Another post got me wodering

[bkludecke]

that's all blasphamy satcom, blasphamy I say....it's all about what the market will bear...

Actually what the market is willing to pay based on competition and other factors will quite often make a contractor take a good look at his/her operation and become more efficient, if necessary, in order to compete. There are even times when I have operated at a loss to ride through a rough patch and keep my crews working. That is a business decision that we are all faced with at one time or another.

 

[emahler]

Bob,

when it comes to residential service (and installing a ceiling fan is) most people will use the company that shows up. There are those who will waste everyone's time getting 3 prices to change a GCFI, but they actually are the minority.

I'm not a big fan of working at a loss, but I understand what you are saying.

However, if the "going rate" in my area for installing a fan is $250, how many customers are actually a) gonna know the real "going rate" as opposed to their preconceived idea of what it should cost and 2) are going to not pay $300 for my tech to do the installation right then and there, rather than saving $50 to wait until a week from Tues?

Why wouldn't they pay $325? or $375? or $400? They will if we give them a reason to. If we show them that they are better off paying us $400 to the job, than pay less to some other company.

The going rate only affects the companies that don't differentiate themselves from the other contractors.

I advocate 1 thing in this industry, and that is charging the most you can to provide a better life for your family and employees, and providing service that is worth more than you charged. I can't just walk in like every other contractor, do the same things as every other contractor, and charge 3X as much. I have to give more, do more, sell more. But it can be done and I can do it.

Price is relative to service and perceived value. I can charge $1000/hr and be a bargain for what your receive. Or I can charge $10/hr and be a huge ripoff.

 

[bkludecke]

Bob,

when it comes to residential service (and installing a ceiling fan is) most people will use the company that shows up. There are those who will waste everyone's time getting 3 prices to change a GCFI, but they actually are the minority.

I'm not a big fan of working at a loss, but I understand what you are saying.

However, if the "going rate" in my area for installing a fan is $250, how many customers are actually a) gonna know the real "going rate" as opposed to their preconceived idea of what it should cost and 2) are going to not pay $300 for my tech to do the installation right then and there, rather than saving $50 to wait until a week from Tues?

Why wouldn't they pay $325? or $375? or $400? They will if we give them a reason to. If we show them that they are better off paying us $400 to the job, than pay less to some other company.

The going rate only affects the companies that don't differentiate themselves from the other contractors.

I advocate 1 thing in this industry, and that is charging the most you can to provide a better life for your family and employees, and providing service that is worth more than you charged. I can't just walk in like every other contractor, do the same things as every other contractor, and charge 3X as much. I have to give more, do more, sell more. But it can be done and I can do it.

Price is relative to service and perceived value. I can charge $1000/hr and be a bargain for what your receive. Or I can charge $10/hr and be a huge ripoff.

I don't disagree with a thing you've said so far. My company has a reputation of being darned good and darned expensive and that's the reputation I've been working to maintain for about 30years now. I've got 6 good field workers right now and we are headed into our slow season workwise. That means alot of the 1 man shops around here are going to panic and cut prices. This is where working smarter and having a good customer base that I've built up over the years comes into play. We are a resort town with alot of 2nd homeowners who just want the darn job done (price is secondary) so I get your point very well. But if the local economy slows to a certain point then I need to either lay off some good men (and risk loosing them for good) or operate at a loss in hopes they will appreciate it enough to work with me. I've done it both ways many times and there is no Right answer.

 

[satcom]

"quite often make a contractor take a good look at his/her operation and become more efficient, if necessary, in order to compete."

That is all well and good, and everyone should try to control overhead operating costs, but when your costs are already bare bones, and your work is at max efficiency, there is nothing left to cut but profits, cut them and your on your way out of business, pricing is not the only way to compete, offering a better service, is another way, finding new nich markets is another or expanding you coverage areas, lowering you prices to compete will only weaken your position. and reduce your present, and future assets.

This past June, I was around town checking jobs, when I met up with an electrical contractors widow, she approched me and asked, if i was intrested in any of tools, or equipmenthatAJ had, seems he led his wife to believe he had a business worth a lot of money, when in fact he left nothing, except a garage full of old tools, and a pile of junk, she tried to sell the business, early on, but there was no value in it, he din't keep his books very well, and he had a large list of customers that called him, because he worked for next to nothing, she asked me an intresting question, Can you tell me why Bill ( a neighbor plumber of hers) and his wife, have so much to show for all these years, and AJ left us with nothing but a pile of junk, and unpaid bills, what do plumbers do that electricians don't?

My view is it dosen't have anything to do with being a plumber or electrician, it has to do with how you run your business.

 

[bjp_ne_elec]

Larry - a couple of questions related to your posts

Larry - a couple of questions related to your posts

First - on the original post, with the price of $250 - $300 - how many hours have you allowed for.

Now in the second post, where you go through the top plate - is this totally blind as to what's above the plate? What happens it there is a water line or waste line right above the top plate? Do you somehow get a peek at what's above it? I'm not trying to be a wise-_ss - just trying to get educated on old work. I have a lot of learing to do.

Thanks

Dave

 

[LarryFine]

First - on the original post, with the price of $250 - $300 - how many hours have you allowed for.

With attic access, and no floor board to pry up, I can mount a fan box, run 14/2 or 14/3 down to the existing switch box, rewire the switched receptacle if it was done with a 2-wire switch loop (so the black becomes the hot and the white becomes the neutral), and hang the fan in 1 to 1.5 hours.

Now in the second post, where you go through the top plate - is this totally blind as to what's above the plate? What happens it there is a water line or waste line right above the top plate? Do you somehow get a peek at what's above it?

I get a peek above the top plate through the 4" hole I make in the ceiling for the fan box. I have to have this line of sight in order to get the fishtape (and then the wire) to the box opening.

I set a flashlight on the ceiling, through the box hole, pointing toward the wall, and a mirror on a handle to see where the light is shining. The flex-bit aiming handle is a must if there is blocking atop the wall, so I penetrate the top plate on this side of the blocking.

 

[celtic]

Can you tell me why Bill ( a neighbor plumber of hers) and his wife, have so much to show for all these years, and AJ left us with nothing but a pile of junk, and unpaid bills, what do plumbers do that electricians don't?

My view is it dosen't have anything to do with being a plumber or electrician, it has to do with how you run your business.

But the plumbers DO have something we haven't been to able to establish:

[Business Owners' Cost Calculator]
​

If EC's took a little time to research what they NEED to run a profitable business, they would realize it's not about what you SHOULD charge - but rather what you COULD charge ...BTW, my prices go up 4/14/07.

 

[emahler]

While, we can certainly get a fan installed in an hour (on site time) if the gods are with us, our typical ceiling fan install is about 2.5 hrs and about 3-3.5 hrs with travel.

That's mostly because 1-1.5 hrs of that time is setup and cleanup. It's talking to the customer to find out what else is going on in their house. Any other issues they may have. Explaining the fan operation (you'd be surprised how many people don't know that you can reverse the flow of air) Making small talk and selling ourselves and our company.

We could rush in, get done, get paid, get out, but why? I'd rather go to 2 jobs and make $800 for the day, then 4 jobs for the same $800.

But that's just our method.

 

[bikeindy]

"At least $450.00 i would not get out of bed for $185.00"


I took a look at some of the recent fan jobs we did this year, and ran a profit loss on 3 of them, one of intrest, was a job done almost as described in this thread, less permit fee, it was $462, took 3.75 hours from shop to return, the total profit was a $17 loss, our overhead is pretty lean, but as noted here in jersey, costs of doing business are up there, it may be he is located in a depressed area, and costs for everything are much lower, and the area wages are also low, but even in a depressed area, it is more important to maintain profits, for the long haul, we have customers complain, they can't get a fan assy and hung for $150, and he is doing wiring, installing boxes, and support, for just $35 more? My bet is, he never did a break even cost on his business, and might not even added in planned budget items needed to stay in business for the long term, like asset replacement costs, and employee actuals.

Why would you send a crew out to a job that takes a couple of hours and have them back at the shop afterward? wouldn't you send them to the next job? maybe you need better scheduling. If I went out or sent my guys to do one fan for $185.00 (here there are no permit requirements for this work) They would be done in under 2 hrs. We don't live in a depressed area at all work is plentiful and we are busy. It is rare on a job like this we would do just one fan most of these homes have 4 bedrooms and no ceiling outlet. we can do 4 fans installed with wiring in 4 - 5 hrs and still pick up another service call on the way back to the shop. My shop by the way is my garage.

so that job is $720 - $120 for materials and other expences - $200 for payroll for 1 lead guy 1 helper (payroll taxes included) = $400 to me. And I was either doing services calls or bidding work either way I am also profitable each day. If you lost $17 on 2 guys doing $450 in work I think there is something wrong in NJ.

"I don't think these folks are interested in paying much more than I am charging and I have 125 homes left in that division to get into."

It's not what they are willing to pay, it's what you need to charge to run your business pay all your expenses and make a small profit to enable you to continue in business.

I've been in business 4 years and finished the books on last year Gross was up 10% net up 16% and I net 36.7% of my gross, on the job above it is higher as you can see. But I was asking the question to see what others are doing this work for. I seem to be low but our profit is fine.

 

[satcom]

"But I was asking the question to see what others are doing this work for."

Looking at the other guy will not give you any useful information, as you notice, every area has different costs of dong business, if you net profit at year end is 37% after taxes then you doing pretty good.

Things are different in every aspect of installation work, pay for example, some EC's may pay $12 to 14 an hour, others may be $14 to $18 and still others $18 to $24 all doing the same type of work but paying different wages. also some may pay benifits, and vacations, others may not, some may be fully insured, with the prober insurances, others may have min policies, workers comp payments are a big item, some states don't require both private and state payments, also if you don't require permits, then there is another cost item, filing time and picking up, so what someone else charges will be of no use as a compared price, even hours to complete a job can differ, one worker may go like crazy, and another may work at a normal pace, one may explain the job and operation of devices, the other may pack up and run.

 

[bjp_ne_elec]

I think it's good discussion,. Satcom - you are correct - everyone will have different operating expenses - but one thing that's very interesting is the discussion of hours. For me getting a feel of what different people think the job will take, and strategies - that's very useful information. What everyone needs to really dig in to and understand is what it costs to send a guy out - considering his wage, any benefits and then stir in your other operating expenses - insurances, loans, leases, fuel bills, etc. Once you have all these and determine what you want to make as a profit, then you should have it worked out.

Someone could absolutely make more profit if they charge $185 for the job, even though the other guy charged $250.

Brett

 

[aline]

Someone could absolutely make more profit if they charge $185 for the job, even though the other guy charged $250.

Brett

And they could make even more profit if they charged $250 like the other guy.

If the other guy is getting $250 why punish yourself for being more efficient?

I was talking to a plumber who said a competitor was selling water heater replacements for $1500.

He seemed quite proud of the fact that he was selling them for $800.
This doesn't seem like something to be proud of to me.
Selling them for $1600 does.

If you're faster, more efficient and can also sell the job for more than your competition then that's impressive to me.

 

[bkludecke]

Ahh, the marketplace. It brings out the best and the worst in all of us.

 

[celtic]

.....I think there is something wrong in NJ.

Tell us something we don't already know

 

[lowryder88h]

money

money

"America has been berry, berry, good to me" What ever your market area can bear.

 

[emahler]

Ahh, the marketplace. It brings out the best and the worst in all of us.

Bob, all day long I'm trying to figure out what you mean...and I just can't...can you explain it for me....s.l.o.w.l.y (I am from Jersey, you know)

 

[satcom]

"What everyone needs to really dig in to and understand is what it costs to send a guy out - considering his wage, any benefits and then stir in your other operating expenses - insurances, loans, leases, fuel bills, etc. Once you have all these and determine what you want to make as a profit, then you should have it worked out."

And most do not do that, they try to do service calls, and charge job rates, they usually never catch the loss because it is mixed with income from other jobs, there are contractors that have worked this way for 20 to 30 years, and never did a balance sheet, to see if they made or lost money, it's the things they missed that are the real loss, the medical benifits, they never had, the retirement fund they never contribuited to, the assets they never built, and these are usually the same ones, calling someone that runs a business for profit, crooks, or just someone ripping off consumers, they don't understand basic business pricatices, so why would anyone expect them to understand, pricing for services, they are usually working for someone else, they can't make a go of business, but they sure have a lot of advice, when someone tells you, your overcharging, check to see what that person is doing for a living, the advice from someone working at a sucessful business, will be much better advice.

 

[bkludecke]

Bob, all day long I'm trying to figure out what you mean...and I just can't...can you explain it for me....s.l.o.w.l.y (I am from Jersey, you know)

What I mean is; There are contractors who charge what they can get away with (laughing all the way to the bank and criticizing those who charge less) and they fail as often as the contractors who try and get every job (even at below cost rates) just to stay busy. In the end the capitalist free market economy will decide what the true value of a product or service is (just check out ebay). No one single answer in this thread can assume to be the best formula for every company, it takes all kinds. As for me; I do what I need to do to turn out a good product, keep my customers happy, take good care of my employees, pay myself, turn a profit and plan for retirement. At any given point along the way I will do things that aretrue to one of those tennants and not another but after nearly 30years of running this company things seem to be right on track.

 

[satcom]

"There are contractors who charge what they can get away with "

They are the ones that would do it, no matter what type of business they ran, but not to confuse them with someone paying their employees a livable wage, and providing benifits, and operating their business for profit, to insure a strong and lasting company. These companies may look like they are charging too much, when in fact many may be just holding on,

One thing about New Jersey is, if an EC gouges a customer, this is one of the things they do enforce, so this is not the state to try and charge what you can get away with, I can imagine there are states where this may be a problem.

 

[bjp_ne_elec]

Satcom - how do you determine "gouging"? I would think that an estimate (for work bid) or some type of agreement (in case of T&M) is in place. The customer would be accepting the proposal (in the case of the estimate) or would be notified of what the labor rate is before starting the job. I would hope there are no customers out there that are just letting an EC walk in, work until he's done, and accept the bill - with no discussion or understanding of what the terms were - but I may be mistaken.

Brett