pricing

[tonyou812]

You know lately I have really been questioning some of the advice from this forum. I really feel like I priced myself out of a few jobs because I need to charge more just to keep the curve high . And by not getting the work I stayed home and made no money while someone else got the job. And for what? Its it my fault that I work alone right now and my expenses are relativly low compare to some other folk.
Example l month ago I did a straight forward Service change and charged 1700 for it. And I couldnt beleive that some people told me that i was low and that I was bad for the industry.First off I think we need to take each situation and evaluate it for each person. At 1700 my materials were If I remember around 500-550. That Leaves more than enough to cover my expenses and pay me for the day. Is my accounting off? Am I missinf something here.I dont think so but some people here seem to think that Its better for me to charge 2300 and have the already tenative Home owners back out and get someone else.
So how exactly is it better for me to stay home and have some other monkey get the job. Do I really need to charge what the Big guy with 8 trucks up the steet is charging?

Go Ahead Eric I await your windstorm? I know this topic has been brought up before but I really think its improtant to the small guy.

 

[quogueelectric]

Everyones financial situation is different. However when you transfer from trunkslamelectric to a legitimate contractor you are entitled to charge the going rate to stay in buisness. If you do not charge enough you will surely be bankrupt soon and charging low prices brings everyone down with the tide. If you need to take the jobs low there are people out there who will exploit you and it is noones fault but yourself. Yet if you need the cashflow to survive go for it. You will be like a rat on a treadmill.

 

[tonyou812]

So you really think 1700 is low?

 

[adamants]

money

money

i prefer to charge what i see to be a good price for the job, where i can make good money, i work out my expenses, add on the profit i want to make for that particular job, and that's it. some jobs i charge out higher than other people and some jobs are lower. the point is i decide how much i want to make off a job, i dont worry too much about how much everyone else is charging. a few jobs that i do repeatedly, i charge out dearer, and people are still happier to pay me. if people want to price shop, they will regardless of how much you charge for the job, but why not make great money instead of good money?
if you dont charge enough, you will be busy, if you charge more, you will usually almost as busy, but a lot better off.
just thinking out loud!

 

[tonyou812]

I have a hard time though telling myself its better to stay home than make money when I really don't have the option of picking and choosing the jobs i want,like some of the other guys I wrked for. When the work starts to roll in I believe then I will have more leverage to look an old couple in the eye and tell them 2700 for your service change take it or leave it.

 

[adamants]

new

new

i started out on my own 1 year ago, i have stuck to my guns and within 4 months i took on another guy to work for me, he is almost qualified. believe me, we have had the odd quiet time, but i make sure he always has something to do. if i dont, then it is a great time to work on building my business, which everyone knows, can get neglected from time to time, because we are too busy working!

 

[wireman71]

1700 for a service charge sounds about standard where I'm at. You said bout 500 in materials. Lets figure 8 hours into it. Phone time. Drive time. Bid. so you grossed 1200 after material for 8 hours work. Give me 1 of these a week and i'm quitting my day job. Don't take anything that anyone else has to say about YOUR financial situation as gospel for you. You do whatever it is that you have to do to pay your bills and put food on your table.

 

[jrannis]

1700 for a service charge sounds about standard where I'm at. You said bout 500 in materials. Lets figure 8 hours into it. Phone time. Drive time. Bid. so you grossed 1200 after material for 8 hours work. Give me 1 of these a week and i'm quitting my day job. Don't take anything that anyone else has to say about YOUR financial situation as gospel for you. You do whatever it is that you have to do to pay your bills and put food on your table.

If you want to keep your doors open you might need more like one of these per day. Dont ever work cheap, look to up sell every chance you get. Dont "eat" work you "missed" in your quote. Be honest and let the customer know it was not included.
Do you think your mechanic isnt on the lookout for belts and hoses to change? Wiper blades, light bulbs, water pump? Its up on the rack, its not going to be any cheaper! Hes not ripping you off, just helping you get your preventitive maintenance done.

 

[ItsHot]

decide

decide

You have to decide, do you want to just earn money? Or earn money and build a business!

 

[emahler]

Tony

what do you want me to tell you?

let's start in general, then we'll get specific...

You don't have 8 hrs into a service upgrade...with estimating, procuring material, travel, dealing with towns and POCO, etc, I'd bet you are closer to 12 hours for that job...

if you were paying someone to perform the work, you would probably have 4 hrs of your time, 8 hrs of a mechanic and 8 hrs of an apprentice to perform this job.

so before too long, you are looking at 18 hrs (assuming apprentice labor costs of 1/2 of mechanics)...

add to that, you have just increased the value of the customers home, with a product that will - if done correctly- last 30+ years, for wages....

the fact that there are a ton of guys out there who don't get it, is a bad thing. The fact that a large part of our industry has no idea what they are doing, is a bad thing...

now, a little more specific...Learn how to sell...you are still selling on price, I can tell by your posts...if you want to sell on price, then do it...but the outcome is never pretty...

have you actually determined your costs? or are you just guessing that your overhead is low? my guess, your overhead per man hour is higher than that of a 10 truck shop (including their advertising and shop)

are you accounting for what will happen when you need to hire help? will they perform tasks as quick as you? or will you start losing money on every job?

do you have a plan? not a thought in your head, but an actual plan? this also ties into the marketing plan...

what market are you targeting? i know, whatever market calls you and is willing to pay you...that's not targeting, that's praying...been there, done that...it's ugly.

sales are a requirement...but you are missing the boat...you can't offer the same service upgrade as the other guy and charge $3000 for it, when he charges $1500...you have to offer the customer $3100 worth of work (or at least get them to perceive that's what they are getting)

show up in jeans and a sweatshirt to give quote? so is he

dirty work boots? he's got them too....

quick 5 min estimate..look at the riser, look at the panel? yep, that's what he does (when we did resi, our average service upgrade estimate would take about 30-45min - panel was opened, grounding was traced, circuits were amprobed...etc)

make up the price? yep he does that too
(do not underestimate the power of the written word...or price)

what are you offering them? service cable and CH BR panel? PVC, copper and Sq D QO? We could tack on $200 extra just because of the Visi-trip...(but we also payed less for QO than for Siemens D - and you can too)

Extra circuits? Surge Protection? Do you offer these? he doesn't....
($60 plug in surge protector can easily add $200+ to the total price)

if you want to do residential service type work, you have a tremendous opportunity to make real good money...but if you are just gonna sell on price, you will always operate as a feast or famine entity...you are in control of what you do...simple as that. You are not the only contractor out there in your position, why do you think other EC's are giving away their work? The 1/2 a loaf is better than no loaf mentality is alive and well...

if you want to learn, look into this guy ...one of the best sales trainers I have ever seen...and I've sat through a lot of classes...

the main problem, tony, is that you are no different than every $1700 service contractor out there...that's not a knock, it's the truth....i don't know what you did before you went out on your own, but whatever it was, it didn't prepare you for what you need to know. The only way to differentiate yourself is to educate yourself...once you educate yourself, you can educate your customer...

think the outfits who are getting $3k+ for the same service you are doing for $1700 don't learn sales?

i'll leave you with this thought...all the information that you need is out there...nothing is secret....just be better than 80% of the guys out there and go find it....

 

[Rewire]

Somebody has to be the highest electrician in town it might as well be me.I raised my labor rates $5.00hr in january and I am still getting work.That is $40.00 a man/day that i could have scared myself away from because we had a few slow days.If I am charging $1500.00 to change a service and I get everyone I bid then I should look at increasing the price.I usually jump in 10% increments so that would mean my next service would be $1650.00 and if I get my price on several I jump another 10%.These are NOT real world numbers but are for display purposes only your cost will differ.

 

[emahler]

that's fine if you are actually making a profit at $1500....but what if $1700 is actuall your breakeven....now you are starting in a whole and digging deeper..until you get above $1700....but before you start making a profit, you have to recoup your earlier losses.....but the key is knowing your costs...then you at least determine whether you want to price at a loss or not....

 

[HaskinsElectric]

Another sanity check you need to perform when determining a price for a job, is to say to yourself "At this price, could I afford to hire a qualified electrician and have him do this job for me and still cover overhead and profit?".

For most one man shops the answer is No.

A guy who is a one man shop usually makes pretty good money but not enough to actually hire someone else to do the work. This is a classic trap. This means you are running a business (for lack of a better term) that is impossible to grow at the rates you charge.

But if you raise your rates, you will price yourself out of the market, so as a one man shop, you are really trapped. The reason you will price yourself out of the market is one man shop's compete with trunkslammers, moonlighters, unlicensed contractors and brand new contractors who don't know how to run a business.

One man shops are really in a Catch 22. They can't bid on shopping centers because they don't have the man power and they can't build the man power because they are in a market in which they can't charge a realistic rate.

Another problem with being a one man shop is if you do work for general contractors, they too are one man shops and have to bottom feed and lowball because they are in competition with the trunkslammers and scoundrels plus general contractors at this level often have personality defects or substance abuse problems.

The hardest nut to crack in the electrical contracting business is figuring out how to grow your business, it simply can't be done at the rates most one man shops charge.

 

[LawnGuyLandSparky]

Example l month ago I did a straight forward Service change and charged 1700 for it. And I couldnt beleive that some people told me that i was low and that I was bad for the industry.First off I think we need to take each situation and evaluate it for each person. At 1700 my materials were If I remember around 500-550. That Leaves more than enough to cover my expenses and pay me for the day. Is my accounting off? Am I missinf something here. I dont think so but some people here seem to think that Its better for me to charge 2300 and have the already tenative Home owners back out and get someone else.

Nothing wrong with your math. You made money. That's what you're in business for.

Apparently there is an unspoken goal here, some contractors think they're entitled to grow into some multi-million dollar business in a few years. The reason others might poo-poo your price is because it undercuts their pricing and business plan, which require them to pay an employee AND themselves.

If you did a straightforward service upgrade for 1700.00 every single day, how would that work for you?

 

[HaskinsElectric]

The reason others might poo-poo your price is because it undercuts their pricing and business plan, which require them to pay an employee AND themselves.

Heaven forbid!

 

[ITO]

You know lately I have really been questioning some of the advice from this forum. I really feel like I priced myself out of a few jobs because I need to charge more just to keep the curve high ...

I find that its hard to get work, unless you have the low bid. Price your work for what you can do it for and make a little money too. If your overhead is low, use that to your advantage and beat the snot out of the big guys.

 

[220/221]

l month ago I did a straight forward Service change and charged 1700 for it. And I couldnt beleive that some people told me that i was low and that I was bad for the industry.First off I think we need to take each situation and evaluate it for each person. At 1700 my materials were If I remember around 500-550. That Leaves more than enough to cover my expenses and pay me for the day

Materials = 550 x 2 = 1100

If you want to supply and warranty materials at no charge, you are allowed to do so. No "real" business would do that. If you sell something you need to make money on it.


Someone else said "you have to KNOW YOUR COSTS". Even a basic accounting of your simple costs in a one man operation would help.



If your choice is sitting home or working at a discount, I see your point and would suggest doing whatever it takes to bring in SOME income every day. However, I would urge you to seek out more opportunities and find better work based on your skills and performance rather than on pricing.

The good work IS out there. If occaisionally you have to settle for less, that's life. Just don't set a precedent. If the $1700 guy gives you a referral, they will expect the same pricing. If a $2400 guy gives you a referral, the same applies.

Bottom line = do what you have to do but always strive for improvement.

Apparently there is an unspoken goal here, some contractors think they're entitled to grow into some multi-million dollar business in a few years. The reason others might poo-poo your price is because it undercuts their pricing and business plan, which require them to pay an employee AND themselves.

Starting from ZERO, it took me 10 years to reach the million dollar mark and wil probably take another 10 to hit the multi million mark. No one is entitled to anything.

If you did a straightforward service upgrade for 1700.00 every single day, how would that work for you?

THAT is a COMPLETELY differnt story. Production work is 40 to 50% more efficient. Yeah...I pulled that number out of my @$$ but I bet it's close.

 

[emahler]

I find that its hard to get work, unless you have the low bid. Price your work for what you can do it for and make a little money too. If your overhead is low, use that to your advantage and beat the snot out of the big guys.

apples and oranges ito....100 man shop doing $10 mil / yr at 2percent Net in coomerical installs is a world away from a 1 man shop doing $200k / yr at 2 percent net and no consistant payroll....

 

[220/221]

I find that its hard to get work, unless you have the low bid

We must work in different areas of the business. I often am amazed that the BIG contractors often under bid me by a LOT.

I knew from day one that I didn't WANT to be low bid.

The best feeling in the world is when you find that you were HIGH bidder and still got the job.

 

[nakulak]

that's fine if you are actually making a profit at $1500....but what if $1700 is actuall your breakeven....now you are starting in a whole and digging deeper..until you get above $1700....but before you start making a profit, you have to recoup your earlier losses.....but the key is knowing your costs...then you at least determine whether you want to price at a loss or not....

this is all the information that tony needs to make his decision. it sounded to me like he knew his costs in his original post, and if he knows what his costs are and he can do the work at that price and stay in business, paying for his insurance, truck, etc., then whatever he is charging works for him. and that's the bottom line.

all this crap about "guys working cheaper than me" are "dragging the electrical contracting business down the toilet" makes me want to puke. If you can't sell the customer on the benefits of hiring YOU as the contractor, and you can't substantiate your price, then don't blame other people. go work for someone who can, or do something else for a living. there will always be good times and lean times, in any business. the only guys that survive the lean times are the ones that can either adjust, or have saved their nuts for the lean times. as a matter of fact, right now is a perfect time for US contractors to do work for foreing companies, or even overseas, because of the disparity of the dollar. And you can bet your bottom dollar that the companies over there are probably already griping that the cheap american contractors are beating them out of work.