"Itemizing" an invoice- how detailed?

[Ponchik]

If the next guy they have come over charges ~$169 less to do what seems to be very similar tasks - you look too expensive.

We cant go with what IF's. When you provide the best service that the customer sees the value they will not call someone else. If I give them a reason to call someone else then it is my fault.
What if the next guy charges double then I look like a bargain.

Are you changing four switches in four locations or are you changing one switch in a four gang box and they decide to change the others while you are already in there?

I am changing four switches. Period. When we go to restaurant they charge us per plate regardless if we eat there or take it home. They will not give you a discount if you order more than 2 plates or more than two beers. Why should we as service providers do any different. We as service providers have trained the customer to treat us this way.

As was mentioned I would have charged a minimum labor charge as this probably took less then an hour, I could still see in some instances mileage, dispatching fees, etc. but those are one time fees regardless of what you did (I prefer to not itemize such things and instead cover such overhead costs in the labor fees) - plus (the marked up price) of each switch used.

You don't let them know what your markup cost was, it isn't any of their business anyway

. But with the internet then know how much the local hardware store charges for the switch and less your price charged to the customer, that is when they start with their questions. Do you go to a retail store and ask what their purchase price was on items you bought? Any that runs a business understands you mark things up that you turn around and sell, especially if your primary business is retail sales, if you don't you must add fees elsewhere to the total bill or you don't profit.

I changed my way of thinking and I look at things differently.

 

[kwired]

Originally Posted by kwired

If the next guy they have come over charges ~$169 less to do what seems to be very similar tasks - you look too expensive.


We cant go with what IF's. When you provide the best service that the customer sees the value they will not call someone else. If I give them a reason to call someone else then it is my fault.
What if the next guy charges double then I look like a bargain.

I can agree, what matters is selling your overall value regardless of what the final bill may be, and one should focus more on that then selling price, when it comes to dealing with the client.


Are you changing four switches in four locations or are you changing one switch in a four gang box and they decide to change the others while you are already in there?


I am changing four switches. Period. When we go to restaurant they charge us per plate regardless if we eat there or take it home. They will not give you a discount if you order more than 2 plates or more than two beers. Why should we as service providers do any different. We as service providers have trained the customer to treat us this way.

If you go to an all you can eat style buffet, or order the all you can eat platter in some instances - you don't get a discount if you only eat one plate, some places you are charged for every refill on beverages some places you get as many free refills as you want. Just like our clients, the clients of such restaurants may like one way better then another, but may still go to both places from time to time.

As was mentioned I would have charged a minimum labor charge as this probably took less then an hour, I could still see in some instances mileage, dispatching fees, etc. but those are one time fees regardless of what you did (I prefer to not itemize such things and instead cover such overhead costs in the labor fees) - plus (the marked up price) of each switch used.
You don't let them know what your markup cost was, it isn't any of their business anyway


. But with the internet then know how much the local hardware store charges for the switch and less your price charged to the customer, that is when they start with their questions. Do you go to a retail store and ask what their purchase price was on items you bought? Any that runs a business understands you mark things up that you turn around and sell, especially if your primary business is retail sales, if you don't you must add fees elsewhere to the total bill or you don't profit. My price on a standard toggle switch is usually less then what the local hardware store sells it for, is more then the big box stores usually will charge, but if they want to drive 40+miles one way to nearest big box store to pick up a switch themselves while I charge them hourly labor while waiting for them to return with that switch, I come out way ahead of you on total billing



I changed my way of thinking and I look at things differently.

​We all have different scenarios that apply and do things a little differently because of them.​

 

[Ponchik]

Originally Posted by kwired

If the next guy they have come over charges ~$169 less to do what seems to be very similar tasks - you look too expensive.


We cant go with what IF's. When you provide the best service that the customer sees the value they will not call someone else. If I give them a reason to call someone else then it is my fault.
What if the next guy charges double then I look like a bargain.

I can agree, what matters is selling your overall value regardless of what the final bill may be, and one should focus more on that then selling price, when it comes to dealing with the client.


Are you changing four switches in four locations or are you changing one switch in a four gang box and they decide to change the others while you are already in there?


I am changing four switches. Period. When we go to restaurant they charge us per plate regardless if we eat there or take it home. They will not give you a discount if you order more than 2 plates or more than two beers. Why should we as service providers do any different. We as service providers have trained the customer to treat us this way.

If you go to an all you can eat style buffet, or order the all you can eat platter in some instances - you don't get a discount if you only eat one plate, some places you are charged for every refill on beverages some places you get as many free refills as you want. Just like our clients, the clients of such restaurants may like one way better then another, but may still go to both places from time to time.

As was mentioned I would have charged a minimum labor charge as this probably took less then an hour, I could still see in some instances mileage, dispatching fees, etc. but those are one time fees regardless of what you did (I prefer to not itemize such things and instead cover such overhead costs in the labor fees) - plus (the marked up price) of each switch used.
You don't let them know what your markup cost was, it isn't any of their business anyway


. But with the internet then know how much the local hardware store charges for the switch and less your price charged to the customer, that is when they start with their questions. Do you go to a retail store and ask what their purchase price was on items you bought? Any that runs a business understands you mark things up that you turn around and sell, especially if your primary business is retail sales, if you don't you must add fees elsewhere to the total bill or you don't profit. My price on a standard toggle switch is usually less then what the local hardware store sells it for, is more then the big box stores usually will charge, but if they want to drive 40+miles one way to nearest big box store to pick up a switch themselves while I charge them hourly labor while waiting for them to return with that switch, I come out way ahead of you on total billing


I changed my way of thinking and I look at things differently.

​We all have different scenarios that apply and do things a little differently because of them.​

In my case there is hardware store with 10 minutes everywhere. :weeping: Maybe I should come be neighbors with you. And you are thinking :happyno::happyno:

 

[kwired]

In my case there is hardware store with 10 minutes everywhere. :weeping: Maybe I should come be neighbors with you. And you are thinking :happyno::happyno:

Are you bringing a hardware store with you?

Most the small town hardware stores (that have decent lines and stock of hardware products) still existing are owned by older people and their stores are bought and paid for, when the owners retire many of them just close as nobody can afford to take them over, especially younger people that haven't built up much of any equity. What they do have going for them is convenience of having it on hand and nearby, but their prices are high compared to even smaller chain stores in larger communities. It is expensive to have a large inventory of small harware items that don't exactly fly off the shelf as fast as you stock the shelves, but yet customers want to be able to come in and be able to purchase some of those items on demand and not have to special order them.

 

[Yetti]

Sometimes I show each part as a line item on the quote, and sometimes I roll many line items together (in the background of an excel spreadsheet) to only show category pricing to the customer.
Either way, labor is built into the price of each line item.
I like to keep any Time and Material variables as it's own category, and as small of a % of the job as possible.
This T&M rate can vary of course, but in general I keep the variable rate lower than normal, as we want to get the job based on the known items and categories quoted to the Customer, and just cover the labor costs for the T&M portion of the quote.

Yetti-

 

[active1]

I have done service from T&M billing to Flat Rate.
Just discussing invoice design and computer based programs this the other day with another EC.

For paper pre-printed invoices I only seen about 3 styles in the 2 dozen companies I worked for.
1. The common materials listed in a grid 3/4 of the page with a quantity box next to item and a few blank lines for the job description at the bottom.
2. Half the page has a blank material used grid to be written in.
3. At least half the page is blank lines and amount box on the far right. With materials, labor, flat price, etc to be written in.

He went with option #2. I told him that was too much space wasted on materials. Besides does the customer really care how many wire nuts or 1/2" connectors you used? His answer was you need to put down all the screws, cover plates, and other junk to justify the material price on the invoice. I asked him why would you want to put a separate material price. His answer was to justify the total bill.

So I opened up the file cabinet and grabbed a random month of invoices.
I read off the summery of each one (work done and price) then handed it to him.
Said look, not 1 lists a material price.

Then I went to the early years when I did itemize everything labor hours and every piece of material.
Read thru and showed him those.
It was embarrassing that the invoice totals came out so low.

Remembering the battles of how much an item should cost or people thinking your labor rate is the same personal as take home pay.
My friend agreed their are times that happens.
I said the more you break things down the more people complain.
How many people have complained because McDonalds charges $0.50 more for cheese?
There is 1,080,000 Google results of that complaint alone.

My friend said he never thought you could charge this to do that.
I said you never asked.
He said there is this other place that used to charge a fraction of that.
Where are they now, out of business.
He said but the biggest company in town charges less.
I said I don't care.

 

[kwired]

I have done service from T&M billing to Flat Rate.
Just discussing invoice design and computer based programs this the other day with another EC.

For paper pre-printed invoices I only seen about 3 styles in the 2 dozen companies I worked for.
1. The common materials listed in a grid 3/4 of the page with a quantity box next to item and a few blank lines for the job description at the bottom.
2. Half the page has a blank material used grid to be written in.
3. At least half the page is blank lines and amount box on the far right. With materials, labor, flat price, etc to be written in.

He went with option #2. I told him that was too much space wasted on materials. Besides does the customer really care how many wire nuts or 1/2" connectors you used? His answer was you need to put down all the screws, cover plates, and other junk to justify the material price on the invoice. I asked him why would you want to put a separate material price. His answer was to justify the total bill.

So I opened up the file cabinet and grabbed a random month of invoices.
I read off the summery of each one (work done and price) then handed it to him.
Said look, not 1 lists a material price.

Then I went to the early years when I did itemize everything labor hours and every piece of material.
Read thru and showed him those.
It was embarrassing that the invoice totals came out so low.

Remembering the battles of how much an item should cost or people thinking your labor rate is the same personal as take home pay.
My friend agreed their are times that happens.
I said the more you break things down the more people complain.
How many people have complained because McDonalds charges $0.50 more for cheese?
There is 1,080,000 Google results of that complaint alone.

My friend said he never thought you could charge this to do that.
I said you never asked.
He said there is this other place that used to charge a fraction of that.
Where are they now, out of business.
He said but the biggest company in town charges less.
I said I don't care.

Not trying to disprove the point you are trying to make here but how long ago were those "early years"? Regardless of the method I'd expect some overall lower invoice amounts anyway simply because materials and labor prices were lower at one time.

You need to compare profit margin, overhead costs, cost of living as it applies to desired employee pay and owners draw, etc. in such comparison and not just invoice total.

 

[active1]

"So, if you hired a plumber to come in and do some work on T&M, and when finished you were handed a bill that said material $3,200, labor $6,236, you would be OK with that w/out seeing how much material and time you were paying for? "

Why would I want to hire a plumber T&M?
Seriously, why?

I would call for an estimate.
Or at least pay a predetermined service call amount with the intention of getting a fixed repair price after they show up.

If your truck needs a tune-up and you call one shop and they tell you we don't know how much it will cost, just drop it off and we'll tell you when were done.
Would you go there or just call another.
Don't get me wrong. There is a time when diagnosis needs to take place first before an estimate.
But even that diagnoses should have a $ amount before stopping and re-accessing.
Some jobs need to be T&M. Those of way too many unknown factors. Sometimes those are ones that go on for years as cost plus.

If a company can't price out a simple task for their trade it's a red flag they lack trade experience of that task, business experience, or looking to take advantage of someone. An example I call 3 tree service companies for a quote on cutting down a palm tree. One looked at it and said they would email me a price in a day or two. The other spent 5 minuets talking to me and had a number. I went with the guy that knew his numbers.

 

[active1]

Not trying to disprove the point you are trying to make here but how long ago were those "early years"? Regardless of the method I'd expect some overall lower invoice amounts anyway simply because materials and labor prices were lower at one time.

You need to compare profit margin, overhead costs, cost of living as it applies to desired employee pay and owners draw, etc. in such comparison and not just invoice total.

Was about 7 years apart.
I will say it was not only the difference of billing T&M vs Flat Rate.
A different mindset of thinking.

Starting off like others I tried to compete on price.
With a lower hourly rate and less material mark-up.
Really didn't make much money for the first 2 years.
Even at that I still had customers try to beat me up over the hourly rate and or price I charged for materials.

Then I decided to change to "if you want this done it will be this much".

 

[kwired]

"So, if you hired a plumber to come in and do some work on T&M, and when finished you were handed a bill that said material $3,200, labor $6,236, you would be OK with that w/out seeing how much material and time you were paying for? "

Why would I want to hire a plumber T&M?
Seriously, why?

I would call for an estimate.
Or at least pay a predetermined service call amount with the intention of getting a fixed repair price after they show up.

If your truck needs a tune-up and you call one shop and they tell you we don't know how much it will cost, just drop it off and we'll tell you when were done.
Would you go there or just call another.
Don't get me wrong. There is a time when diagnosis needs to take place first before an estimate.
But even that diagnoses should have a $ amount before stopping and re-accessing.
Some jobs need to be T&M. Those of way too many unknown factors. Sometimes those are ones that go on for years as cost plus.

If a company can't price out a simple task for their trade it's a red flag they lack trade experience of that task, business experience, or looking to take advantage of someone. An example I call 3 tree service companies for a quote on cutting down a palm tree. One looked at it and said they would email me a price in a day or two. The other spent 5 minuets talking to me and had a number. I went with the guy that knew his numbers.

Big city, small town differences come into my answer.

When I do have work done on my truck I kind of know which shops are better at certain tasks, and take that into consideration regardless of what the cost may be. Had a transmission problem a few years ago, best local place to take it was likley to just sell/install a rebuilt transmission based on initial apparent problems with little diagnosis. In mean time couldn't get me in for a week, so I took it to a transmission specialty shop about 50 miles away as they could look at it sooner, they found a sensing device was all that was wrong with it. They may have charged more then the first place would have (if they ended up with same diagnosis and only replaced the sensor) but they were more optimistic up front about lets take a look and see what the problem is, as well as able to get it scheduled sooner, where the first place seemed more certain that they would likely be installing a rebuilt transmission, which I'm sure would have been more cost at either place.

The plumber? It depends on the task they are presented with. If I wanted them to just install a line to a sink, I would expect maybe half a days labor rates at maybe $100 an hour or so, plus material costs that are maybe not much more then double what you may buy the same materials at a big box or hardware store. So if with that in mind that comes out to a $400-500 dollar job I won't be too shocked to get a bill for $700, but if instead they give me a bill for $9000, it just might raise some questions.

At same time I need to get bills like that once in a while to make me realize what I am doing when I invoice my customers.

I sometimes feel I wouldn't want to pay that much for the service performed when I look at invoices I send out, then I get a bill from someone else that did work for me and have to think I must be underselling myself.

 

[Dzboyce]

Let me tell you about something I'm going thru as the customer. Last month we were moving my Case 580M backhoe from one job site to another. It was only about 10-12 miles, so we were roading it. My guy driving it didn't realize it was still in 4wd. It started making noise. He stopped and called me. I came and looked at it, verified there was a problem. I called the Case dealer to come pick it up and bring me a rental replacement.

i stopped at the dealer a week later to check on it, they hadn't got to it yet. Same thing the next week. So, Thursday I'm thinking I need to stop in and check on it or the rental bill is going to be more than the repair bill.

later that afternoon I get a phone call form the dealer, the service manager is on vacation, but the backhoe is done. The bill is $13,000. How would I like to pay for it? I came unglued. More than one f-bombs were dropped. No estimate was ever provided me. I had not authorized repairs based upon an estimate. You can be sure that repair bill had better be fully itemized and they can justify every penny of it.

I'll pay the bill, if it's justifiable, but damn am I pissed at them. You can also guess how much of my business they will get in the future. Needless to say they will not be selling me the dozer I had been thinking about buying from them. Or what kind of a recommendation I will give anyone else about them.

 

[active1]

As far as what I have posted I tried to write, and to be clear I want to say it again.
Price up front.

Like I wrote before not getting an upfront price, at least after a small amount of checking can be a sign of a rip-off about to happen.

By no way am I advocating for unknown price drooped on the customer when the work is done.

Step 1 - Access what they want / need
Step 2 - Give them a price
Step 3 - Do the work or go on to the next job

From the customers side a flat rate price, proposal, bid, and estimate look like the same thing.
$XX amount to do this work. No need to show your math.

Some states have laws on home repair and vehicle repair to prevent no price till something crazy at the end.
Such as requiring a signed agreement for amounts above.. Or final price has to be almost the estimated price.
So if a plumber came over to fix a toilet, no price discussed, and gave you a bill for $9,000, depending on state laws you may have a case for the contractor board.
The plumber would have been performing work above $ amount without a contract.
Don't think the plumber would be able to hold up in court if he violated the contracting laws.

 

[kwired]

As far as what I have posted I tried to write, and to be clear I want to say it again.
Price up front.

Like I wrote before not getting an upfront price, at least after a small amount of checking can be a sign of a rip-off about to happen.

By no way am I advocating for unknown price drooped on the customer when the work is done.

Step 1 - Access what they want / need
Step 2 - Give them a price
Step 3 - Do the work or go on to the next job

From the customers side a flat rate price, proposal, bid, and estimate look like the same thing.
$XX amount to do this work. No need to show your math.

Some states have laws on home repair and vehicle repair to prevent no price till something crazy at the end.
Such as requiring a signed agreement for amounts above.. Or final price has to be almost the estimated price.
So if a plumber came over to fix a toilet, no price discussed, and gave you a bill for $9,000, depending on state laws you may have a case for the contractor board.
The plumber would have been performing work above $ amount without a contract.
Don't think the plumber would be able to hold up in court if he violated the contracting laws.

Fair enough. I was just trying to point out it don't always work that way. Around the smaller communities where I am at, if you are known to gouge people on price - you probably won't last long, the word gets around fast. That said, there are companies that do charge significantly higher price for same work as some of their competition. Why are they still in business, they have a well run service department, fix things right the first time instead of making several return trips throwing parts at something until it finally works, will usually be able to schedule you fairly quickly when you do need service work, can send out 1,2, or 10 service people depending on what is needed for the job. When it comes to things around the house, most homeowners want cheap, when it comes to running a business and the item in question is holding up productivity, those more reliable service companies may be well worth what they charge to some business owners.

 

[Ponchik]

Fair enough. I was just trying to point out it don't always work that way. Around the smaller communities where I am at, if you are known to gouge people on price - you probably won't last long, the word gets around fast. That said, there are companies that do charge significantly higher price for same work as some of their competition. Why are they still in business, they have a well run service department, fix things right the first time instead of making several return trips throwing parts at something until it finally works, will usually be able to schedule you fairly quickly when you do need service work, can send out 1,2, or 10 service people depending on what is needed for the job. When it comes to things around the house, most homeowners want cheap, when it comes to running a business and the item in question is holding up productivity, those more reliable service companies may be well worth what they charge to some business owners.

With the internet the price gouging word will get around, much faster in smaller cities than large ones.

The home owner may want to go cheap unless you can convince them otherwise and that is when sales training is necessary. You don't need to have a broken production line type customer in order to have higher charges for your services.

 

[kwired]

With the internet the price gouging word will get around, much faster in smaller cities than large ones.

The home owner may want to go cheap unless you can convince them otherwise and that is when sales training is necessary. You don't need to have a broken production line type customer in order to have higher charges for your services.

I agree, it all comes down to how well you sell yourself (your business and it's products/services) Present them well enough and people may say "he is a little high in price, but well worth it". That is the kind of comment you want going around about your business, and that goes for any business.

Those that want cheap don't always realize that some of those little things that someone higher priced maybe pays attention to details on comes back as a better overall investment at times. Sure there are occasions where it may not matter one bit.

 

[active1]

"With the internet the price gouging word will get around"

That got me looking at the local Yelp negative reviews.

Seems like the top complaints are no show at scheduled time, didn't fix the problem, and personality conflicts / professionalism / saying the wrong thing seemed to get the negatives. Sure I found one where they complained about the material price and permit charge was marked up with the HO wanted the company to wait while they went shopping to avoid the M/U. IMO that just goes back to the original don't break it all down.

Interestingly you could sort the contractors from $ to $$$$. Just like searching for lunch. You want a $ lunch place, here's burger king. Or you want a local $$$$ lunch place with table cloths. Myself I'm a real cheapa$$. But I also understand the low end cheapest place is probably more trouble than it's worth. The last time I called for some HVAC service I went on the low end. The guy spent a few hours looking at everything, make about 4 lifeline calls for help, broke my closet light, for a simple problem that I even said it's probably this when he showed up. Rather have a confident person that knows what they are doing and gets in and out with little trouble or mess.

 

[Besoeker]

As detailed as the written order you were given.

 

[kwired]

As detailed as the written order you were given.

I seldom have written orders, especially for service calls, but don't think verbal invoices are the best way of tracking things when it comes to tax time

 

[Besoeker]

I seldom have written orders, especially for service calls, but don't think verbal invoices are the best way of tracking things when it comes to tax time

Many of our customers had a formal service contract which gave fixed hourly rates and mileage charges. The engineer had a standard report sheet which he filled out on site and had the customer sign it before leaving site. The job was invoiced based on that and a copy of the report went with the invoice. Thus, a complete document trail and that kept the auditors happy.........