Billable hourly wage

[Coppersmith]

Every county in every state seems to have a different rate. What factors go into what people are willing to pay per hour I can only guess.

Number of companies
Number of available technicians
Weather conditions
Insurance costs
How rich the customers are
How old the housing stock is
Union market share
a dozen other things

Customers look for two things: price and quality. The higher your quality, the more you can charge. Quality costs money so you can't be high quality and be the low price leader. Quality includes a lot of things. Being on time, exact time appointments, neat uniforms, booties, well spoken techs, neat work, cleaning up after yourself, good quality materials, being fast and efficient, accepting credit cards, and lot more.

Some customers are only concerned with price and never ask about quality. (Hint: Stay away from these.)
Some customers never ask about the price and call you because you were recommended highly (Hint: You want these.)
If a customer calls and the first thing they say is "Do you offer free estimates?", they are probably going to be price shoppers.

Probably the correct solution to the problem is:
(1) Determine who your competitors are.
(2) Find out what they are charging.
(3) Figure out what quality benefits you offer that differentiates you from your competitors.
(4) Decide where on the spectrum of pricing you want to be: lowest, low, middle, high, highest. (Hint: middle is a good starting spot.)

Once you have a price and have used it for a while, how do you know if you are charging the right price? By seeing what percentage of estimates (small jobs) you give turn into jobs and how full your calendar is.
I shoot for a 80% conversion ratio. If you start getting 95% of the things you estimate, your pricing is probably too low. If you are only getting 40%, your pricing is probably too high. If you are booked out three weeks, your pricing may be too low. If you are booked out only two days, your pricing may be too high (or you need to work on getting referrals).

 

[petersonra]

people make too much of some formula for figuring out how much to charge.

start by figuring out your actual marginal cost per hour and your overhead.

figure out how many hours of billable time there are likely to be per year.

it is simple math to figure out from there what you have to charge to break even if your estimates are good.

the important thing is to decide what you want to be. if you are happy doing the work that comes in from referrals, and don't care about growth, your costs will be a lot less since you won't have to pay for a salesman, a PM, a fancy office, or a lot of other overhead. This allows you to make a good living with a lower rate if you can make it work.

Keep in mind that a lot of self employed businessmen make less working for themselves than they probably would if they worked for someone else.

 

[Greg1707]

hourly vs flat rate

hourly vs flat rate

I posted earlier about the three answers to the question how much do you charge to install a ceiling fan?

A. $250
B. I charge $100 per hour.
C. I charge $100 per hour and it will probably take 2-3 hours.

What I was getting at is this. Are there customers out there that will hire someone to install a fan or do other similar work on an hourly bases?

In my area people want to know what the cost will be for electrical work. Not how much I charge per hour. I could say $20 per hour and they still would want to know what it would cost. Besides, how many fans do I need to install until I learn that it takes about 2 hours start to finish?

 

[Coppersmith]

I posted earlier about the three answers to the question how much do you charge to install a ceiling fan?

A. $250
B. I charge $100 per hour.
C. I charge $100 per hour and it will probably take 2-3 hours.

What I was getting at is this. Are there customers out there that will hire someone to install a fan or do other similar work on an hourly bases?

In my area people want to know what the cost will be for electrical work. Not how much I charge per hour. I could say $20 per hour and they still would want to know what it would cost. Besides, how many fans do I need to install until I learn that it takes about 2 hours start to finish?

I do "C". Everybody seems to have a different take on this. Perhaps customers in different areas react differently. I give fixed prices on very few jobs. (Ceiling fans being one of them.) I charge an hourly rate + a trip charge + material x markup + rentals. I itemize all of that on my invoice. I get no pushback from customers. The majority of my customers are upper income. Perhaps that's the difference. Perhaps it's because the people that ask detailed pricing questions aren't the ones who hire me which is fine because I'm very busy with people willing to pay what I think I'm worth.

P.S. I'm still learning how to estimate my time. I routinely underestimate my hours so I routinely end up saying "Sorry, it took me a bit longer than I expected." Their response is usually "How should I make out the check?"

 

[goldstar]

I just want to add this to what has already been mentioned. In NJ it is unlawful to charge a HO on a T&M basis. You should look at the Board of Electrical Examiners website and find and read through the Statutes and Regulations document

http://www.njconsumeraffairs.gov/ocp/Pages/regulations.aspx

You'll come to this section :

http://www.njconsumeraffairs.gov/re...nt-Contractors-Home-Elevation-Contractors.pdf

If you're just performing a straight forward service call (i.e changing a switch, receptacle or a breaker) you can probably get away with that unless the work becomes more extensive than just an hour or so worth of work.

Hope this helps

 

[kwired]

I posted earlier about the three answers to the question how much do you charge to install a ceiling fan?

A. $250
B. I charge $100 per hour.
C. I charge $100 per hour and it will probably take 2-3 hours.

What I was getting at is this. Are there customers out there that will hire someone to install a fan or do other similar work on an hourly bases?

In my area people want to know what the cost will be for electrical work. Not how much I charge per hour. I could say $20 per hour and they still would want to know what it would cost. Besides, how many fans do I need to install until I learn that it takes about 2 hours start to finish?

My answer is D. "I need to know more about what I may run into before I can tell you"

Couple times have had to spend 2-3 hours plus a helper just setting up scaffolding to get to a fan in churches where the fan was 30 feet off the floor, fixing/replacing the fan was otherwise quick and simple.

 

[JES2727]

Hello Fellow Electricians.
Can someone please share some knowledge here.

I have a small company in NJ. What is an acceptable hourly rate to invoice a customer for 2 guys doing service work? And do you charge a higher rate for the 1st hour and then default to another rate for each additional hour? If so, is it to much to ask what going rate is?

Any input particularly from a company in NJ would be appreciated.

SINCERELY
STATICCONTROL

Sometimes it's hard to just get a straight answer without the discussion veering away from your original question. So I'll just answer your question for you.
A service call is $99 for the first half-hour and $99 for each additional hour (rounded to the next quarter-hour). This is just for service work.
We're in Middlesex County.

 

[Coppersmith]

My answer is D. "I need to know more about what I may run into before I can tell you"

Couple times have had to spend 2-3 hours plus a helper just setting up scaffolding to get to a fan in churches where the fan was 30 feet off the floor, fixing/replacing the fan was otherwise quick and simple.

I think that went without saying. If someone can't explain their job clearly to me in two sentences and it sounds like it might take more than a few hours, I'll just go over and take a look if they need an estimate. The reason I like T&M is because except for the simplest jobs, you never really know how long it will take without a detailed look. And even then, you really don't know.

Even something as simple as a ceiling fan installation requires an extensive question and answer session on the phone before a quote can be made.

"Is there a fan there now?"
if not, "Is there a box to mount a fan on there? (probably with a white blank cover.)"
if not, "Is there an accessible attic space above where the fan will be going?"
if not, "Is it OK if we cut your drywall ceiling and wall to get the wiring in?"

"How high is the ceiling?"
"Will the fan have a remote control?"
if not, "Will the fan have a light?"
if ceiling is 10 feet or less
if a light, "Do you want a switch to control the light or will you use the pull chain?"
"Do you want a switch to control the motor or will you use the pull chain?"
if yes, "on/off or three speed?"
Tall ceiling
"a switch to control light (if present) and motor is required. Do you want on/off or three speed?"

 

[Coppersmith]

In NJ it is unlawful to charge a HO on a T&M basis.

I skimmed the document you linked and could not find where a T&M job is prohibited. I did find this section which seems to indicate that T&M jobs ARE allowed:

"iii) The total price or other consideration to be paid by the buyer, including all finance charges. If the contract is one for time and materials, the hourly rate for labor and all other terms and conditions of the contract affecting price shall be clearly stated;"

 

[goldstar]

I skimmed the document you linked and could not find where a T&M job is prohibited. I did find this section which seems to indicate that T&M jobs ARE allowed:

"iii) The total price or other consideration to be paid by the buyer, including all finance charges. If the contract is one for time and materials, the hourly rate for labor and all other terms and conditions of the contract affecting price shall be clearly stated;"

That's correct but I believe you cannot perform the T&M on an open ended basis (i.e. I get $100.00/hr and not sure how long it will take). You have to state in writing what your rates are and how long you believe it will take (or not to exceed in terms of time and $$). The HO has to know up front approximately how much the repair or job could end up costing.

 

[kwired]

I skimmed the document you linked and could not find where a T&M job is prohibited. I did find this section which seems to indicate that T&M jobs ARE allowed:

"iii) The total price or other consideration to be paid by the buyer, including all finance charges. If the contract is one for time and materials, the hourly rate for labor and all other terms and conditions of the contract affecting price shall be clearly stated;"

That's correct but I believe you cannot perform the T&M on an open ended basis (i.e. I get $100.00/hr and not sure how long it will take). You have to state in writing what your rates are and how long you believe it will take (or not to exceed in terms of time and $$). The HO has to know up front approximately how much the repair or job could end up costing.

It says contract right in there, what is the point of the contract if you leave it open to add more time or material to the total cost?

Time and material billing isn't a contract, unless maybe you give an estimate based on expected time and expected material and both parties agree on the amount in the estimate and somehow turn the estimate into a contract, but then you are bound to what was in the contract and will not be adding more charges without some sort of change orders.

That be for most build it or fix it projects. You may have be more likely to have more complex contracts with commercial or industrial clients that are more of an ongoing thing then they are a single project.

 

[Coppersmith]

It says contract right in there, what is the point of the contract if you leave it open to add more time or material to the total cost?

Time and material billing isn't a contract...

I'm not a lawyer, however my understanding of a contract is that it is a legally binding agreement in which the parties can agree to anything that is not illegal. T&M contracts are quite common in the construction industry. Some have upper limits stated for the amount charged, others are open ended.

I don't know anything about NJ law, however the paragraph I quoted seems to allow open ended T&M jobs.

I do the vast majority of my work T&M.

 

[kwired]

I'm not a lawyer, however my understanding of a contract is that it is a legally binding agreement in which the parties can agree to anything that is not illegal. T&M contracts are quite common in the construction industry. Some have upper limits stated for the amount charged, others are open ended.

I don't know anything about NJ law, however the paragraph I quoted seems to allow open ended T&M jobs.

I do the vast majority of my work T&M.

You are absolutely correct that a contract is an agreement to both parties.

Now go back to OP and he is asking how much to invoice for service work. If there were no agreement between both parties (especially in writing) up front then doing the work and presenting an invoice doesn't exactly fit that description. Most service calls start out this way, but could turn into more formal of a contract depending on what happens once you start looking into the problem you were called for, unless you have some sort of form that the customer must sign before you do any work - then you may have items on that form the customer agrees to by signing the form, including a minimum fee regardless of what else happens - which then becomes the contract.

One step further - customer disputes charges whether there is written contract or not- most average service calls are not high enough $$ to be worth taking to court, so customer either
1. negotiates
2. pay the invoice
3. don't pay the invoice.

 

[staticcontrol]

Thank you

Thank you

Thank you all for your reply. And special thank you to the few who actually answered the question .

Staticontrol

 

[GlennGould]

. . . .
so, i'm telling a guy making $250 a day how he can
make four times that amount, without getting dirty.
he'll say "really?" and then go back over and sit down
and text while i program, ignoring the free offer.
. . . .

LOL
I wonder how the Boss is going to Make America Great Again, considering what he has to work with!
You cannot fix some of these problems without surgery!
LOL

 

[mlnk]

No T and M for homeowners

No T and M for homeowners

Per CSLB, when contracting with homeowners in Calif, for jobs over $500, T and M contracts are not legal. You must charge flat rates.You can charge a flat rate service fee, estimating fee, say $80 and you can perform work. For additional work, if the additional is more than $420, you must write a firm fixed price.