Cost calculations

[electricmanscott]

Have any of you smaller shops calculated your cost of doing business recently?

I have been going over mine (one man show) and my rate should be about $110.00 an hour. Minimum.

That's based on giving myself some of the benefits that my customers receive at their places of employment. Of course heaven forbid that I want paid vacation and sick days and maybe enough money to eat table scraps when I grow old.


Since I'm not having any luck finding a "real" job I am going to have to really work on my salesmanship.

 

[Cow]

HD/Lowes didn't work out?

Are you willing to travel? Have you looked at the job postings on the Roadtech's board?

http://www.roadtechs.com/

 

[e57]

I know - it sucks out there.... Currently I'm restarting my 'company' and putting a real "contracting hat' on for the first time in some time... Just to employ myself.... I hung the 'hat' up during one the last big economic fiascos. (Or at least in my area... The Dotcom...) Since then I was happily employed for many years, and during some could pick a wage... Only would do side work if I felt like it or my wife (pants) allowed me...

As for the COB - looking to sort out the same... But it might be a bliss-full experiance to not know for the time being...

Oh - in conversation with a bonding agent today - I call them out of bordom - but he said a new law for CA is going to change bond prices due to a new 'near monopoly' on contractor lic bonds - and "License Bonds will be priced on credit score..." - Said bonds for guys with bad credit could cost 80% of the $12.5K bond it self - per year.... Thankfully I'm not one of them yet...

 

[satcom]

Have any of you smaller shops calculated your cost of doing business recently?

I have been going over mine (one man show) and my rate should be about $110.00 an hour. Minimum.

That's based on giving myself some of the benefits that my customers receive at their places of employment. Of course heaven forbid that I want paid vacation and sick days and maybe enough money to eat table scraps when I grow old.


Since I'm not having any luck finding a "real" job I am going to have to really work on my salesmanship.

As a small shop we have to review our cost of doing business every quarter, and then adjust our rates to stay in balance, and stay in business, $110 an hour is pretty much on the bottom end of costs for most small trade contractors.
I think the idea is, to resist looking at what others are charging and adjust your rates to what you need to pay your overhead and operating expenses, and a small profit, that number may scare you, but it may well be over that $110 the electrical work is easy, the business end is the hard part.

 

[hardworkingstiff]

.... the electrical work is easy, the business end is the hard part.

Oh how true, how true.

 

[laketime]

Does anybody here get any work at a labor rate of $110/hour?

 

[jaylectricity]

Does anybody here get any work at a labor rate of $110/hour?

I tried to get $150 for about an hour's worth of work in Chestnut Hill the other day. Penthouse apartment bigger than a two story house across from the Atrium mall.

Apparently the lady she was selling the apartment to was insisting that it be done by a licensed electrician. She told me that my invoice would have to reflect that I was, indeed licensed. She asked me what my rate was, and I said I would have to look at the work and figure out the cost. This was over the phone, before I had seen the place, going off of her description of what needed to be done, which wasn't very good in the first place.

When I arrived, I had to jump through hoops just to get security to point me in the direction of her apartment. They didn't want my truck with the ladder on top parked in front of the building for all the passing traffic to see. Anyway, it turns out she wanted 4 receptacles replaced with GFI receptacles that she had already purchased.
I told her I could do it right then for $150. She was taken aback. She said, "That's too much. Larry said it was $70."

Me: Who's Larry?
Her: [my referral]'s associate.
Me: I don't know who that is.

I felt like saying, "If you have somebody who can do it for $70, why am I here?"

Instead I just thanked her for her time.

It's not that I expect $150 an hour...it's just that I think $150 was a fair price for me to do that work in that apartment less than 24 hours after she called me in the first place.

 

[satcom]

Does anybody here get any work at a labor rate of $110/hour?

Your not going to to find many, if any electrical contractors, that are getting $110 an hour labor rate , but you may find that many of them get $110 or better burdened rates, which include all their costs of doing business, on a per hour breakdown cost, when you total all your overhead and operating costs and then add a small profit, it is not a labor rate, when a company charges $110 or more per hour, their direct labor rate may be $20 to $30 an hour.

 

[LarryFine]

It's not that I expect $150 an hour...it's just that I think $150 was a fair price for me to do that work in that apartment less than 24 hours after she called me in the first place.

Agreed. Next time, clarify that the first hour is $150 before you drive there.

 

[electricmanscott]

HD/Lowes didn't work out?

Are you willing to travel? Have you looked at the job postings on the Roadtech's board?

http://www.roadtechs.com/

Lowes, HD still on the radar screen but also just looking at all options. I've sent out a few resumes. Nothing yet. I would imagine these advertised jobs get flooded with applicants.

Not willing to travel. Have a family. Looking for stability.



Jay, I've been in that building. Pain in the rear! What's worse is that those condos are practically wallpapered in money. Cheap bastards.

 

[electricmanscott]

As a small shop we have to review our cost of doing business every quarter, and then adjust our rates to stay in balance, and stay in business, $110 an hour is pretty much on the bottom end of costs for most small trade contractors.
I think the idea is, to resist looking at what others are charging and adjust your rates to what you need to pay your overhead and operating expenses, and a small profit, that number may scare you, but it may well be over that $110 the electrical work is easy, the business end is the hard part.

When I do the calculations it surprises me every time. The cost of doing business, before paying myself, is far higher than most would imagine.

There is no such thing as "low overhead" no matter how many guys advertise this way, even for a one man show.

 

[bradleyelectric]

People that think they have low overhead because they don't have a 3 million dollar building are fooling themselves.

We get more than $110/ hr we are on a job for small jobs. $175 is where we start on a service call. For 2 guys on a job depending on the scope we sometimes walk out with over $400. and are actually on the property for an hour. Very rarely do we go look at a job leave, give a price than go back and do it. It's just not cost effective for anything under $1000. Then again, we don't give an hourly rate. It's all priced per project.

People call and ask if we do a certain kind of task and we tell them if we do, ask for their information and ask them when would be convenient to take care of it for them. We don't ask it they want us to give them a price or tell them they should be comparing our price to someone that has no clue how to price this type work and wont be in business next year. I hear all the time people couldn't find an electrician and mostly it is because people don't stay in business doing this type of work because they don't know how to price it or are afraid to price it properly. I just look at it as I'm providing pricing that will benefit my customer to the point I'll still be in business the next time they need me.

 

[JWCELECTRIC]

Lowes, HD still on the radar screen but also just looking at all options.

Scott,

Have you talked with the kitchen and lighting depts. to see if you can be one of the installing contractors for upgrades & fixture installs?

- JWC

 

[hardworkingstiff]

There is no such thing as "low overhead" no matter how many guys advertise this way, even for a one man show.

The owner of the company I worked for (16 years) once said the small contractor has more overhead than we do. I looked at him curiously, and he explained we spread our overhead costs around more areas of revenue and the overhead costs per dollar of revenue wind up lower than the small guys. When I left, the company was doing about $50,000,000 a year in sales (petroleum equipment sales and installation, including electrical).

 

[hardworkingstiff]

Have you talked with the kitchen and lighting depts. to see if you can be one of the installing contractors for upgrades & fixture installs?

- JWC

My 1st reaction is it's like working for Wal-Mart, they will put you out of business.

I think Scott's comment about becoming better at sales was insightful.

 

[JWCELECTRIC]

My 1st reaction is it's like working for Wal-Mart, they will put you out of business.

I think Scott's comment about becoming better at sales was insightful.

How So? If for example you go install a light fixture at a clients home at your given price. When you are at the home start using your sales and see if there is any other work the owner may need. On the kitchen upgrades you work with the cabinet installers and go to the home to see what is needed to bring the kitchen up to code and provide them with your price. If your provide quality work more than likely the client will call you back.

 

[satcom]

How So? If for example you go install a light fixture at a clients home at your given price. When you are at the home start using your sales and see if there is any other work the owner may need. On the kitchen upgrades you work with the cabinet installers and go to the home to see what is needed to bring the kitchen up to code and provide them with your price. If your provide quality work more than likely the client will call you back.

You will not be able to sell them additional work, because chances are pretty good, the customers that buy the box store improvement jobs, have contractors, show up that never apply for permits, and any decent additional work would most likely need a permit.

 

[electricguy]

There is many calculators out there like this one.
http://freelanceswitch.com/rates/

 

[CopperTone]

Right now I bill $125/hr for 1 licensed electrician and 1 apprentice. I would love to charge more but I didn't think I could get away with it. I bid many jobs using this rate plus material and mark up. I lose lots of jobs too. We make money at this rate so for us I think it is good but if people here think I can bill out at a higher rate then maybe I should investigate that.

I also don't charge a service charge or call fee - maybe I should do that.
I've thought of doing this.
Someone calls for some repair work at their house.
I inform them that we can send out a service truck with 2 guys (1 licensed, 1 apprentice) and it will be $150.00 for the first hour and then $125 every addiitonal hour and the lead guy will let you know within the first 10 minutes how long about it will take.

 

[satcom]

Right now I bill $125/hr for 1 licensed electrician and 1 apprentice. I would love to charge more but I didn't think I could get away with it. I bid many jobs using this rate plus material and mark up. I lose lots of jobs too. We make money at this rate so for us I think it is good but if people here think I can bill out at a higher rate then maybe I should investigate that.

I also don't charge a service charge or call fee - maybe I should do that.
I've thought of doing this.
Someone calls for some repair work at their house.
I inform them that we can send out a service truck with 2 guys (1 licensed, 1 apprentice) and it will be $150.00 for the first hour and then $125 every addiitonal hour and the lead guy will let you know within the first 10 minutes how long about it will take.

It is common for the service guys in this area to get anywhere fro 129 to 150 for just showing up to give an price on the job, if the customer accepts the price for the work they remove the call fee, They give a flat rate to do the work, they don't use hourly rates, and they usually have one man in the truck.

Only you will know if your rate is good, you need to calc your expenses and find your break even, then establish a rate, with that rate you can estimate jobs for a desired profit, and everyone will have a different rate.

Is your second man in a formal state program? How do you pay for him with the rate you charge?