macmikeman
Senior Member
- Location
- Planet macmikeman
Streetwalkers are only too aware of this fact.
Flat rate pricing
- Thread starter IrishRugger
- Start date
- Status
Streetwalkers are only too aware of this fact.
Rewire
Senior Member
- Location
- Lake of the Ozarks
Good is a relative term. My golf game is good is it Tiger Woods good well no.Is it good compared to some ,yes.
readydave8
re member
- Location
- Clarkesville, Georgia
- Occupation
- electrician
I agree, wish I had learned more sooner, now I'm humble enough to be willing to learn and I do learn constantly.
IrishRugger
Senior Member
This time I must beg to differ. Just finished a small job that I gave the customer a flat rate price for and I think I have made a profit on this one.
Rewire
Senior Member
- Location
- Lake of the Ozarks
Just being in business increases your odds.
Flat rate for residential service work, has been earning us a profit for many years, most of the T&M guys I seen them come, and I seen them go, over the years, most of them just made a weeks pay, if they were lucky, yes just being in business is risky.
brian john
Senior Member
- Location
- Leesburg, VA
When I did residential service the company I worked for did all work T&M billing.
The owner lived in a 10,000 sq ft house, had a twin engine airplane, single engine airplane, 35' yacht, 5 kids all went to top notch colleges, started in business in 1948, died last year and his company is still operating.
Yeah you have the only method that works, DO NOT assume because you cannot figure out a formula for making a profit with a method that is different than yours, that everyone else is a dolt, it makes you seem VERY NARROWED MINDED or incompetent of grasping that others have a method that works outside your game plan.
As you know there is more to operating a successful business that just a simple billing plan.
readydave8
re member
- Location
- Clarkesville, Georgia
- Occupation
- electrician
Everything I've quoted in the last 2 weeks I've been too high, someone cheaper got the job. They probably know what their work is worth.
Maybe I should cut my prices in half and see if I can get double the work.
Maybe I should cut my prices in half and see if I can get double the work.
I've been doing T&M service work and every year I'm up 10-20% from the previous year albeit it only 5 years. I broke my last years gross a week ago.
I haven't changed a thing I am doing, other than adding more work and more clients from referrals.
I'm not the smartest guy, or the most carismatic. I hear that my rates are average to above average.
I will never understand why so many here say T&M "never works"
brantmacga
Señor Member
- Location
- Georgia
- Occupation
- Former Child
I don't think it wise to judge a business' success on how the owner lives. There's two sides to every story; for all we know the guy could've inherited a fortune, won the lottery, or lived modestly his first few years making smart investments along the way.
T&M, for the most part, is not the ideal way to run a service company. You can only bill the hours that were worked. There's no incentive for the tech to work efficiently. The only jobs I will use T&M on is troubleshooting, and that's mostly just the 'T'. Once the troubleshooting is concluded, we use the flat-rate system for quoting a cost to make necessary repairs.
I for one would not hire any contractors on a T&M basis for general service work. I, like most customers, want to know what its going to cost me before any work begins.
The key to flat-rate is knowing how to use the pricing structure; the tech needs to know what each assembly consists of. This helps them to formulate a price. The techs need to have some sense about them in estimating so they'll know if the flat-rate price in the book will adequately cover the costs associated with the job.
There seems to be a misconception here that no matter what the job is, you use the same price always. Each item is limited to a specific amount of time and material; the tech uses his assembly breakdown to see what's included, then understands how to account for the additional material and time. Most of this will be printed to make it easier, but techs should also know hourly rates and markups. This is useful also in case there isn't a task listed that suits the job.
For instance, lets say the job is simply replacing light fixtures. We have a flat rate price for that, but its specific to the type of fixture, weight, ceiling height, and accessibilty. The price for changing 50lbs chandeliers on 14' ceilings would certainly be higher than changing flush-mounts on an 8' ceiling.
Or running new circuits; each task is limited to a certain length of cable or conduit, and differentiates between open attics and wall fishing. There is a price-per-ft for circuits longer than what is specified in the assembly breakdown.
Our flat-rate pricing book is quite extensive listing everything from devices and fixtures, to costs for bucket trucks, standy fees, trenching, scaffolding, motors, automation, pools, etc. . . you name it and we most likely have a price for it already.
And of course, brian, there is more to running a business than a "billing plan", but that's for the owner to handle. The flat-rate concept is for the benefit of the company in that each tech can be self-sufficient in estimating and selling jobs. It also makes it easier to reward hard work with incentive-based pay.
I think its safe to say that everyone doing flat-rate has tried T&M at some point in business, and saw something in this system that appealed to them more.
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brian john
Senior Member
- Location
- Leesburg, VA
Nor is it wise to assume one of us knows all the answers.
Let's see started in business in 1948 it is now 2010 and his firm is still operating, lived well and was wise enough to make investments with the loss of money he did not make.
Yeah another poor business plan.
brian john
Senior Member
- Location
- Leesburg, VA
Because they know better than you, when you final retire and live well they'll point their know it all finger and say you could have done better.
If you are happy
live well
GO FOR IT.
It is not that T&M "never works" T&M always works, but it also has many down sides, in some of the markets, in residential work, it almost causes the customer to question your billing, and in many states there are consumer protection laws, that require you to present the customer with a total job cost, in a written contract, before you start the job, T&M also restricts income to hours billed, all the non billed hours that cost your operating budget, are lost, not good for growing a business, but usually ok for making a weekly pay check, but don't look for it to cover any of your forward costs, like medical, and other benies, or a nest egg for retirement, bottom line if you want to own a job, use T&M, if you want more, then find other methods of operating.
I guess i don't get resi work. I stay away from it like the plague unless I really know the person. I understand its a different world.
Rewire
Senior Member
- Location
- Lake of the Ozarks
I tell my guys My business is a success not when I can go out and buy a brand new truck but when you can go out and buy a brand new truck.
Commercial accounts, will also question T&M billing, if you present them with a time and material bill, they will also be be likely to slow pay item billing, and shop other work with your T&M rates.
brian john
Senior Member
- Location
- Leesburg, VA
In 25 years I have we might have an issue once in a rare while.
We also use flat rate pricing and both systems work well one just has to be aware of who there customers are and know how to handle them.
Very hard to price a blow up, were the service has melted down with a flat rate or to test and repair damage caused by hook and ladder truck dropping it's ladder on a power line. So often we HAVE to give a swag based on T&M NTE, not I can do it this way or walk away from what is about 15% of by business. If we come close to the nmber we contact the customer and discuss why there is a price increase.
http://statter911.com/2010/08/12/up...-during-safety-check-3-firefighters-slightly-
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It is more then rare in my area, it is common, at our last contractors meeting, it was one of the top complaints, you are lucky to to find it rare, considering the economy and the general business conditions.
brantmacga
Señor Member
- Location
- Georgia
- Occupation
- Former Child
Brian, I never said I had all the answers. I'm trying to explain clearly what flat-rate is and correct misconceptions. Unless you were keeping the books and writing the checks at your previous employer, there's no point in speculating how well that business operated. I'll be more than happy to discuss first-hand personal experiences in business.
Instead of being so defensive about T&M, explain specifically what the benefits of it to you are, like I've attempted to explain our flat-rate system.
My problem with T&M is; You can only bill actual hours worked, customers are more likely to question your pricing, and its harder to sell. Feel free to discuss those items and tell my how it works for you.
We've had no problems with commercial customers using flat-rate; in fact many of them prefer this method of pricing.
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