How Do you factor travel expenses into your hourly rate.

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bgelectric

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Hey Everyone,
Im working on a proposal that requires us to give the customer an hourly rate for a master, journeyman, and a helper.
I dont see how you would factor travel expenses into an hourly rate.
Example: One of the customers locations is 4 hrs north of our office and another is 1 hr.
How would you factor travel expenses into an hourly rate when you dont know the amount of traveling you will do.:?
 
factor hourly

factor hourly

Again the customer requests an hourly rate with travel expenses to be included.
How would you factor travel expenses into an hourly rate without knowing the duration of the service call. They are requesting hourly rates for their different locations.
 
bgelectric said:
Again the customer requests an hourly rate with travel expenses to be included.
How would you factor travel expenses into an hourly rate without knowing the duration of the service call. They are requesting hourly rates for their different locations.
Click to expand...

Can you split the rates?

Location "A" $xx for the first hour, $yy for each hour or part thereof after.

Location "B" $zz for the first hour, $yy for each hour or part thereof after.

That should make it clear to the customer that the first hour covers travel to and from, and the rest is time on site.
 
gadfly56 said:
Can you split the rates?

Location "A" $xx for the first hour, $yy for each hour or part thereof after.

Location "B" $zz for the first hour, $yy for each hour or part thereof after.

That should make it clear to the customer that the first hour covers travel to and from, and the rest is time on site.
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Yes they do request different rates for their different locations.
There is a specific request for an hourly rate that includes travel for each location. There is no option to give them the first hour and then each hour thereof after.
I don't understand how you would factor travel into the hourly rate not knowing how many times or how long you would be making the service call.
This is a bid for a maintenance contract.
 
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gadfly56 said:
Can you split the rates?

Location "A" $xx for the first hour, $yy for each hour or part thereof after.

Location "B" $zz for the first hour, $yy for each hour or part thereof after.

That should make it clear to the customer that the first hour covers travel to and from, and the rest is time on site.
Click to expand...

Yes they do request different rates for their various locations.
There is a specific request for an hourly rate that includes travel. There is no option for the first hour tnhe each hr thereof after.
I don't understand how you would factor travel into the hourly rate not knowing how many times or how long you would be making the service call.
This is a bid for a maintenance contract.
 
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It's pretty obvious that what they want is unreasonable, there is no way you can effectively bid this. The person is either kind of dumb, or is working some sort of angle to get as much out of you for free as possible. I suspect they are "working you over". Either way do you really want to do a "bid" based on T&M? I can promise you that if you offer different rates based on the individual doing the job that they will always want the cheap guy on the job! If you send out a journeyman by himself without an apprentice, they will be mad and want an adjusted price. Been there done that!

At the least if you really want to try this, I suggest you set the rules and demand solid information like how many hours you can expect to log, on an individual service call. Otherwise you may spend more time driving to the jobs then actually doing them. They probably already know this from the last guy.

PT Barnum once said "There is a sucker born every minute", which is why his circus was a huge success. Sometimes I think large corporations and GCs, think that about contractors, as soon as one has had enough and quits working for them, there is another in line begging for the work.

RAW
 
I don't know if it's me or is everyone (including the OP) not understanding a simple question.

The OP says the customer is asking for an hourly rate for a service call. They are not asking how much a service call costs.

You tell them that a master will be $125 per hour, a journeyman will be $100 per hour and a helper will be $75 per hour. (Obviously use your own rates.) The clock starts ticking when they leave the shop and stops when they get back. So it doesn't matter if the job is 1 hour or 4 hours away or your guys get stuck in traffic, you have to pay them the same as when they are on the job if they are in your truck.

-Hal
 
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I can show you the math and suggest that you tell them that a truck includes 2 guys. Otherwise you will have difficulty earning a profit. With the combined labor of two guys randomly set at $200/hour you add the travel expenses, so on the job that is one hour away(40 miles?), for example (at IRS milage rates):

1 hour on site would be a three hour job with travel so:
3 hrs = $600 + $44.40 milage = $644.40 / 3 =$214.80/hour.

8 hours on site would be a 10 hour job with travel so:
10 hrs = $2,000 + $44.40 milage =$2,044.40 / 10 = $204.44/hour.

So you have a $10.36/hour difference between the two. What you do with that is up to you.
 
bgelectric said:
Again the customer requests an hourly rate with travel expenses to be included.
How would you factor travel expenses into an hourly rate without knowing the duration of the service call. They are requesting hourly rates for their different locations.
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The time spent traveling is just regular billable time IMO.

The added expenses for mileage or whatever should be added in on a per trip basis.

There is no other practical way to do it.

I think the customer is trying to pull a fast one on you by trying to get you to include travel time and expenses in the hourly rate.

The mileage expense for your truck is approximately $1.00/mile. if you will never have to pay anything else out expense wise (like meals or hotels), you can estimate how many miles it is round trip and give them a per trip charge.
 
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I always billed travel time at 1/2 the field rate, that's fairly common.
Travel expenses were always done at cost, using the IRS rules on mileage, currently I think 55.5 cents / mile.
 
hbiss said:
I don't know if it's me or is everyone (including the OP) not understanding a simple question.

The OP says the customer is asking for an hourly rate for a service call. They are not asking how much a service call costs.

You tell them that a master will be $125 per hour, a journeyman will be $100 per hour and a helper will be $75 per hour. (Obviously use your own rates.) The clock starts ticking when they leave the shop and stops when they get back. So it doesn't matter if the job is 1 hour or 4 hours away or your guys get stuck in traffic, you have to pay them the same as when they are on the job if they are in your truck.

-Hal
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I would have to agree with you, thats how I ended up submitting the proposal. When we leave for the project is when the clock starts.
Thanks for all the input everyone.
 
Jraef said:
I always billed travel time at 1/2 the field rate, that's fairly common.
Travel expenses were always done at cost, using the IRS rules on mileage, currently I think 55.5 cents / mile.
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do you pay your employees half their normal rate while traveling?
 
petersonra said:
do you pay your employees half their normal rate while traveling?
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As far as I know it would be illegal. If they leave from the shop, drive or ride in your truck to the jobsite, then ride back to the shop the time behind the windshield is regular time and they must get paid according to their regular payroll rate, including overtime, holiday, night differential etc.

-Hal
 
hbiss said:
As far as I know it would be illegal. If they leave from the shop, drive or ride in your truck to the jobsite, then ride back to the shop the time behind the windshield is regular time and they must get paid according to their regular payroll rate, including overtime, holiday, night differential etc.

-Hal
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There is no law anywhere that I am aware of that prohibits an employer from having different pay scales for the same employee for different tasks.

The point I was trying to make is that it is a bit silly to have a lower travel rate and than a higher regular rate to make up for the lower travel rate since you still have to pay the employees the same amount usually regardless of whether they are traveling or doing their electrician chores.
 
bgelectric said:
Hey Everyone,
Im working on a proposal that requires us to give the customer an hourly rate for a master, journeyman, and a helper.
I dont see how you would factor travel expenses into an hourly rate.
Example: One of the customers locations is 4 hrs north of our office and another is 1 hr.
How would you factor travel expenses into an hourly rate when you dont know the amount of traveling you will do.:?
Click to expand...

You know the scenarios best.
Use your common sense, add 20%, that will be your cost.
Then add your profit, and hope:
1: You still get the job.
2: You'll make any money if you do get the job.
 
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