Customary labor charges

[OK Sparky 93]

Good Sunday evening all!
A little background. Since the whole covid thing hit work has been sparse. Talking with the boss, and he makes the statement that people say we, he , the company is too high.
Just today I had an individual a GC type, (a friend through church) say the same thing.

Companies that we have done several jobs for before, we don’t anymore. Even before covid.

Now that I am wanting to test and get my EC license, I want to avoid whatever is happening where I am.

All j-man, and there are just two of us have our own vehicles. Company pays for fuel.

I don’t know what his overhead is, but his shop is his house.

So here is my question.
If the labor rate was $75 for one man
And $110 with a helper, if you need a third hand and he is a j-man,is he a $75 man?

With that said we make an hourly rate right there with the union.
So with three guys we are looking at around $80 an hour payroll.

If those charges are not astronomically high, then what do I need to be aware of when I launch out on my own. I don’t want to be thought of as too high.

 

[masterinbama]

You are getting ripped off.

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[OK Sparky 93]

Well as the 53 year old j-man, at times I feel like it. That’s why I am making that next step.

Please, what makes you say this?

 

[masterinbama]

Well as the 53 year old j-man, at times I feel like it. That’s why I am making that next step.

Please, what makes you say this?

Forgivable PPP loans.



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[Coppersmith]

If the labor rate was $75 for one man
And $110 with a helper, if you need a third hand and he is a j-man,is he a $75 man?

With that said we make an hourly rate right there with the union.
So with three guys we are looking at around $80 an hour payroll.

If those charges are not astronomically high, then what do I need to be aware of when I launch out on my own. I don’t want to be thought of as too high.

My rates are much higher and I have lots of business. My company is also a union employer. Every j-man get charged out at the same rate. Two j-men working independently, should do the work in half the time, so from the client prospective it's the same as paying for one j-man who works twice as long. Now if they are working together, they will not be as efficient. They will get in each others way. That will raise the cost for the client. In that situation, use a lesser priced employee who is able to do the work.

The amount you can charge is very dependent on the market you are in. Poor people don't have money to hire electricians. You need to market to people with disposable income who can afford the luxury of an electrician. If there are not enough of these people in your market, you won't be successful. I find homeowners with a house value of $300K or more are good prospects.

From a pure economics standpoint, you should raise your price every time you get job, until a balance point is reached where you are just getting enough work to keep busy. This is where you are maximizing your income. Conversely, if you are not getting enough jobs to keep you busy, lower your price a little each time you get turned down.

There will be people who you give a price to who will say you are too high. That's fine. Say thank you and move on. Not everyone can afford you. Why should you work for $75/hr when there are people who will pay you $100/hr of more. Go find those people. You are not running a charity. You should be trying to maximize your income.

But before you consider what to charge you have to do a very important thing. You have to figure out how much it costs to operate your business. If it costs $100/hr to operate and you are charging $95/hr, you are losing money and will fail eventually. Read this book. It's an invaluable reference of figuring out your costs and the correct price to charge.

 

[OK Sparky 93]

It’s been a few weeks now that I have been working as a rookie in this contractor arena. My hourly I rate is not an issue or doesn’t seem to be, it is all in the billing. Everything so far has been service work.
I am not sure about the rest of you, however are you running down the road with a small supply house or are most jobs a trip to the supply house.
The latter seems to be the case for me in most instances. My pockets aren’t that deep yet.
Whether I have a truck full of parts or I have to chase down for each job
Would it be better or fair to have a truck charge of some number for every job thus making the charge first hour higher.
Do you guys charge for driving, one way and or both ways.
If you do a job that took 15-20 minutes. It’s a service call 1 hour,

but it’s an hour round trip. Do you eat that hour? Is it a 2 hour charge, or is it an hour with a truck charge?How do you the rest of handle things like that?

 

[romex jockey]

Welcome to the elite spark chat 93

And welcome to the EC universe

Further, welcome to the universal axiom that follows suit

GOOD, FAST, CHEAP

pick two, anyone wanting all 3 are simply being told what they wish to hear

Best fishes!

~RJ~

 

[James L]

It’s been a few weeks now that I have been working as a rookie in this contractor arena. My hourly I rate is not an issue or doesn’t seem to be, it is all in the billing. Everything so far has been service work.

What kind of service work are you talkin about? Are you talkin about repairs, or are you hanging ceiling fans, adding or swapping out devices....

I am not sure about the rest of you, however are you running down the road with a small supply house or are most jobs a trip to the supply house.
The latter seems to be the case for me in most instances. My pockets aren’t that deep yet.

How are you finding out the scope of work for your service calls? Is somebody just calling and wailing for help, or are they telling you what they need you to come and do?

I don't do a whole lot of service calls, but when I'm on the phone with a prospective customer, I'm asking them all kinds of questions so I can find out what I might need to bring. You can really minimize your trips for materials if you just come prepared for some basic stuff

Whether I have a truck full of parts or I have to chase down for each job
Would it be better or fair to have a truck charge of some number for every job thus making the charge first hour higher.
Do you guys charge for driving, one way and or both ways.
If you do a job that took 15-20 minutes. It’s a service call 1 hour,
but it’s an hour round trip. Do you eat that hour? Is it a 2 hour charge, or is it an hour with a truck charge?How do you the rest of handle things like that?

I charge one hour of Labor to show up. Usually I can be anywhere in the metro area within a half hour. So that gives me a half hour of labor for my time, and a half hour of labor to cover gas, vehicle maintenance, etc

 

[readydave8]

but it’s an hour round trip. Do you eat that hour? Is it a 2 hour charge, or is it an hour with a truck charge?How do you the rest of handle things like that?

that's 30 minutes from shop, 1 hr round trip

of course I try to stack service calls by area, not always possible

and create triangles, 2 service calls may be 30 minutes from each other but both 30 minutes from shop

but here lately been a few that were dead runs, and I explained to customer that to come promptly would double cost. had a few take me up on it

 

[Coppersmith]

Every EC on this board has a different way to charging clients. Here’s my take on it.

When thinking about the costs of running your business, especially labor, it’s helpful to imagine you just sit in your office and direct the operations while your employees do all the work. Solo operators tend to not charge for every minute worked. This is a mistake. Employees expect to be paid for every minute worked. So I’ll answer your questions from that perspective.

[A]re you running down the road with a small supply house or are most jobs a trip to the supply house. The latter seems to be the case for me in most instances. My pockets aren’t that deep yet.

The easiest way to increase your profits is to decrease your costs. Every run to the supply house increases your labor and vehicle expenses. If you can’t afford to stock a service truck, then you are going to be making many, perhaps daily, trips to the supply house. I suggest you start carrying some basic materials immediately and increase your inventory as you can afford to do so. Your goal should be to carry a week’s worth of materials and never make a supply run mid-job.

If you have asked enough questions, or looked the job, you should know exactly which big and expensive items you need. Buy these items before the job, but don’t buy the small things. Those should already be on the truck. You can waste many labor hours shopping for all those small items. For example, if you are replacing a panel, go buy the panel and all the breakers, but you should already have wire, connectors, tape, mounting screws, wirenuts, labels, and some spare breakers on the truck.

Would it be better or fair to have a truck charge of some number for every job thus making the charge first hour higher.

There are lots of different names for this: dispatch charge, truck charge, trip charge, and travel charge. The bottom line is it costs money to move a vehicle from the shop to the job so yes, you must charge a fee for that. The IRS says a passenger car costs 54 cents a mile to operate. I’ve calculated that it costs one dollar per mile to operate my truck. I charge a flat fee for anywhere in my service area, but you can do it on a mileage basis if you wish. I don’t say there is a fee. I just include it in the first hour. Some people react negatively to trip fees. Don’t tell them about it and they can’t react.

Do you guys charge for driving, one way and or both ways. If you do a job that took 15-20 minutes. It’s a service call 1 hour, but it’s an hour round trip. Do you eat that hour? Is it a 2 hour charge, or is it an hour with a truck charge? How do you the rest of handle things like that?

I mostly do residential and light commercial service. The average number of billable hours is four per day. Some days are eight and some are one, but four is the average. My employees expect to get paid eight hours a day. In order to make enough money to pay them, my hourly rate = (labor cost x 2) + (overhead cost) + profit. If we bill four hours, we make eight hours worth of labor reimbursement. On days we bill more than four hours, we make extra labor reimbursement and this covers the days we bill less than four hours. I don’t have a separate drive time charge because I don’t need it. Gangbox jobs where we expect to work each man eight hours get charged eight hours of labor cost a day (not 16).

My minimum charge is one hour. I’ve heard of others who charge two hours minimum. You have to have a minimum because it’s not worth sending somebody out to a 20 minute job.