Human Nature?

[emahler]

You don't set the price, the market does. It's up to us to try to know where the upper limit of the market is. I try to hit that ceiling as often as I can. It's my job to price it where I can pay my bills, and make it through the hard times. So far, I've done my job OK. If I can work from a home office, charge 75% of what you do, pay all my taxes and insurances (just like you), and put 25% more than you on the bottom line, who's the "better" business man?

The market will bear what the market will bear. It's up to you to know what that number is and how you can make money from it. Don't belittle the small guy that has found a way to make money just because you can't.

lou, i think i've posted it before...but I would argue that a well run 5-10 man shop, with an actual office/shop and all the associated overhead, actually has a lower overhead per man hour rate than a comparable 1 man shop...

now the 1 man shop that doesn't have insurance (because it's too expensive) or take vacations (can't afford them) or any of the many other items most guys wouldn't dream about working for someone else without, yet think nothing of working for themselves without, might have a lower overhead per man hour rate...but they have given up a lot to get that rate...

guys always mistake Gross OH $ for OH/man hour $....and they are 2 different things...

in many cases, a 10 man shop can make more money on a lower rate than a comparable 1 man shop...

 

[Bob NH]

An underlying issue in this thread seems to be that competitors who charge less are costing others business.

That kind of competition is what makes this economy work. People who manage and operate efficiently get the business and make money for themselves and save money for the consumers. Those who operate inefficiently, or don't charge enough, go out of business and the human resource gets redistributed to someone who can use it to make a going business.

WalMart, Home Depot, CostCo, and on-line suppliers exist because they operate efficiently, and they force other to compete on cost and better service. The consumer benefits and many electrical contractors buy some products at places other than the local supply houses.

The Soviet Union had no competition for services and products and there were forever shortages and high costs for what was available. Sole source and cost-plus government contracts cost all of us money that would have been saved by real competition.

Competition benefits the economy and especially the consumers. If some contractors must forego 400% markups on material and gouging customers on change orders, that is a price that you have to pay to stay in business and make this economy work.

 

[iwire]

bob - it's the internet,

Do what you want, and all I am telling you is how it comes across to me.

 

[emahler]

bob nh - i speak only for myself here...the issue isn't the knowledgeable, efficient contractor who can lower cost and increase profit...it's the contractor who is operating without a cause and not based on anything other than misinformation...the goal is to proactively get those contractors to educate themselves, not sit back and wait for the hurt...

bob- you also aren't a contractor and don't really think like one...that's not a knock, but the truth...but you are learning...

 

[iwire]

bob- you also aren't a contractor and don't really think like one...

What does a contractor think like?

According to you many do not think 'right', Oh wait, those people are not contractors, only people that think like you are 'real contractors'.

 

[emahler]

What does a contractor think like?

According to you many do not think 'right', Oh wait, those people are not contractors, only people that think like you are 'real contractors'.

most contractors don't think

bob, for what it's worth, i actually like you...but you know that you will get a paycheck at the end of the week (unless history repeats itself...LOL)

 

[Bob NH]

bob nh - i speak only for myself here...the issue isn't the knowledgeable, efficient contractor who can lower cost and increase profit...it's the contractor who is operating without a cause and not based on anything other than misinformation...the goal is to proactively get those contractors to educate themselves, not sit back and wait for the hurt...D

The market takes care of that without your help. They will eventually go out of business and be available to you to help you make more profit.

In the meantime they will do their part in keeping prices in line for customers by forcing most of the successful contractors to be efficient and keep their prices in line.

 

[iwire]

most contractors don't think

Nice. :roll:

but you know that you will get a paycheck at the end of the week

And now the whine......

That is a choice you made.

 

[cschmid]

Now I see this as getting a little childish..emaler is not selling anything but his promoting his style is like he is selling something..nothing wrong with that..I am like Bob here I am not a contractor but a manager..I work for a business that has been around for almost 90 yrs..

Now will one of you guys who have all the answers please tell me where your business will be in 10 years and what will it look like..If you want education answer the questions..

Bob the company you work for is how old..

One man shops or small shops future is only as long as the owner is running it..nothing wrong with that..that is why it is called free enterprise..

Emahler wanted honest input so lets hear some what makes your business tick..

Ours is our customers and our community with our reputation which is in every employees commitment to quality at a reasonable price..

what is yours..lets have an honest discussion on what makes your business a cut above the rest..

Bob brag up why your business is a cut above the rest..Bob I say your business because you are the Representative for the business to the public you deal with..

I took your advice Bob and broke this down into smaller sections is this better than a big long paragraph..

 

[BryanMD]

In the meantime they will do their part in keeping prices in line for customers by forcing most of the successful contractors to be efficient and keep their prices in line.

Keep their prices in line with what?
This is the issue.

If the competition keep their prices in line with what the actual, true, and **responsible** business needs to recover from their rates (wages/benes/insurance/admin/etc) then there isn't an issue.

 

[emahler]

Nice. :roll:



And now the whine......

That is a choice you made.

no whine bob, i'm content...it's just a different thought process...i couldn't possibly work for someone and know that i'll only make $x, no matter how much, or how little I accomplish today...

 

[emahler]

The market takes care of that without your help. They will eventually go out of business and be available to you to help you make more profit.

In the meantime they will do their part in keeping prices in line for customers by forcing most of the successful contractors to be efficient and keep their prices in line.

they never go out of business, they just change names and owners...

keeping prices in line with artificially low rates, based on nothing, is good how?

 

[iwire]

i couldn't possibly work for someone and know that i'll only make $x,

Well thats the difference, I could not possibly deal with the unknown every week.

Never been a gambler.

 

[emahler]

Now I see this as getting a little childish..emaler is not selling anything but his promoting his style is like he is selling something..nothing wrong with that..I am like Bob here I am not a contractor but a manager..I work for a business that has been around for almost 90 yrs..

Now will one of you guys who have all the answers please tell me where your business will be in 10 years and what will it look like..If you want education answer the questions..

Bob the company you work for is how old..

One man shops or small shops future is only as long as the owner is running it..nothing wrong with that..that is why it is called free enterprise..

Emahler wanted honest input so lets hear some what makes your business tick..

Ours is our customers and our community with our reputation which is in every employees commitment to quality at a reasonable price..

what is yours..lets have an honest discussion on what makes your business a cut above the rest..

Bob brag up why your business is a cut above the rest..Bob I say your business because you are the Representative for the business to the public you deal with..

I took your advice Bob and broke this down into smaller sections is this better than a big long paragraph..

the day I start asking for money is the day i'm selling

it's not about having all the answers, it's about asking the questions...do i, or do i not, list the people who have way more answers than me?

when we were doing resi service, it was everything from how the phone was answered to how the calls were dispatched (small windows of time, not 'sometime on tuesday'), letting the customers know exactly what their cost would be and sticking to it (no surprises), actually standing behind what we did and fixing problems...etc, etc, etc...nothing different than any good resi service company does...

today, we are doing things that allow the customers to save money without costing them money...it's great to not even have price be a part of the sales process...

where will i be in 10 yrs? hopefully sold out to a larger company and off doing something that I really love...

make one thing perfectly clear...i've always stated, it's not just charging more...it's giving more...if you are going to charge $5k for a service upgrade, you can not do the same job as 10 other guys will do for $1500 and expect the customer to be happy...you have to a $5k job (all the extras, bells and whistles) Not everyone wants or needs a $5k upgrade, and that's fine....but there is nothing worse than a contractor performing an upgrade worthy of $5k, but only charging $2k because they don't know...that's worse than the hack (licensed or not) doing a $1k worthy upgrade for $1k...

 

[emahler]

Well thats the difference, I could not possibly deal with the unknown every week.

Never been a gambler.

i know...that's what makes the world go round...neither is right or wrong...just different thought processes...

 

[celtic]

It is always the truth that irks people the most. Don't like it don't read it, that's your ignore button.

Emahler is 100% correct in his "preachings". Rather than cry about it, some of the guys here should read his stuff and realize how valuable the information is and that it can only help you in the long run.

I am in 100% agreement here.

If you refuse to educate yourself ..fine...you don't have to.
Emahler and a few others willing offer their views on the whole "pricing and business" concept free of charge. You don't have to agree with the position ~ but you would be a fool to not consider what is being said.

Being an EC is not about pulling wire and drilling holes, it is about running a successful and profitable business. There are volumes written on how to apply the NEC to any job condition, how many of us EC's education has stopped at the NEC and the associated volumes?
While it is important to understand the NEC, do you understand how to run a business? How is that accomplished? Trial and error...and the error part resulting in lost profit or worse ~ your shirt? If that is your approach, you are doomed....doomed to follow in the footsteps of other contractors that swing a hammer like a champ but not understand the business of contracting in the least. I am curious to know what the last book/author on business some of you have read is...and when?

If you don't like the sermon, hit the ignore button and continue to keep your head in the sand....while your other end is exposed waiting to be violated.

Preach on!

 

[nakulak]

Keep their prices in line with what?
This is the issue.

If the competition keep their prices in line with what the actual, true, and **responsible** business needs to recover from their rates (wages/benes/insurance/admin/etc) then there isn't an issue.

this is an interesting point. I will try to be brief.

what exactly is a responsible business ? read your history books and newspapers. cases in point:
- microsoft is being sued for patent infringement by half of europe. they practically ran borland out of business by stealing all their talent (or did).
- the "old money" type companies like carnagie and the factories didn't make money by being responsible - they made money by building sweat shops and running rough-shod over land deals and small businesses and trying to break the backs of any union organizers
- how do you think home depot has gained its market share ? by being responsible ? they sell screws below cost to drive mom and pop hardware stores out of business.

business is survival of the fittest, buyer beware, and take no prisoners. its dog eat dog, there is nothing nice about it (unless you happen to have found a nice comfortable niche) , its (generally) a rat race, and if there is anything that history, current events, and the news will tell you, it is never, ever responsible (unless absolutely forced to do so by the powers that be, under threat of litigation, castration, or proclemation)

disclaimer: the loosely based historical facts represented above are for illustration only and may or may not represent actual facts. for actual events and circumstances please believe the bs that <insert company name here> represents as the real facts

Edit: I just want to say, I admire optimism. I admire business that are responsible and treat their employees and fellow businessmen with respect. But its cut throat, and driving the other guys out of businesses is as much of the game as anything else, and being responsible, upright, etc etc just is not what many successful companies (past and present) are about. at all. ever.

 

[BryanMD]

this is an interesting point. I will try to be brief...

But its cut throat, and driving the other guys out of businesses is as much of the game as anything else, and being responsible, upright, etc etc just is not what many successful companies (past and present) are about. at all. ever.

Point taken.

My point (to extend your analogy) is that those companies fully understood their intention and had a business plan to achieve it that included a DEEP knowledge of the costs involved.

If it is a truly a well considered marketing strategy to undercut your competition to gain market share... that can be rationalized. It still may not be prudent but it can be understood.

The issues in these threads are about the guy operating a business "out of his back pocket" without any accounting or business management education.

Someone who **doesn't** know what his numbers are and viscerally are afraid to know what they are (perhaps).

That if they did understand their numbers better they would see their need to either charge more to recover the expenses; or (perhaps) choose a different way to make a living altogether.

 

[frizbeedog]

where will i be in 10 yrs? hopefully sold out to a larger company and off doing something that I really love...

Well, That's interesting. Mabey you're the problem.

 

[celtic]

Well, That's interesting. Mabey you're the problem.

Wanting to sell the company is a problem?

What is your plan...build a business, have one of your adult children take over when you are done or let the company die when you die?