Charging for travel time

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patricknola

Electrical contractor/Generac Dealer
Location
new orleans, La, United States
Occupation
Electrical contractor.
Hey Guys, I'm an electrical contractor in New Orleans,La. and I've recently started servicing generac generators. I'm getting calls from all parts of the state, sometimes an hour or two drive away. I'm trying to figure out how to calculate/charge customers for time/distance when they are outside of my usual jurisdiction. Thanks
 
patricknola said:
Hey Guys, I'm an electrical contractor in New Orleans,La. and I've recently started servicing generac generators. I'm getting calls from all parts of the state, sometimes an hour or two drive away. I'm trying to figure out how to calculate/charge customers for time/distance when they are outside of my usual jurisdiction. Thanks
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You have two choices. Bury the time in your fee structure ($xxx dollars for the first hour, $yyy per half hour additional) or put it up front. If the customer balks, explain that your employees get paid while the truck is on the road and you should not eat that time. They are free to look elsewhere.
 
IMO, your hour y rate should not be any different for travel time versus work time.
Overhead like depreciation, workers comp, and insurance are the same whether you are stuck in traffic, cruising or electricing.

Of course, you could also just consider it as commuting, and travel for free.
 
Since you have such a large service area, I would use a separate travel charge which is calculated per client based on mileage or time.

If you combine travel costs into your labor rate it gets very messy. If you are forced to quote a labor rate, you don't want the travel charge making you sound overly expensive.

You also don't want to use an average travel charge since you will be overcharging your local clients resulting in less local business.
 
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Bottom line is it cost you to travel, if you are going to serve a large area you need to convince clients why you are worth paying what you ask for.

Some are willing to pay more for great service, others are looking for cheap - then sometimes complain the service company never really fixed their issues. You may have to eat some cost once in a while just to make up for any mistakes you might have made, still worthwhile for clients that are willing to pay extra for good service - those are the clients you want to have, the ones that want cheap will try to hose you for anything they can.
 
patricknola said:
charge customers for time/distance when they are outside of my usual jurisdiction.
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Fortunately 75% of my clients are within 10 miles, I'll travel 30 miles to handle a 1 hr minimum call. Over 30 miles I either don't take it or I'll mention I have a minimum 2 hr charge even if the service only takes 30 minutes. It all depends I suppose on how hungry you are at that point in time.
 
patricknola said:
Hey Guys, I'm an electrical contractor in New Orleans,La. and I've recently started servicing generac generators. I'm getting calls from all parts of the state, sometimes an hour or two drive away. I'm trying to figure out how to calculate/charge customers for time/distance when they are outside of my usual jurisdiction. Thanks
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Travel time is something that has to be paid to the employee so you need to find a way to have the customer cover that cost.

My opinion is it is best to be upfront about it and not try to hide it somewhere. But, many customers don't like that so businesses get creative about it sometimes.

I don't think there is a "one size fits all" answer to this issue. I think you should charge for mileage, tolls, and parking too.
 
A lot of really great answers here already. Another thing to keep in mind is "opportunity cost". While they are traveling, not only does that cost you, but that also costs you the opportunity to have them working on something else. Because of this, we typically have travel time just like regular time and it just is what it is. There are always exceptions though..
 
I tell my customers that the clock starts ticking when I leave the shop and stops when I return. I'll give them a free half hour each way or a total of 1 hr travel time. After that it's my regular labor rate. If I get stuck in traffic, etc it' still on them.

-Hal
 
bwat said:
A lot of really great answers here already. Another thing to keep in mind is "opportunity cost". While they are traveling, not only does that cost you, but that also costs you the opportunity to have them working on something else. Because of this, we typically have travel time just like regular time and it just is what it is. There are always exceptions though..
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The other dimension to opportunity cost is about materials installed. You make profit on the tech's time, but also on the material he/she installs. Even if you get paid for someone running 90 minutes to the customer's site, unless the tech is bringing a widget to be installed for several hundred dollars you can lose out on that end of the equation.
 
patricknola said:
Hey Guys, I'm an electrical contractor in New Orleans,La. and I've recently started servicing generac generators. I'm getting calls from all parts of the state, sometimes an hour or two drive away. I'm trying to figure out how to calculate/charge customers for time/distance when they are outside of my usual jurisdiction. Thanks
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Are you a generac dealer or authorized to do warranty work? If reimbursed by generac you likely stuck with whatever they decide to reimburse you for on warranty issues.
 
We charge portal-portal. On top of that, for anything other than local, we add roughly $0.50-1.00/mile for every mile driven for truck and fuel expenses, etc depending on the distance.
 
Cow said:
We charge portal-portal. On top of that, for anything other than local, we add roughly $0.50-1.00/mile for every mile driven for truck and fuel expenses, etc depending on the distance.
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Within reason I would think. Say you were working on a job 100 miles from the shop, had an apparent simple service call only 10 miles from shop on the path to your other job and told them you would stop by to check it out on the way back at end of the day, do you charge them for 10 miles, 90 miles, or no mileage at all because you were going by anyhow? Then maybe about all you did was reset a GFCI when you did take that look at it.
 
I was a nationwide tech for many years way back when. Hal and Cow have the correct portal to portal answer.
10 service calls along a 100 mile stretch of interstate: That's 10 portal to portal charges.

You can't be serious about telling a customer that if you're in the area you'll stop-in/take a look for no charge. Stop-in fine. N/C, never happen.

I have had to fight for an hour just getting on/off a highway and get to a customer within a mile of the highway. Time = $$$

My service calls were 30% actual work and the rest travel and paperwork.

Of course the cornfields🌽 of Nebraska were not where I normally ventured but I did spend a week in the panhandle of Texas running around a bunch of cattle🐂 feedlots. They were even billed for some clothes since I was only supposed to be there one day.
 
g3guy said:
I was a nationwide tech for many years way back when. Hal and Cow have the correct portal to portal answer.
10 service calls along a 100 mile stretch of interstate: That's 10 portal to portal charges.

You can't be serious about telling a customer that if you're in the area you'll stop-in/take a look for no charge. Stop-in fine. N/C, never happen.

I have had to fight for an hour just getting on/off a highway and get to a customer within a mile of the highway. Time = $$$

My service calls were 30% actual work and the rest travel and paperwork.

Of course the cornfields🌽 of Nebraska were not where I normally ventured but I did spend a week in the panhandle of Texas running around a bunch of cattle🐂 feedlots. They were even billed for some clothes since I was only supposed to be there one day.
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You just made it clear to me we all have differences in what effects us. I don't have to wait for an hour to get on/off a highway unless there is an accident or road construction or something like that going on. I might be able to travel 100 miles to a job and still come home each day where in some metro areas a 100 mile trip might be about all that gets done the first day of the project.

General service calls in those kinds of situations is probably best to get someone closer. If you are fairly specialized in some area that hardly anybody else does, you are traveling further all the time as your clients will be a little more spread out anyway if that is all you do, and those clients will usually be expecting higher charges from you, but also expect performance from you as you are supposed to be the expert on whatever your specialty is. They don't want to pay big price for you to come out and then you say "lets try this and see what happens" they want a pretty good idea that solution is going to work the first try.
 
When we are running service work in our small area of operations we always charge time one way (to get to the job). If the job is outside of our regular area we give the customer a price for travel usually based on our estimate of mileage and travel time.

On another note; we had a garage door company come to service our overhead door a year or so ago. They were probably 75 miles away and made it clear that they would charge crew time portal to portal which we agreed to. When the techs were finished they wrote up the ticket and mentioned that they had two other jobs in our immediate area that day. All three customers were charged the same full round trip fee which we felt was very unethical so we called and let them know that we were unhappy about that but we would pay the bill as we agreed to. They of course reduced the trip charge in order to maybe avoid a poor yelp rating. I'm guessing that the crew was "counselled" on keeping their mouths shut about such things in front of the customer.
 
bkludecke said:
All three customers were charged the same full round trip fee which we felt was very unethical so we called and let them know that we were unhappy about that but we would pay the bill as we agreed to. They of course reduced the trip charge in order to maybe avoid a poor yelp rating. I'm guessing that the crew was "counselled" on keeping their mouths shut about such things in front of the customer.
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That's a problem too. Say you have a customer 100 miles away and another 10 miles from the shop on the way back to it. Are you going to charge the first customer for 100 +90 miles and the second customer 90+10 miles? Is that fair to the second customer?

What happens when you get other calls from one of those customers and your travel time charges are completely different each time?

Portal to portal normally means the round trip travel time from the shop, to the customer and back to the shop. That's the only fair way to do it. It's none of any customer's business if you had other stops along the way. So, yeah, the service person needs to keep his mouth shut.

In the example above, the first customer would be charged for 200 miles and the second for 20 miles.

-Hal
 
kwired said:
Within reason I would think. Say you were working on a job 100 miles from the shop, had an apparent simple service call only 10 miles from shop on the path to your other job and told them you would stop by to check it out on the way back at end of the day, do you charge them for 10 miles, 90 miles, or no mileage at all because you were going by anyhow? Then maybe about all you did was reset a GFCI when you did take that look at it.
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When our office person works up the invoices, he usually spreads the travel costs around when we hit stops on the way. We haven't had any complaints.
 
hbiss said:
That's a problem too. Say you have a customer 100 miles away and another 10 miles from the shop on the way back to it. Are you going to charge the first customer for 100 +90 miles and the second customer 90+10 miles? Is that fair to the second customer?

What happens when you get other calls from one of those customers and your travel time charges are completely different each time?

Portal to portal normally means the round trip travel time from the shop, to the customer and back to the shop. That's the only fair way to do it. It's none of any customer's business if you had other stops along the way. So, yeah, the service person needs to keep his mouth shut.

In the example above, the first customer would be charged for 200 miles and the second for 20 miles.

-Hal
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Many do it that way, don't think there is any rule that you can't make compromises on those kinds of things.

What is not fair is to have a service call for something that probably only takes one technician, but the crew is on their way to or from a job when they show up and customer is charged basically four times as much because there were four guys riding in the truck. I would definitely complain about that if someone did that to me. Portal to portal I can live with even if I know they made other stops, but would be more willing to hire someone else next time if I knew they were more likely to compromise on that mileage when they had other stops along the way.
 
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