Double my cost to get material markup

petersonra said:
We have one pretty good customer that insists that engineering and design cost be broken out for some reason. I can't really remember why, but I'm thinking it might have to do with the way the state of Illinois charges sales tax.
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I've seen some places get deductions on certain USA based services. USA manufactured materials get special treatment but I dont think those rules apply to the service of installing them.
 
You need to keep your labor and material mark ups consistent by whatever method you use. Some times you send a bill and they don't like the price and then they tell you they need an itemized breakdown, or the job has change orders.

If you get greedy sometimes you have to eat something and give money back.

Find material and labor charges and mark ups that are realistic in your area and stick with them in case you have to explain yourself in court or somewhere else
 
Eddie702 said:
You need to keep your labor and material mark ups consistent by whatever method you use. Some times you send a bill and they don't like the price and then they tell you they need an itemized breakdown, or the job has change orders.

If you get greedy sometimes you have to eat something and give money back.

Find material and labor charges and mark ups that are realistic in your area and stick with them in case you have to explain yourself in court or somewhere else
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So I try to avoid this issue when possible by using flat rate for assemblies. Same as a restaurant you won't ask how much their price for steak was you just accept that when you see the steak in the picture is 55 bucks that it is a good steak cooked by a professional at your whim to your specifications.
 
letgomywago said:
So I try to avoid this issue when possible by using flat rate for assemblies. Same as a restaurant you won't ask how much their price for steak was you just accept that when you see the steak in the picture is 55 bucks that it is a good steak cooked by a professional at your whim to your specifications.
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If I was in a restaurant and saw a $55 steak, my heart would "flat rate"!
 
jim dungar said:
Speaking as a customer. I am hiring you for your skill and labor not for you to be a supply house. Anything more than a 20-30% markup tells me you dont know how to track your costs and dont respect me as an informed consumer. I expect to see labor costs 》$100/hr and material comparable to pricing I see on-line.
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I’m glad there aren’t more of you. My markup is double and my service rate is $250 an hour. I don’t see anyway anyone can run a real business at 100 an hour at least in service. I ran it for years at $150 and realized I was barely breaking even.
 
blueheels2 said:
I’m glad there aren’t more of you. My markup is double and my service rate is $250 an hour. I don’t see anyway anyone can run a real business at 100 an hour at least in service. I ran it for years at $150 and realized I was barely breaking even.
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I agree about the labor rate, which is why I said greater than. My point was many electricians seem to be afraid to bill at reasonable labor rates instead trying to make it up on equipment markup.

When I assembled control panels my customers often supplied the majority of the expensive electronic components, so my labor rate needed to take that into account. When I sold electrical equipment large industrial customers often purchased the equipment like switchgear, MCCs, and panelboards so the contractor's were basically only providing labor and wire.
 
The type of work, and the resulting type and quantity of material, surely does make a difference here, especially if you are only going to charge for labor on the job site.

If you are charging for a handful of receptacles that you had to spend an hour on going to the store to obtain then a 300% markup on material is justifiable, or else add an hour to the labor section of the invoivce.

If the material is $5000 of wire that also took you an hour to pick up from the supply house, then marking up the material 200% is not justified.
 
jim dungar said:
Speaking as a customer. I am hiring you for your skill and labor not for you to be a supply house. Anything more than a 20-30% markup tells me you dont know how to track your costs and dont respect me as an informed consumer. I expect to see labor costs 》$100/hr and material comparable to pricing I see on-line.
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Good luck with that viewpoint. We typically sell materials at an 80% markup, and that's if it is part of an installation job. Otherwise, it's about 2.1 to 2.5 X. If you are a widget maker, your markup will be more in the realm of 3.2X cost of goods sold.
 
I find it interesting how varying everyones strategy and outlook is on this topic. Not just from this thread but others like it.

So far I have not had a single bat of an eye at 2X material and $125 per/hour labor rate. Not service, mostly planned installs. I do adjust a little depending on the customer.

I am running this business to make money, but I also don't want to be too far out of line that I am in the gouging category.
 
jim dungar said:
I agree about the labor rate, which is why I said greater than. My point was many electricians seem to be afraid to bill at reasonable labor rates instead trying to make it up on equipment markup.

When I assembled control panels my customers often supplied the majority of the expensive electronic components, so my labor rate needed to take that into account. When I sold electrical equipment large industrial customers often purchased the equipment like switchgear, MCCs, and panelboards so the contractor's were basically only providing labor and wire.
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Full disclosure I use flat rate so my customers never see what the material and labor breakdown is.
 
We charge $75.00 for estimates, service calls and diagnostic charges up front ... it eliminates the "Lookie Looz".
 
mtnelect said:
We charge $75.00 for estimates, service calls and diagnostic charges up front ... it eliminates the "Lookie Looz".
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Some people build this into their overhead, and some, like you have an upfront fee. I don't think there is a wrong way to cover this. It's likely influenced by what is traditional in your service area. Do you credit that charge to the job if they accept your estimate?
 
gadfly56 said:
Some people build this into their overhead, and some, like you have an upfront fee. I don't think there is a wrong way to cover this. It's likely influenced by what is traditional in your service area. Do you credit that charge to the job if they accept your estimate?
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You are correct ... I left that part out, that is part of the sales pitch.
 
My attorney charges $650 / hour. He tracks his time and bills for everything he does. A woman near me charges $120 for a 15-minute session to take photos of people with their kids at a park and she prints up to 6 photos. A local well pump guy in his own business charges$145 / hour. So what should I charge per hour as a 30 plus year experienced, licensed, bonded, insured electrician with a risk factor that troubleshoots on live circuits? I'm at $150 now. Materials at 30% above cost. People can easily check the cost of materials online. I give both lump sum estimates and also estimates that show the labor hours at $150 each with the materials totaled separately.
 
Amps said:
My attorney charges $650 / hour. He tracks his time and bills for everything he does. A woman near me charges $120 for a 15-minute session to take photos of people with their kids at a park and she prints up to 6 photos. A local well pump guy in his own business charges$145 / hour. So what should I charge per hour as a 30 plus year experienced, licensed, bonded, insured electrician with a risk factor that troubleshoots on live circuits? I'm at $150 now. Materials at 30% above cost. People can easily check the cost of materials online. I give both lump sum estimates and also estimates that show the labor hours at $150 each with the materials totaled separately.
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I don’t think 150 is enough. I back that up with running my own business at 150 for 2 years and it wasn’t enough. Just went to 250$ an hour about 2 months ago. Still getting jobs. But I think it needs to be at 300.
 
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