Definition of a Service Call

[Unbridled]

I charge a $85 service charge on all my T&M work. This charge covers my mobilization to the job, my cost for labor to get to the job and overhead/Profit.
I then bill the customer $90 HR to do the install starting when I arrive at the jobsite.

However, I see some contractors including their 1st hour of work in their service call fee. Does anyone out there include a labor hour of installation as included in there service call fee??

It doesn't seem logical to me, so I thought I'd question this forum.

 

[mopowr steve]

I do a minimum service call charge for customers within x amount of miles which allows for up to 1 hour of troubleshooting/repair time.

 

[ptonsparky]

I do the first hour included but it doesn't matter what you call it. 85 + 90 = 175 for the first hour on the job.

 

[goldstar]

I do the first hour included but it doesn't matter what you call it. 85 + 90 = 175 for the first hour on the job.

I'm all for getting whatever you can whenever you can. That's good if you can get it (in terms of other competitors prices). However, the chances of you getting call backs for additional work in the future become slim. If you're charging a customer an initial $85 before you even get to the site to investigate their problem why wouldn't they get someone more local who charges for the time spent on the job only? Just my opinion.

 

[petersonra]

I charge a $85 service charge on all my T&M work. This charge covers my mobilization to the job, my cost for labor to get to the job and overhead/Profit.
I then bill the customer $90 HR to do the install starting when I arrive at the jobsite.

However, I see some contractors including their 1st hour of work in their service call fee. Does anyone out there include a labor hour of installation as included in there service call fee??

It doesn't seem logical to me, so I thought I'd question this forum.

that seems fair to me. however, customers do not always see fair as fair. You have to find a sweet spot where you can make money off the deal while not scaring off potential customers.

we have a $300 minimum to send an engineer out. when people find out they have to pay to get someone out it is amazing how often they no longer want anyone to come out.

 

[Unbridled]

Service Call

Service Call

that seems fair to me. however, customers do not always see fair as fair. You have to find a sweet spot where you can make money off the deal while not scaring off potential customers.

we have a $300 minimum to send an engineer out. when people find out they have to pay to get someone out it is amazing how often they no longer want anyone to come out.

So my perception of this forums answers is to price my service calls to include the 1st hours labor on the job-site, simply adjust the amount to $175 which includes the $85 service call and $90, the 1st hour of labor.
This seems like a simple manipulation of the numbers. In the end, I still receive $175 for the service call and 1st hours labor.
My concern is how a customer perceives each of these two methods. Which method do you all think is more advantageous for me in procuring the job?
1. $85 Service call + $90 for 1st hour, or
2. $175 Service call which includes 1st hour of labor

 

[Unbridled]

Service Call

Service Call

I found this article to be somewhat informative in discerning service calls and when not to charge and what to include in a service call.
http://bdappliance.com/understanding-the-service-call-charge.html

 

[JFletcher]

Keep in mind if you charge $xxx for a service call that includes an hour of labor, and the problem takes five minutes* to find and fix, the customer is well within their right to want you to hang around another 55 minutes to get estimates on adding recessed lights, a spa, inquiring about other problems, and so on. For those reasons and others, my service call includes up to thirty minutes labor. Past that, I charge in fifteen minute intervals*.

*Even if it takes me two minutes to find the problem, and it sometimes takes just that, I will check other things on that circuit... sometimes there is more than one problem, or concurrent problems.

I did a 6' post light last year that didnt work. Bad photocell found, replaced, the lights flickered, and the pole shocked me... found the empty sockets full of bugs, one of the center tabs sacked out, polarity reversed, corroded connections at the wirenuts, and a skinned piece of UF inside the pole causing the shock.

*I believe the cable, phone and power companies here charge based on fifteen minute intervals too. I think it works out better for the customer as they arent paying for an entire hour that may not be used, and seeing, say, "19.50/15 min" is better than "$75/hr".

I'd think your service call price has to include some amount of labor on site, even if it's 15 minutes to tell the customer "you need a new panel" or other extensive/pricey work, and write up an estimate for them.

"ptonsparky
I do the first hour included but it doesn't matter what you call it. 85 + 90 = 175 for the first hour on the job."

Based on those numbers my service call would be $130. If my labor rate, overhead, etc were the same as yours, on calls that take an hour or less, you're making $45 more per call than I, tho you may not have as many calls or repeat business. It would be interesting to see where the breakpoint is on profitability.

 

[ptonsparky]

JFletcher...my calls aren't near that high although I have a "special one" that is approaching that amount.

 

[oldsparky52]

I think capitalism will have an influence.

 

[Unbridled]

Service Calls

Service Calls

Keep in mind if you charge $xxx for a service call that includes an hour of labor, and the problem takes five minutes* to find and fix, the customer is well within their right to want you to hang around another 55 minutes to get estimates on adding recessed lights, a spa, inquiring about other problems, and so on. For those reasons and others, my service call includes up to thirty minutes labor. Past that, I charge in fifteen minute intervals*.

*Even if it takes me two minutes to find the problem, and it sometimes takes just that, I will check other things on that circuit... sometimes there is more than one problem, or concurrent problems.

I did a 6' post light last year that didnt work. Bad photocell found, replaced, the lights flickered, and the pole shocked me... found the empty sockets full of bugs, one of the center tabs sacked out, polarity reversed, corroded connections at the wirenuts, and a skinned piece of UF inside the pole causing the shock.

*I believe the cable, phone and power companies here charge based on fifteen minute intervals too. I think it works out better for the customer as they arent paying for an entire hour that may not be used, and seeing, say, "19.50/15 min" is better than "$75/hr".

I'd think your service call price has to include some amount of labor on site, even if it's 15 minutes to tell the customer "you need a new panel" or other extensive/pricey work, and write up an estimate for them.

"ptonsparky
I do the first hour included but it doesn't matter what you call it. 85 + 90 = 175 for the first hour on the job."

Based on those numbers my service call would be $130. If my labor rate, overhead, etc were the same as yours, on calls that take an hour or less, you're making $45 more per call than I, tho you may not have as many calls or repeat business. It would be interesting to see where the breakpoint is on profitability.

Mobilization Labor (2 men, 1/2 hr ave.).....$24.50 w/Burden
Install Labor (2 Men, 1 hr)...............$49.00 W/ Burden
Overhead (45% of COGS)............$73.50
Total Cost (less materials/equipment rentals.$147.50

Income $175.00
Costs....$147.50
Margin..$27.5
% Profit. 19% (based on Margin/COGS

Breakeven..$147.50

 

[Unbridled]

Mobilization Labor (2 men, 1/2 hr ave.).....$24.50 w/Burden
Install Labor (2 Men, 1 hr)...............$49.00 W/ Burden
Overhead (45% of COGS)............$73.50
Total Cost (less materials/equipment rentals.$147.50

Income $175.00
Costs....$147.50
Margin..$27.5
% Profit. 19% (based on Margin/COGS

Breakeven..$147.50

Unfortunately, we don't do as much T&M work as I would like. I am however ready to increase my profit percentage to 50-75% here soon. What do you all think?:slaphead:

 

[gadfly56]

Mobilization Labor (2 men, 1/2 hr ave.).....$24.50 w/Burden
Install Labor (2 Men, 1 hr)...............$49.00 W/ Burden
Overhead (45% of COGS)............$73.50
Total Cost (less materials/equipment rentals.$147.50

Income $175.00
Costs....$147.50
Margin..$27.5
% Profit. 19% (based on Margin/COGS

Breakeven..$147.50

Unfortunately, we don't do as much T&M work as I would like. I am however ready to increase my profit percentage to 50-75% here soon. What do you all think?:slaphead:

All good if you can get that. I think the simplest rule of thumb about what to charge is "how busy are you?" All things being equal, if your phone is ringing off the hook and people are lining up outside the office, you're probably charging way too little. Likewise, if it's crickets, you're charging too much. Don't ignore your market, pay attention to what EC's around you are doing for comparable work.

 

[sw_ross]

Link included has interesting perspective

Link included has interesting perspective

I found this article to be somewhat informative in discerning service calls and when not to charge and what to include in a service call.
http://bdappliance.com/understanding-the-service-call-charge.html

What I gathered from perusing the link;
- Initial service charge is fairly low for the initial visit (probably just covers the cost of driving to the site and looking over the situation)
- Once the problem is diagnosed an estimate is given for the total cost of the repair
- If the customer chooses to proceed with the repair, after having knowledge of the repair cost, the initial dispatch fee is deducted from the cost and they only pay the amount of the estimate
- If the customer chooses not to pursue the repair (maybe appliance isn't worth repairing) they only pay the dispatch fee so the service company can recoup the cost of showing up to look at the job
- The invoice includes itemized costs of Labor, Parts used, and a deduction for the initial dispatch fee. I assume the total cost adds up to the estimate amount?

It's an interesting business plan for service calls. Something worth contemplating...

 

[growler]

Keep in mind if you charge $xxx for a service call that includes an hour of labor, and the problem takes five minutes* to find and fix, the customer is well within their right to want you to hang around another 55 minutes to get estimates on adding recessed lights, a spa, inquiring about other problems, and so on.

Is that really a bad thing? If you give an estimate on future work with time that is already paid for.

You don't get most of this estimated work but it's time that's already paid for so it's not a loss.

Plus it would be very rare for me to find and fix a problem in 5 minutes. It normally takes that long for the customer to show me the original problem.

 

[petersonra]

I think you guys are making a profit mistake if you do any service work for free.

IMNSHO, there should be a charge to send someone out to diagnose a problem and figure out what it will take to fix it.

We used to get burned for that kind of thing where our sales guys would send us out to look at a problem. We would figure it out and then they would just get someone to fix it for them "cheaper" or fix it themselves.

now engineers no longer do free service calls. P.O. first.

 

[active1]

@petersonra
The 1st phone call normally starts with the caller asking for a free estimate.
My response was what are you wanting to have done.
For small jobs I would ask them a few details and tell them what the cost may be with a note that we would have to see it before starting the scheduled work.
With the opportunity to say no if it's higher, then no charge and we leave.

Their next response is somethings not working.
Then the service call with the 1st XX time of labor comes in.
Tell them it may of may not be repaired in that time, but we should be able to give you a number after that 1st amount of time.
Sure you get once in a while places are so bad with burried boxed, equipment or furniture blocking, waiting for access, etc.
Then the # is T&M.

As far as the 5 minute fix. Nobody likes a 5 minute hero.
Yes first year in service I learned that.
Customers are so angry because they feel stupid and ripped off.
Then they want to dispute the bill, your boss hates you because of the mess.
Remember your a skilled professional, not a quick fix handy man.
Investigate. Such as pull out the device (if it's the problem area). Are the box splices done well, bonded properly, terminals tight?
If something is wrong there it may be the same all over.
Is the device worn or old? Check the panel feeding that circuit if possible.
Are all the connections tight or can you get some turn on them?
Code violations?
Then items like a tripped GFI, I'll give them the option of replacing an old one.
Not by saying it's bad. But just that they had a problem and you can not guarantee their old device wont cause them more problems.
Your already out there so it's X more.
Yes, talk about other work they may want done now or later.
It does provide them a better service.

The only bad about including less time with the call like 30 minuets would be not enough time to discuss the problem, diagnose, estimate, sell, and demobilize if they decline. So either you get unbilled time, or need to request more time to diagnose.