Charge “Half-Day” or “Full-Day”

[Andrew t]

My employees (when I have them) get paid for eight hours a day regardless how many hours (eight or less) I can fill on their schedule. They are told if they run out of billable work, they are to make sure everything in the truck is put away where it belongs. Once that is complete, they are to inventory the truck, make a list of items needed, and go shopping for fill-ins. If they still have time, take the truck to the car wash. If all of that is complete, they can go home, but remain reachable (until quitting time) in case a call comes in for a short job or estimate. I also sometimes have them come to the shop to help me do something.

Not all contractors operate that way. Some only pay their people for the hours they are working but have commission arrangements. I'm not sure why an employee would accept such a deal.

Exactly you are paying Your employees and if you have not billed the time somehow you are losing money
I worked for a large union contractor and you never left early if your assignment was done go in the back and sweep the parking lot

 

[Coppersmith]

Exactly you are paying Your employees and if you have not billed the time somehow you are losing money
I worked for a large union contractor and you never left early if your assignment was done go in the back and sweep the parking lot

Well, I guess it will surprise you to know that I am a union contractor. We are all not the same. I don't make my employees do busy work. And if you read post #21 in this thread you will see that I make a good profit as long as I have an average of four billable hours per day (which I do). The average actually has to fall to 2.5 hours before I lose money.

 

[Andrew t]

I do by know what your billing rate is but in New York a journeyman is $74 out the door so a 2.5 hour job you would need to bill $592 for labor

 

[Bob_Sacamano]

Yeah, no I’m talking about how I come up with the final price that I present to the customer. I don’t itemize anything out.

I've found that by itemizing material out (in technical jargon), it gives the customer confidence that I thought out the job costs and didn't pull the figure out of the air. I then tack on an extra hour or too so I don't have to bust my ass. I include a Change Order disclaimer. The amount of extra hours that I get from things going right exceeds the occasional time that I'm hit when something unexpected arises.

Basically it comes down to sales. Can you sell them on the fact that they hired an expert? If you can do this, you can adjust your hourly. List a higher price for less hours. If you're there an hour longer, you still made what you would have If you listed your regular price with the padding.

 

[Coppersmith]

I've found that by itemizing material out (in technical jargon), it gives the customer confidence that I thought out the job costs and didn't pull the figure out of the air. I then tack on an extra hour or too so I don't have to bust my ass. I include a Change Order disclaimer. The amount of extra hours that I get from things going right exceeds the occasional time that I'm hit when something unexpected arises.

Basically it comes down to sales. Can you sell them on the fact that they hired an expert? If you can do this, you can adjust your hourly. List a higher price for less hours. If you're there an hour longer, you still made what you would have If you listed your regular price with the padding.

If you are itemizing your material and hours, then they are calculating in their head how much you are charging per hour. If they are hiring you after doing that, odds are, you are not charging enough. (I'm absolutely serious about this.) The whole point of flat rate pricing is to hide the dollars per hour which if correctly calculated (true costs plus a reasonable profit) will almost always make the client freak out.

 

[Bob_Sacamano]

If you are itemizing your material and hours, then they are calculating in their head how much you are charging per hour. If they are hiring you after doing that, odds are, you are not charging enough. (I'm absolutely serious about this.)

Valid point. In my estimates, it literally says my hourly rate. Sometimes I feel like I'm charging too little. I just moved up to northern Michigan 6 months ago and started my own company. In Chicago I was making $50 an hour as an IBEW Journeyman. I started out charging $64 & $72 when i thought i could. Everyone was taking my work. A friend told me to raise my prices to a point when only some people take my jobs. I've raised my price to $80 ($95 sometimes) and some people start to balk. This is with a 156% markup on material. I don't feel like I have enough steady work to justify more people balking.

Prices in my community:
I see electricians advertising $60 /hr on Craigslist. Yet the largest Contractor in town charges $350 /hr.
Mechanics charge $100 /hr
Geek Squad charges $130 /hr
Large HVAC firms charge $95 /hr, locksmiths $70 /hr
Journeymen electricians only make $25-$35 when working for someone else.

I guess I'm at a loss of what I should be charging.

 

[AC\DC]

Copper smith recommended to me on another thread

How Much Should I Charge?: Rohr, Ellen: 9780984587629: Amazon.com: Books

How Much Should I Charge? [Rohr, Ellen] on Amazon.com. *FREE* shipping on qualifying offers. How Much Should I Charge?

www.amazon.com

I will say it’s a great book, would recommend reading it. Last night I finally sat down and did what she recommends, it’s an eye opener.
After doing that calculation, Your large contractor at $350 an hour seems right. That is what I need to charge to make what I want.
Building the confidents is another matter

 

[Another C10]

A lot of good info within this thread ..

My fine tuned billing process has been refined to the 1 man shop criteria, being competitive and not loosing my rear in the process.

My typical process is, Itemize the job with a sketch as my guide based on the customers details in addition to my directed questions.

List the supplies anticipated put those on a computed spread sheet, enter everything from conduits, cable sizes, breakers, fittings etc .. give all those
a value with an appropriate markup added to create profit and offset supplies gathering, replacements if necessary or changes, now I have the proposed materials cost determined, as far as labor I simply go with anticipated time, again with the sketch I envision through experience a reasonable time frame, considering every point of the installation with a time reference, Example: Install breaker terminate, label.. (1.0 hr ).. pipe 50' 3/4" emt 10' above ground to receptacle box .. (2.0 hr) .. Pull wire terminate ..(1.5 hrs) etc .. so on the low end that would be 4.5 hrs. Then I anticipate a higher end version based on the same installation but as an additional .5 or 1 hrs per installation point, so the high end would be roughly 7 hrs.

I give the client a Hi - Lo range of hours in this example 5-8 hrs. I charge 125.00 for the 1st hour and 75.00 thereafter so my labor estimate would be 425 / 650 then just add the adjusted materials anticipated, Lastly I have a clause on the invoice that states any unforeseen conditions or issues may create an adjustment to the proposed budgeted cost design. By the way this is something you want to mildly mention to the client during the installation process to let them know if the project is running as planned or if details have created a factor not anticipated ex: forklift traffic, store customers traffic .. that way if adding additional labor cost to the end invoice it will be easier to remind the customer of the difficulty they became aware of through your input.

Everyone has their own methods and hourly rates, just find that sweet spot of estimating then modify it as time goes on.

Great question to a group of professionals.

 

[Coppersmith]

I charge 125.00 for the 1st hour and 75.00 thereafter

Immediately double your rate. Then read the book AC/DC mentions in post #47 before you go out of business.

 

[Another C10]

Immediately double your rate. Then read the book AC/DC mentions in post #47 before you go out of business.

I'm sure you mean well ... I will go out of business if I double my rates that's for sure. I can charge 150 hr and make good money but the volume would be at least 50% less .. same difference you say true but having 50 clients a month as apposed to 25 is better in the long run.

Everyone has their strategy, the day I cant sufficiently pay my bill will then determine labor rate adjustments. Thanks for your input.

 

[Another C10]

Forgot to mention with a larger book of business it becomes worth more if or when deciding to sell.

 

[Coppersmith]

If you lower your prices you can get 100 clients a month. Read the book. You'll thank me later.

 

[flashlight]

I just said this in the other thread, but I think a minimum half day is perfectly reasonable. Think about it, how often does a job take much less than half a day? Sure there are those textbook ones where its close or on the way to something else, you dont have to run out for parts, and it takes 45 minutes on site, but really how often does that happen? Besides even if it does, there is a liability you accept by showing up. Who knows what you are getting into. Sometimes maliciously, sometimes not, the HO will claim XYZ stopped working since you were here, you drop you drill and put a nice dent in the hardwood floor, get into a can of worms with some stupid thing you now own becasue you touched it. for a $100? No thanks, Ill stay home and play on my tractor.

I know this thread is getting old, but that's so true that XYZ stops working once you get there. Completely unrelated to the
work you have done, and entirely coincidental, but still it happens often enough that there must be some kind of law of the
cosmos to describe it. Perhaps Murphy's ; )

 

[Another C10]

If you lower your prices you can get 100 clients a month. Read the book. You'll thank me later.

Well .. with respect, I figure your being fun, true .. 100 more clients would be nice but I couldn't handle the volume, besides my prices will not go lower I'm already at roughly 75% of this area's labor range. I understand being a Union Contractor that your overhead is enormous therefor you need to charge 350.00 or whatever. It makes perfect sense. I'll consider reading another persons perspective on creating a profitable business. Thank you

 

[jim dungar]

... I will go out of business if I double my rates that's for sure. I can charge 150 hr and make good money but the volume would be at least 50% less...

A buddy of mine, in contract machining, had 6 people on the payroll. He raised his prices 4X, his business dropped by 75%. Now he has just 2 people to keep track of, and yet his dollars of profit is the same. The work he lost was the low profit, time critical and demanding stuff that he originally took on to keep busy and build his company's reputation.

 

[Greg1707]

A lot of good info within this thread ..

My fine tuned billing process has been refined to the 1 man shop criteria, being competitive and not loosing my rear in the process.

My typical process is, Itemize the job with a sketch as my guide based on the customers details in addition to my directed questions.

List the supplies anticipated put those on a computed spread sheet, enter everything from conduits, cable sizes, breakers, fittings etc .. give all those
a value with an appropriate markup added to create profit and offset supplies gathering, replacements if necessary or changes, now I have the proposed materials cost determined, as far as labor I simply go with anticipated time, again with the sketch I envision through experience a reasonable time frame, considering every point of the installation with a time reference, Example: Install breaker terminate, label.. (1.0 hr ).. pipe 50' 3/4" emt 10' above ground to receptacle box .. (2.0 hr) .. Pull wire terminate ..(1.5 hrs) etc .. so on the low end that would be 4.5 hrs. Then I anticipate a higher end version based on the same installation but as an additional .5 or 1 hrs per installation point, so the high end would be roughly 7 hrs.

I give the client a Hi - Lo range of hours in this example 5-8 hrs. I charge 125.00 for the 1st hour and 75.00 thereafter so my labor estimate would be 425 / 650 then just add the adjusted materials anticipated, Lastly I have a clause on the invoice that states any unforeseen conditions or issues may create an adjustment to the proposed budgeted cost design. By the way this is something you want to mildly mention to the client during the installation process to let them know if the project is running as planned or if details have created a factor not anticipated ex: forklift traffic, store customers traffic .. that way if adding additional labor cost to the end invoice it will be easier to remind the customer of the difficulty they became aware of through your input.

Everyone has their own methods and hourly rates, just find that sweet spot of estimating then modify it as time goes on.

Great question to a group of professionals.

You say that you "give the client a Hi-Lo range of hours in this example 5-8 hours." Why not just give the customer a fixed price based on 9 hours of labor?

 

[electrofelon]

A couple things about this topic that that bug me when they are not brought up:

1. You cant always charge what you biz plan says you want/need/should charge. Some people are not there yet, may never get there because they are not that good (at business, electrical or both). Many do not have the luxury of kicking back and waiting for that job that will pay $200/hr.

2. Usually rates are not about what someone "needs" its what they want. I could charge $15/hr and "stay in business". There is practically no overhead for a one man show.

3. Different jobs will pay differently and I have a hard time believing some of you guys get the same rate regardless of what the job is. Someone getting $150/hr for residential, even a custom home (repairs and service call stuff sure) I have a hard time believing. Around here, you are just not going to be anywhere in the ballpark if you are over $50/hr on a new custom house build.

 

[Another C10]

You say that you "give the client a Hi-Lo range of hours in this example 5-8 hours." Why not just give the customer a fixed price based on 9 hours of labor?

The truth is on giving a set price from what I figure is .. We bid based on an estimated time frame with a specific material list in mind, with that said, a set bid is basically a high version of our estimate anyway, my tactic is when providing a Hi -Lo range it too is based on an estimated probability although it still shows the time and material process, making it easier to ask for more when showing the reasons if work went over beyond the scope, or the other scenario is coming in under the Hi price shows the deal they got knowing it could of cost more in which they were already willing to pay for.

Its a strategy and also an honest approach to providing a service for a requested project. I'm all about being fair many of my repeat customers know this and will wait weeks for my schedule to land on their day. I am grateful and as time moves on will adjust my rates, time frames or material up cost to accommodate my interests.

 

[Another C10]

A couple things about this topic that that bug me when they are not brought up:

1. You cant always charge what you biz plan says you want/need/should charge. Some people are not there yet, may never get there because they are not that good (at business, electrical or both). Many do not have the luxury of kicking back and waiting for that job that will pay $200/hr.

2. Usually rates are not about what someone "needs" its what they want. I could charge $15/hr and "stay in business". There is practically no overhead for a one man show.

3. Different jobs will pay differently and I have a hard time believing some of you guys get the same rate regardless of what the job is. Someone getting $150/hr for residential, even a custom home (repairs and service call stuff sure) I have a hard time believing. Around here, you are just not going to be anywhere in the ballpark if you are over $50/hr on a new custom house build.

An hour is an hour whether its replacing a 20 amp breaker or 600 amp breaker or wiring a new home or retrofitting 100 warehouse fluorescents the difference obviously is the time length involved. that's my thinking.

 

[electrofelon]

An hour is an hour whether its replacing a 20 amp breaker or 600 amp breaker or wiring a new home or retrofitting 100 warehouse fluorescents the difference obviously is the time length involved. that's my thinking.

So you get the same per hour when you quote wiring a house vs say installing a 1000A commercial service?