Could marking material up equal losing money?

[busman]

I agree there is 1% who has a price objection, whether they object to the price of the part or the price of the labor to install the part, I have no data to support. We use flat rate pricing so the 1% who have a price complaint with us have it over the total price of the job.

If you?re charging T&M, I also agree with you that you will have a hard time getting over $90/hr. for service work. That is the inherent problem with T&M.

I do know that you cannot make a profit (at least as I define a profit) at $90/hr, no matter how much you mark up materials. Your labor, which represents your expertise and the exceptional customer service you deliver is the real value in what you have to offer your customer.

Our labor rate is 3.9 times more than yours with a very modest single digit mark-up on material. Parts are practically at our cost plus tax and handling. We don't sell parts and material, we sell our labor, thus, we never get a material or parts price objection.


Flame suit on...

Really? You have any residential customers at $351 / hour? [FONT=&quot][/FONT]

 

[iwire]

Really? You have any residential customers at $351 / hour? [FONT=&quot][/FONT]

My nephew is a plumber that works flat rate residential jobs, they shoot for about $475 an hour, of course they do not tell the customer that.

He will swap out a water heater for about $2500.

 

[busman]

My nephew is a plumber that works flat rate residential jobs, they shoot for about $475 an hour, of course they do not tell the customer that.

He will swap out a water heater for about $2500.

All I can say is I wish we could manage that around here. Going rate for a water heater change-out is about $800-$1,200 including the heater.

 

[hardworkingstiff]

I think a couple of business courses are in order before I even think about opening up shop.

That, is one of the most intelligent statements I've ever read in this forum.

 

[iwire]

All I can say is I wish we could manage that around here. Going rate for a water heater change-out is about $800-$1,200 including the heater.

They are turned away by many so they end up working less hours but still making good money.

Basically instead of trying to get every job out there they just target the ones that pay well.

 

[hardworkingstiff]

I think the bottom line is there is not a clear cut "right" way to do this.

If you push your overhead cost into labor and keep materials markup to a minimum (or zero) you will probably get more jobs that are material heavy and labor light.

If you push your overhead cost more into materials to keep you labor rate lower you will see your work get pushed more to labor heavy and material light work.

Bottom line, the market generally determines what prices will be. You can try to mix things up in your books to make things look however you want, but the mission is to get good at sales and push the price up to where you need it to be.

As a business owner, you MUST understand your overhead. Most contractors fail because the don't have a good education in business. They don't understand there cost (overhead).

Your statement about going to school for business is a GREAT move.

Good luck.

 

[kwired]

My nephew is a plumber that works flat rate residential jobs, they shoot for about $475 an hour, of course they do not tell the customer that.

He will swap out a water heater for about $2500.

They are turned away by many so they end up working less hours but still making good money.

Basically instead of trying to get every job out there they just target the ones that pay well.

I try to target customers that pay well also but around here, even the ones that pay the best are not likely to pay 2500 for a water heater change. Small community - everyone knows everybody (almost) if you are too high priced word travels fast and no one wants to hire you. You better have satisfied customers - then they are willing to pay some more for good service but most will still have a limit on many things.

 

[Sierrasparky]

They are turned away by many so they end up working less hours but still making good money.

Basically instead of trying to get every job out there they just target the ones that pay well.

Bo at those rates in my area the'll soon get a reputation for being a rippoff. If someone like that ever got a complaint in my state and the investigator saw those prices the PC could get into trouble for price gouging.

 

[brian john]

Bo at those rates in my area the'll soon get a reputation for being a rippoff.

I have heard this before and yet we see business that charge flat rate pricing strive while others fall by the wayside. It is all in your presentation and opertional practices.

Dare I asked what state?

If someone like that ever got a complaint in my state and the investigator saw those prices the PC could get into trouble for price gouging.

That's an American way of doing business.

Let's see an ATS manufacture just charged me 99.98 for a Ice Cube relay at Grainger’s it was 17.45. Is the ATS manufacture gouging? No, they have a warranty item, it is MY CHOICE to decide what I pay and to know the market.

What to Sam Hill, does any FOOL in the government know about running a business? If they knew anything about business they would not be working for the government