do charge a flat rate, but that is because my state requires the customer, to have a priced upfront contract on all jobs over $500 we pay everyone, fair market wages, and overtime if need be, and do not do any kind of piece work.

Yes, there are many ways of operating a business, in business there is no one shoe fits all, the only caution, I always suggest in operating any business, is to know your cost of doing business, and that matters in both big and small operations.