Sick of T&M issues need help choosing Flat Rate

[LEO2854]

This is sound advice and a principle that I have always worked off of. "Sometimes you eat the bear, and sometimes the bear eats you" comes to mind. Very rarely should the bear end up eating you though. :slaphead:

The auto industry probably has the hour book down better than anyone else, 10 hour book job takes 4 hours, until you run in to those rusty bolts.

Yes they really do have down to a science, once i started doing a flat rate system i started making great money.

And yes there are those jobs you lose your shirt on but the more you do it the more you find ways to avoid those job killers.

 

[robwire]

Check out Craftsman's books. I have their elect. construction program. You can plug in your hourly rate and it has time all ready assigned to the different task. I have used it for several years and it is in line with the actual time it takes but most of the time you do the job faster than it gives you so it works to your favor. I think it was like $35.00 to down load it and it has free upgrades. It is also compatible with Quick books if you use that for tracking and it will do your invoice or estimate.

Craftsman units are new construction not flat rate units. There is a huge difference. I cringe every time is see someone suggesting craftsman. With all the wonderful resources out there these days like turbo bid,accubid, ETC ETC.Why would anyone use such an outdated crude book like that? If you pay 35 dollars for an estimating system that's what your going to get 35 dollars worth of info.

If you going flat rate there is nothing that compares to Electricians Success by James Busch . Don't fear technology, embrace it.

 

[jaylectricity]

When we buy new trucks we finance them - we hold on to our money and only make small payments over time - yes you pay a little more in interest but you dont have to drop 18k up front and then that money is gone - I would rather make payments of things like this than lump sum. I could always sell the vehicle and hopefully break even on what I owe on it.

With that being said - I pay the insurances up front for the year because I hate the mundane task of writing those checks every month.

This really seems backwards to me. You'll write out the check for the whole insurance bill even though paying it monthly is at little to no additional charge, but you'll pay big bucks for the mundane task of writing checks every month for five years?

If you have the cash, you should buy the truck with cash. You could always sell the vehicle and get a lump sum of cash if needed.

 

[svh19044]

This really seems backwards to me. You'll write out the check for the whole insurance bill even though paying it monthly is at little to no additional charge, but you'll pay big bucks for the mundane task of writing checks every month for five years?

If you have the cash, you should buy the truck with cash. You could always sell the vehicle and get a lump sum of cash if needed.

With 0-2% finance rates, it makes more sense to finance a depreciating asset and remain liquid.

Insurance can go either way, some companies offer 10%+ discounts for paying annually.

Or see what the accountant tells you is better, not usually a one fit for all.

 

[kwired]

If your estamate was only $100 then you should only get $100 unless they added work to the project.

It is unfair business practice to estamate $100 knowing it will cost more just to get the job then jack up the bill after the fact that type of stuff really angers customers myself included and wiil give you a bad reputaition because they will spred the word .

First the customer does not know how much something will cost till you give them a quote and you must sell the job on the spot if you leave without the green light you have already lost the job because the next guy that comes over may low ball just to get the job then jack up the price at the end.


So the price you give must be high enough in case of trouble so you will still make money but you must keep your word on the price you gave otherwise they will not tell their friends they found a great Electrician.

I don't estimate $100 knowing it will probably be more. I will estimate $200 knowing it will likely be less. When that $200 estimate turns into a $125 invoice they are happy. If that $100 estimate turns into a $250 invoice (and there was no work outside of orignal scope) then they are not happy - and understandably.

If it is a written estimate it is likely to be more accurate. If they want to know a set price more time is needed to know what it will take otherwise a high number is needed just in case. Most cases I am talking about are small repairs or installation of specific items. New construction or major rennovations is a little different. 99.99% of those jobs I run into the customer does not even know what they want - a few basic things, yes, then you start mentioning optional items and they didn't even consider those prior to you bringing it up.

Around here I get plans for new homes or additoins handed to me all the time, and they want to know how much to wire it. No electrical detail at all on the plan. Those are times when you would just like to give them a price range of "anywhere between $5000 and 100,000 should cover it. Give me some details of what you want and I can get a little closer.

This is sound advice and a principle that I have always worked off of. "Sometimes you eat the bear, and sometimes the bear eats you" comes to mind. Very rarely should the bear end up eating you though. :slaphead:

The auto industry probably has the hour book down better than anyone else, 10 hour book job takes 4 hours, until you run in to those rusty bolts.

The auto industry is a little more predictable as far as what work is required to accomplish a particular job. It takes about same process to replace brakes on several models. Putting a receptacle in a building can require about as many different procedures to do so as there are different buildings to put it in.

When they do flat rate pricing for automobiles they do take into consideration what vehicles apply to the pricing. Some vehicles do fit into a different rate. Take my diesel truck. I would take it anyplace for a $30.00 oil change - but the 30.00 deals always excludes diesels in the fine print. The cost of oil alone is more than $30.00 if I change it myself.

 

[dkeaux@gmail.com]

Try "T&M not to exceed" include all expenses and obviously if it will tie you up to the point that you can't make another call on that day then you have your flat rate. The best pricing programs can't beat common since. Higher profit margines beat higher gross anytime.

 

[jaylectricity]

Try "T&M not to exceed" include all expenses and obviously if it will tie you up to the point that you can't make another call on that day then you have your flat rate. The best pricing programs can't beat common since. Higher profit margines beat higher gross anytime.

OK so what do you do when it turns out you need an unforeseen $200 part to make the job happen and that puts you over the "not to exceed" limit? I mean, if you're telling me that I might have to pay $xxxx.xx why not just make sure you charge me $xxxx.xx?

 

[kwired]

Try "T&M not to exceed" include all expenses and obviously if it will tie you up to the point that you can't make another call on that day then you have your flat rate. The best pricing programs can't beat common since. Higher profit margines beat higher gross anytime.

OK so what do you do when it turns out you need an unforeseen $200 part to make the job happen and that puts you over the "not to exceed" limit? I mean, if you're telling me that I might have to pay $xxxx.xx why not just make sure you charge me $xxxx.xx?

It's all part of the game of getting the job. Either way you do it you are going to win jobs and you are going to lose jobs. Many times how you sell yourself or your company gets you the job and it doesn't matter whether you are high or low in price. If potential customer does not like you from the minute they meet you, you probably don't have much of a chance of winning the job.

 

[satcom]

Try "T&M not to exceed" include all expenses and obviously if it will tie you up to the point that you can't make another call on that day then you have your flat rate. The best pricing programs can't beat common since. Higher profit margines beat higher gross anytime.

Oh yes! that would work well, first loose money on T&M then assure you will loose even more, with a not to exceed clause.

 

[iwire]

Oh yes! that would work well, first loose money on T&M then assure you will loose even more, with a not to exceed clause.

Funny, we are very successful with T&M NTE agreements. When we hit the NTE we stop working so we don't loose money.

It drives me nuts when guys like yourself make it sound like there is only one way to make money and that is to do it like you do it.

While that is not true at all, there are a million ways to run a business and all most all them can succeed or fail depending on everything from luck, to skill, to the weather, to the reliability of the vendors, to the needs of the customers and on and on.

 

[iwire]

OK so what do you do when it turns out you need an unforeseen $200 part to make the job happen and that puts you over the "not to exceed" limit? I mean, if you're telling me that I might have to pay $xxxx.xx why not just make sure you charge me $xxxx.xx?

We stop, we notify the customer and wait on instructions how they would like to proceed.

The last good sized T&M NTE I did was around 18K and ended up almost 25K.

 

[220/221]

. I don't have time to build a flat rate book for myself.

Any Ideas??

You have been doing this long enough to give a flat rate without a book probably 90% of the time.

To create your own flat rate system, take the amount that you think it should be (old school) and quadruple it. That's your flat rate price. Seriously, the hardest part about using the flat rate systems is looking the customer in the face and telling them it will be $249 to replace a GFCI receptacle or simple circuit breaker.


We do very little T&M work. Only for certain clients who know and trust that they are getting a great deal.

 

[nhfire77]

Funny, we are very successful with T&M NTE agreements. When we hit the NTE we stop working so we don't loose money.

It drives me nuts when guys like yourself make it sound like there is only one way to make money and that is to do it like you do it.

While that is not true at all, there are a million ways to run a business and all most all them can succeed or fail depending on everything from luck, to skill, to the weather, to the reliability of the vendors, to the needs of the customers and on and on.

Iwire, I share your frustration. I think that non-Cali and east coast guys can't demand a decent hourly rate, maybe I'm off base.

 

[svh19044]

Iwire, I share your frustration. I think that non-Cali and east coast guys can't demand a decent hourly rate, maybe I'm off base.

You're way off base. It's more along the lines of, if you live in a very low cost of living area, you don't charge as much as anyone else.

Most of the rates nationwide are actually very similar.

 

[KVA]

Iwire, I share your frustration. I think that non-Cali and east coast guys can't demand a decent hourly rate, maybe I'm off base.

Everyone who is in business has to demand their price to cover their overhead or they can't operate. Your overhead normally stays the same and so does your salary etc.. If you lower your prices you then lower everything else including your salary. And if you want to lower your salary why run a business just go punch a clock and work for someone.

 

[George Stolz]

how much money do i want to have walking away at the end of this job?

google bare bones business, and you will get ellen's website. download
her weekend biz plan, and do it. the books will cost you about $20.

it's tax season, so you should have your numbers together for last year.
you will need them for your budget.

you'll punch in your numbers, and find out that what you probably need
to have coming in the door to make an adequate living is above $125 an
hour.

"but i can only get $85 an hour in my market!"

that is why electricians go broke. they sell $125 hours for $85.

The book is very convincing - almost enough to believe that people will continue to line up to pay quadruple for the pleasure of financing your perceived "necessary" overhead.

I mean, how could I possibly do my job without spinners on the van?

There's some solid ideas, but there's scant attention paid to reducing overhead to remain competitive.

 

[satcom]

Funny, we are very successful with T&M NTE agreements. When we hit the NTE we stop working so we don't loose money.

It drives me nuts when guys like yourself make it sound like there is only one way to make money and that is to do it like you do it.

While that is not true at all, there are a million ways to run a business and all most all them can succeed or fail depending on everything from luck, to skill, to the weather, to the reliability of the vendors, to the needs of the customers and on and on.

There is no one way to operate a business, but using T&M with residential, and some commercial customers can and usually does end up as the OP said, with issues and a fight with the contractor or customer.
When you operate with a contract with a set price and agreed terms, or a flat rate with a signed proceed agreement, there is less chance of a dispute.
In Jersey we are required to have a contract on residential jobs over $750.
We do plenty of T&M work on commercial and industrial accounts, and the T&M Rates and material terms are always under contract

Commercial Fit up work, may be a standard bid process, and contract, or a T&M agreement contract.

 

[KVA]

The book is very convincing - almost enough to believe that people will continue to line up to pay quadruple for the pleasure of financing your perceived "necessary" overhead.

I mean, how could I possibly do my job without spinners on the van?

There's some solid ideas, but there's scant attention paid to reducing overhead to remain competitive.

How do you reduce overhead? Shut off my cell phone and go back to just a land line? Buy all my tools from Harbor Freight? Take a cab to my jobs?:lol:

If your gonna reduce anything it would be your profit margin. I don't see any overhead you can cut unless it's an employee that's not making you much money.

 

[George Stolz]

If you read the book, you would see what I am saying.

(Edit: I'm no saying you'd agree, just saying you'd understand what I was getting at.)

 

[ptonsparky]

How do you reduce overhead? Shut off my cell phone and go back to just a land line? Buy all my tools from Harbor Freight? Take a cab to my jobs?:lol:

If your gonna reduce anything it would be your profit margin. I don't see any overhead you can cut unless it's an employee that's not making you much money.

That employeebwouldnbe me most weeks.