Service call order of operation

[Benton]

Howdy,

What is normal procedure for you when dealing with service calls? I have the trip charge and hourly rate, but how do you handle material cost if they arise? Do you include material cost in the hourly rate or do you charge them separately? When charging and hourly rate how many people to you associate with the rate-say $75 per hour?

Thanks

 

[LEO2854]

Howdy,

What is normal procedure for you when dealing with service calls? I have the trip charge and hourly rate, but how do you handle material cost if they arise? Do you include material cost in the hourly rate or do you charge them separately? When charging and hourly rate how many people to you associate with the rate-say $75 per hour?

Thanks

I have a service call fee,such as $179 , that will cover diagnostic and small parts if needed , if other stuff is needed to do it I'll give the client a quote to do the whole job in a grand total price,that includes stock and markup .

All the client needs to see is the job description and the grand total price.

They don't need to know how many hours it will take , and they don't need to know how much per hour,all they need to know is what they will pay when the job is done as long as you tell them up front what that is , you will sell more tickets at a higher price,this is called "Flat Rate Pricing"

 

[George Stolz]

...all they need to know is what they will pay when the job is done as long as you tell them up front what that is , you will sell more tickets at a higher price,this is called "Flat Rate Pricing"

I'd call that "upfront pricing."

"Flat rate" indicates that you don't actually figure anything job-specific in the bid and just charge a given pre-figured price for a predetermined task (i.e. $400 to hang any ceiling fan on an existing box, etc.)

"Upfront pricing" indicates to me that some thought goes into how long a specific job will take and what parts it will involve, but that the customer simply sees a single price to have the job done.

 

[GoldDigger]

I'd call that "upfront pricing."

"Flat rate" indicates that you don't actually figure anything job-specific in the bid and just charge a given pre-figured price for a predetermined task (i.e. $400 to hang any ceiling fan on an existing box, etc.)

"Upfront pricing" indicates to me that some thought goes into how long a specific job will take and what parts it will involve, but that the customer simply sees a single price to have the job done.

In some professions, you first scenario is called "book rate" pricing instead of "flat rate" (and there is not always a book!)

 

[George Stolz]

...how do you handle material cost if they arise? Do you include material cost in the hourly rate or do you charge them separately?

I don't see how or why you would try to increase the hourly rate to cover parts. Just charge for the parts. The customer does not have to see your math (better if they don't.)

I've always had a soft spot for Marc's sliding scale idea (here) although admittedly have never taken it for a spin.

 

[Daja7]

I'd call that "upfront pricing."

"Flat rate" indicates that you don't actually figure anything job-specific in the bid and just charge a given pre-figured price for a predetermined task (i.e. $400 to hang any ceiling fan on an existing box, etc.)

"Upfront pricing" indicates to me that some thought goes into how long a specific job will take and what parts it will involve, but that the customer simply sees a single price to have the job done.

exactly, it works very well and you do not have to explaine or negotiate your rates. the customer is paying for a job not time.

 

[Benton]

exactly, it works very well and you do not have to explaine or negotiate your rates. the customer is paying for a job not time.

So how many people are included in your hourly rate?

 

[RLyons]

I don't see how or why you would try to increase the hourly rate to cover parts. Just charge for the parts. The customer does not have to see your math (better if they don't.)

I've always had a soft spot for Marc's sliding scale idea (here) although admittedly have never taken it for a spin.

I can't tell you how many GFI's I've replaced which take all of 15 minutes to replace and cost $15....x 3.5 = $52.50 for the GFI :jawdrop: and what is the "flat rate" for this?
So we are talking upwards of $300 just to replace a GFI? Maybe it is me but I think that is crazy. The majority of customers I deal with are older and fixed income and would rather have repeat customers and feel that flat rates would cause them to rethink calling for little jobs when flat rate comes into play. I can't tell you how many customers are ecstatic when I come for a switch or GFI replacement and take the initiative to look over things or fix a sunk in outlet replace a cracked cover ect.. because they paid for a hour and the original job took me all of 20 minutes.

 

[George Stolz]

I can't tell you how many GFI's I've replaced which take all of 15 minutes to replace and cost $15....x 3.5 = $52.50 for the GFI :jawdrop: and what is the "flat rate" for this?
So we are talking upwards of $300 just to replace a GFI? Maybe it is me but I think that is crazy. The majority of customers I deal with are older and fixed income and would rather have repeat customers and feel that flat rates would cause them to rethink calling for little jobs when flat rate comes into play. I can't tell you how many customers are ecstatic when I come for a switch or GFI replacement and take the initiative to look over things or fix a sunk in outlet replace a cracked cover ect.. because they paid for a hour and the original job took me all of 20 minutes.

I agree, and that sentiment likely keeps me firmly ensconced in new construction.

 

[Daja7]

I can't tell you how many GFI's I've replaced which take all of 15 minutes to replace and cost $15....x 3.5 = $52.50 for the GFI :jawdrop: and what is the "flat rate" for this?
So we are talking upwards of $300 just to replace a GFI? Maybe it is me but I think that is crazy. The majority of customers I deal with are older and fixed income and would rather have repeat customers and feel that flat rates would cause them to rethink calling for little jobs when flat rate comes into play. I can't tell you how many customers are ecstatic when I come for a switch or GFI replacement and take the initiative to look over things or fix a sunk in outlet replace a cracked cover ect.. because they paid for a hour and the original job took me all of 20 minutes.

First off you have to understand how upfront or flat rate pricing works. Your prices come from your cost to do business, it is not a random or arbitrary number. you have to do a lot of number crunching to come up with this. Employee cost, overhead which includes a suprising number of items, then what you need for salary for yourself and profit for the business. Efficiencies come into play as well. Then you come up with the hourly rate to put to each task. This number is what you decide it takes for time or national averages. How many productive hours in the day can you get. Normal resi service work a 50% efficiency is about as good as you can get over all. (sometime better but over all). While it may seem to you to be high I have done this for years and have very, very little push back. yes i have adjusted prices before but very rarely. There are plenty of charities out there if you want to give, but we are in business to make a living. I also try to give value by doing a short home safety evaluation, change batteries in smokes , that type of stuff but over all the price is what i need to make a living.

 

[kwired]

If this is about service calls, I think most of us have a minimum charge that will be incurred regardless of what happens on the call.

How can you possibly plan on what will be needed until you have seen the application? Charging for parts before knowing what parts will be needed is insane, unless you have a pretty good idea of exactly what it is you are going to be servicing ahead of time.

You may only need a $2.00 switch for parts or maybe you need a $2000.00 variable frequency drive, or a transformer, or even something higher priced than that. What kind of labor is necessary may also vary depending on the application. But you should still start with the same base to come and spend at least the first half hour or hour diagnosing the problem then going from there. Some instances that first half hour or hour are not going to be enough to diagnose the problem, but by then you hopefully at least have some idea of what to possibly expect where as before you see the application at all you may be totally clueless as to what you will run into.

 

[electricblue]

First off you have to understand how upfront or flat rate pricing works. Your prices come from your cost to do business, it is not a random or arbitrary number. you have to do a lot of number crunching to come up with this. Employee cost, overhead which includes a suprising number of items, then what you need for salary for yourself and profit for the business. Efficiencies come into play as well. Then you come up with the hourly rate to put to each task. This number is what you decide it takes for time or national averages. How many productive hours in the day can you get. Normal resi service work a 50% efficiency is about as good as you can get over all. (sometime better but over all). While it may seem to you to be high I have done this for years and have very, very little push back. yes i have adjusted prices before but very rarely. There are plenty of charities out there if you want to give, but we are in business to make a living. I also try to give value by doing a short home safety evaluation, change batteries in smokes , that type of stuff but over all the price is what i need to make a living.

Amen to this post. If you don't start charging more, you are gonna be on a fixed income. Please read Ellen Rohr's books

 

[kwired]

But how do you flat rate service calls? You typically are responding to the unknown, at least to some extent. If a customer calls you and says a light is not working you show up, trouble shoot the problem, then maybe you can give them a flat rate for the repair, once you figure out what the problem is.

Should they decline to have you make that repair for whatever reason, you still would want a minimum charge for time invested so far wouldn't you?

I just don't see how you can have any flat rate for the unknown, and I have been on many service calls, some are simple relatively inexpensive fixes, some end up being fairly time consuming or end up requiring a fair expense in parts. You have no way of telling which it will be until you have been there and start seeing what you are up against.

 

[electricblue]

Most times I can diagnose within 1 to 2 hours. If it goes over that. I would offer a price to back feed, re-feed or replace. That's just me.

 

[RLyons]

Efficiencies come into play as well. Then you come up with the hourly rate to put to each task. This number is what you decide it takes for time or national averages. How many productive hours in the day can you get. Normal resi service work a 50% efficiency is about as good as you can get over all. (sometime better but over all). While it may seem to you to be high I have done this for years and have very, very little push back. yes i have adjusted prices before but very rarely. There are plenty of charities out there if you want to give, but we are in business to make a living.

Help me understand this. The formula includes charging the customer for non billable time? So you are charging the customer for downtime? Im starting to see more and more why I could never run my own buisness. I'm going to start keeping track of my billable vs non time and see if I deserve a raise cause last I checked more than half of my day comes back billed and I feel I am yet a master in my craft.

 

[kwired]

Help me understand this. The formula includes charging the customer for non billable time? So you are charging the customer for downtime? Im starting to see more and more why I could never run my own buisness. I'm going to start keeping track of my billable vs non time and see if I deserve a raise cause last I checked more than half of my day comes back billed and I feel I am yet a master in my craft.

Time that is spent not directly doing something for a client is still costing your business money - now the owners time spent may not be as directly noticeable, but an employee is paid whether they are directly producing income or not. If you have an employee clean the shop, or the truck, or even have them drop something at the post office or go to get fuel, they are on the clock but are not installing or troubleshooting for a client, these are still things that need to be done and are overhead expense that needs to be accounted for in what is billed out.


If you are a one man show, that time you spend where you not directly producing income still takes away from the time when you are directly able to produce income and it will catch up with you if you let too much of it go. You need to charge enough on your direct production to make up for that time or you will work yourself to death with little to show for it.

You will eventually learn that for every hour of direct productivity there is an amount of non direct productivity that just happens, that number is not necessarily the same from one business to the next though.

 

[Daja7]

Help me understand this. The formula includes charging the customer for non billable time? So you are charging the customer for downtime? Im starting to see more and more why I could never run my own buisness. I'm going to start keeping track of my billable vs non time and see if I deserve a raise cause last I checked more than half of my day comes back billed and I feel I am yet a master in my craft.

Basicaly the customer pays for everything. This is why you need to know efficiencies. That factor is put into your chargable rate. The rate is based on actual time doing the job the rate has built in overhead for drive time non productive time etc. As far as a trouble shoot call we have several levels of diagnostic fees. You normally know when you get there what type of diagnostic you are looking at. quote that fee and move on. if the fix is simple and in your hands, you fix it. if it something that you need to do a major rework you quote that fix. My basic diagnostic is based on 1/2 hour. sometimes it takes more but it all equals out. This may seem complicated but it is not. plenty of literature out there that explains it. It is actualy much easier once you figure it out. much less explanation to the customer as well. They are not watching the clock because they know what they are paying and realize they are paying for a job to be completed not for time.