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Sick of T&M issues need help choosing Flat Rate

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    Sick of T&M issues need help choosing Flat Rate

    Today I'm having a fight with a HVAC contractor. I quoted him $85 per man hour. Two of us did the job so I billed him for two men at $85 per hour, $170 per hour. I've done this for many customers successfully. He actually hired me because the flat rate guys prices seem too high to him. I was unlucky enough to do a job that was tough enough that it would have been a low or no profit job for the flat rate guys. There fore my invoice was higher then what the local flat rate guy would have charged. He thinks hes getting screwed. And the fight goes on.

    I really want to do flat rate for obvious reasons. I've even talked with the person who made the ES2 system. If I was entirely a residential service company I would buy into his system in a heartbeat. However I'm not. My company is just my son and I. We do fire restoration as well as all sorts of remodels, Commercial small work, and Industrial small work. It is hard for me to justify spending $89 every month for a system where I really don't need the whole boat. I don't have time to build a flat rate book for myself.

    What I would like is something more like what I think the original Electrical Success system was originally before it went high tech, (I've never really seen it), where I could make a one time payment and use it for several years. I think there is a real need for something like this because there are many contractors that want to do SOME service work, but not enough to warrant buying into a whole a complete service business related system that requires a monthly fee.

    I also try very hard to stay away from monthly obligations, if business has a slow period it's hard to bring expenses in line with income when your obligated to pay whether you had work or not.

    Any Ideas??

    #2
    $89 a month is one hour of your time.

    You probably spend that much of your time screwing around with these kind of problems.
    Bob

    Comment


      #3
      Originally posted by petersonra View Post
      $89 a month is one hour of your time.

      You probably spend that much of your time screwing around with these kind of problems.

      Good call, haven't looked at it that way. I'll consider it.

      My problem is a monthly obligation to make a payment. I'm old school, I see monthly contracts as evil because if you ever need to cut back you can't. I'ts like leasing a truck or office equipment, and everything else that obligates you to a monthly payment. All those little monthly obligations add up to a lot of cash, and they are NEVER paid off. That's what bankrupts people and business.

      RW

      Comment


        #4
        While I always caught guff about doing T&M work I never lost money on a job either, so when you say it's obvious why you want to learn flat rate pricing when you just said that the flat rate guy would have lost money, is, well, not that obvious to me.
        I can build anything you want if you draw a picture of it on the back of a big enough check.

        There's no substitute for hard work....but that doesn't mean I'm going to give up trying to find one.

        John Childress
        Electrical Inspector
        IAEI / CEI / C10
        Certified Electrical Inspector

        Comment


          #5
          In a perfect world, they are the same thing.

          If you can do T&M, you can do flat rate. YOU know what YOU need for your company to turn a profit. For a father/son team, you are probably going to find that the time spent on the software itself is a more daunting task than without. However, it's an excellent idea to learn it and use it if you plan on expanding to multiple field employees. Or in other words, if you plan on taking the office seat and allowing your son and another man in the field, you should go this route. If not...you are probably wasting money at this point (waste isn't quite fair, as again, it's a good practice to get in to for the future).

          Comment


            #6
            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.
            Organized people are people that are just too lazy to look for their stuff

            Comment


              #7
              Originally posted by wolfman56 View Post
              There fore my invoice was higher then what the local flat rate guy would have charged. He thinks hes getting screwed. And the fight goes on.

              I really want to do flat rate for obvious reasons. I've even talked with the person who made the ES2 system. If I was entirely a residential service company I would buy into his system in a heartbeat. However I'm not. My company is just my son and I. We do fire restoration as well as all sorts of remodels, Commercial small work, and Industrial small work. It is hard for me to justify spending $89 every month for a system where I really don't need the whole boat. I don't have time to build a flat rate book for myself.

              Any Ideas??
              well, if it's you and your son, you can approach it with this question:

              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.

              i just sat down wed. with someone who's pretty successful, for a critique
              of my website.....

              the website should be an extension of my business plan. right now, it isn't.
              a rewrite is in order, and that'll happen over the next two weeks.
              the website rewrite starts with a tuning of the business plan. the business
              plan is what the website designer is going to build the site off of.

              in my case, my mouth and feet aren't going the same direction. i say i want
              one thing, but my actions aren't in alignment with that. most of us are like that.

              ellen at bare bones biz is brutal, but after almost bankrupting here family plumbing
              business, she took it to $40M in sales in two years. one of those kinds of stories.

              so, she knows what she's doing.
              ~New signature under construction.~
              ~~~~Please excuse the mess.~~~~

              Comment


                #8
                Originally posted by Fulthrotl View Post

                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.

                Lets not even talk about $70.


                I gotta move.


                Question: Where's the work #1 in the great Country of ours....and that you can charge $125 hrly for???


                I think it's a lucky duck thing. Some got it, some don't.
                " I'm at a crucial part of my painting "...........Monika Danneman

                Comment


                  #9
                  Originally posted by ritelec View Post
                  Lets not even talk about $70.


                  I gotta move.


                  Question: Where's the work #1 in the great Country of ours....and that you can charge $125 hrly for???


                  I think it's a lucky duck thing. Some got it, some don't.
                  The money is right there for the taking.

                  When you give an estimate ,Give a grand total only price="Flat rate"

                  The key is how well you can sell the product and convincing the customer that you are the right man for the job.

                  You must add up all your costs per year and ad you desired salary and divide that by 1,000 billable hours that will give you an hourly rate that will make you a profit.

                  You will be shocked to see how much your necessary hourly rate is and that is where the Grand Total price for the job works.

                  You do not want to tell clients your hourly rates and itemized stock prices or even how many hours it will take ,

                  That just gives them ammo to shoot you down to the bottom of the barrel.

                  In some cases T&M is required by the customer and that just gives them the upper hand and makes your life much harder.

                  And unless you have the lowest hourly rate you will not get the job anyway.

                  Comment


                    #10
                    Originally posted by wolfman56 View Post
                    Today I'm having a fight with a HVAC contractor. I quoted him $85 per man hour. Two of us did the job so I billed him for two men at $85 per hour, $170 per hour. He thinks hes getting screwed.

                    Let me see, fight with HVAC contractor, get back to basics. First off, distract him and get him to look in another direction and then hit him really hard. Once you knock him down then kick him a couple of times to let him know you mean business and let him know it's time to pay up. Don't forget a radio to cover the noise and there should be no witnesses.


                    This method can work but it's easier and less jail time if you explain what the possible cost could be and get him to sign a work order or contract.
                    The 95% of people that you can't trust give the other 5% a bad name.

                    Comment


                      #11
                      Originally posted by growler View Post
                      Let me see, fight with HVAC contractor, get back to basics. First off, distract him and get him to look in another direction and then hit him really hard. Once you knock him down then kick him a couple of times to let him know you mean business and let him know it's time to pay up. Don't forget a radio to cover the noise and there should be no witnesses.


                      This method can work but it's easier and less jail time if you explain what the possible cost could be and get him to sign a work order or contract.
                      Yeah, but if you hit him to hard, then you gotta load him in the trunk and take him out to the desert and dig the hole and all of that is non billable hours, so it just really cuts into your overhead.
                      I can build anything you want if you draw a picture of it on the back of a big enough check.

                      There's no substitute for hard work....but that doesn't mean I'm going to give up trying to find one.

                      John Childress
                      Electrical Inspector
                      IAEI / CEI / C10
                      Certified Electrical Inspector

                      Comment


                        #12
                        Father and son team????

                        Was thinking one gets him high the other gets him low.
                        " I'm at a crucial part of my painting "...........Monika Danneman

                        Comment


                          #13
                          Did you ask the HVAC contractor if he does his jobs T&M or if he bids or flat rates them?

                          I think you have to do some variety of bids, flat rate, as well as T&M. You may prefer to do one method as much as possible.

                          For me T&M most of the time. I do have a lot of repeat clients, most of time they just call and tell me what they want done and never even question what it will cost. If it is a larger project - or maybe they have third party financing involved they may at very least want some estimates - I usually estimate high - as it is easier to ask them for less money in the end than it is to ask for more.

                          There are people that will want to know what it is going to cost. You have to know whether they are looking for just an estimate or if they want a fixed price. If fixed price you better have a pretty clear scope of work and make sure they know if there is work done outside the scope it is not covered in the price. Seems like there are not very many jobs that ever end with just what the customer initially requested and nothing else.
                          I live for today, I'm just a day behind.

                          Comment


                            #14
                            Originally posted by wolfman56 View Post
                            Today I'm having a fight with a HVAC contractor. I quoted him $85 per man hour. Two of us did the job so I billed him for two men at $85 per hour, $170 per hour. I've done this for many customers successfully. He actually hired me because the flat rate guys prices seem too high to him. I was unlucky enough to do a job that was tough enough that it would have been a low or no profit job for the flat rate guys. There fore my invoice was higher then what the local flat rate guy would have charged. He thinks hes getting screwed. And the fight goes on.

                            I really want to do flat rate for obvious reasons. I've even talked with the person who made the ES2 system. If I was entirely a residential service company I would buy into his system in a heartbeat. However I'm not. My company is just my son and I. We do fire restoration as well as all sorts of remodels, Commercial small work, and Industrial small work. It is hard for me to justify spending $89 every month for a system where I really don't need the whole boat. I don't have time to build a flat rate book for myself.

                            What I would like is something more like what I think the original Electrical Success system was originally before it went high tech, (I've never really seen it), where I could make a one time payment and use it for several years. I think there is a real need for something like this because there are many contractors that want to do SOME service work, but not enough to warrant buying into a whole a complete service business related system that requires a monthly fee.

                            I also try very hard to stay away from monthly obligations, if business has a slow period it's hard to bring expenses in line with income when your obligated to pay whether you had work or not.

                            Any Ideas??
                            I have no idea how the flat rate guys work in your area, but around here they put most of the hourly rate guys out of business in the last 3 years, yes they do tend to charge higher rates, many average 150 to 200 a man hour when you break down their flat rate, they not only do service work, but they also bid commercial fit work and types of residential, myself i am hard pressed to see how anyone can operate a contracting business at an hourly rate, and grow a business that will produce a living wage and grow the business in the long term.

                            Comment


                              #15
                              Originally posted by satcom View Post
                              I have no idea how the flat rate guys work in your area, but around here they put most of the hourly rate guys out of business in the last 3 years.
                              Why would anyone want to hire an hourly rate contractor? I have seen a few that were dumb enough but some of them learned a hard lesson. If you don't know the contractor how would you have any idea ( other than wishfull thinking) how much work they will accomplish in an hour? If the job is on a budget ( like most) what happens if something doesn't go right and lots of extra time is needed? Who has a crystal ball and call tell what may go wrong on a job? The higher price for flat rate is insurance and to spread the cost of a hard job out over a number of jobs.

                              I hate to say this about someone I don't know but this HVAC contractor must be an idiot not to know he was taking a chance.

                              But then again who actually knows what the flat rate contractor's price would have been. I'll bet the HVAC contractor didn't show a written estimate and a scope of work to go along with the stated lower price.
                              The 95% of people that you can't trust give the other 5% a bad name.

                              Comment

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