Double my cost to get material markup

[AC\DC]

How many million dollar homes are there? I’ve done work in million dollar homes, but most people don’t live in million dollar homes.

Every referral I get I pretty much name my price but my price usually only adds up to 100 an hour. I think that’s pretty fair. Recently I’ve been trying to advertise on Angi and I’m very disappointed with the referrals I get from there. Im trying to grow but having problems with the people on the internet.

I was saying wealthy is now 1mil and up
500k is now middle class houses

 

[mtnelect]

After COVID, this country went to sleep. Now we are in the "Awakening" mode.

Trained, and licensed contractors are now in the drivers seat. Don't sell your self short, there is now a short supply of trained & licensd contractors. The "Baby Boomers" are retirering, and I am one of them.

 

[mtnelect]

Also, don't forget your advertising sticker ... this is a big deal, always leave a sticker !

 

[letgomywago]

Also, don't forget your advertising sticker ... this is a big deal, always leave a sticker !

I find ones that were just left by the previous owners and the current ones don't even go to it to see who's worked there before. People my age do turn to the internet and the only way you can get on there without doing anything is get good enough that people recommend you on social media without your asking. It's just the future for word of mouth.

 

[mtnelect]

I find ones that were just left by the previous owners and the current ones don't even go to it to see who's worked there before. People my age do turn to the internet and the only way you can get on there without doing anything is get good enough that people recommend you on social media without your asking. It's just the future for word of mouth.

Good information ... yes, the future is changing. Sounds like you figure it out already. If you want to succeed, you will.

 

[jim dungar]

I find ones that were just left by the previous owners and the current ones don't even go to it to see who's worked there before. People my age do turn to the internet and the only way you can get on there without doing anything is get good enough that people recommend you on social media without your asking. It's just the future for word of mouth.

Recommendations from the internet are fine, as are many rating sites like Yelp.
It is the third part sites that are probably not worth it. You want serious customers not price shoppers or places trying to sell you stuff. Don't forget how yourcustomers use the internet also, a website might not worth it while a Facebook page might be if you are looking for my generation of customers. I just Googled electricians near me and I didn't find any of 'my friends' on the list at all.

 

[OK Sparky 93]

How many million dollar homes are there? I’ve done work in million dollar homes, but most people don’t live in million dollar homes.

Every referral I get I pretty much name my price but my price usually only adds up to 100 an hour. I think that’s pretty fair. Recently I’ve been trying to advertise on Angi and I’m very disappointed with the referrals I get from there. Im trying to grow but having problems with the people on the internet.

I spent a crap load of money with Angi. I didn’t really track the leads. But I know that what I was trying to charge for a job and then have to either add in the cost of the lead or eat it. Well that just sucked for me.
I dropped Angi. I joined a BNI chapter earlier this year. It took a few months to gain some traction but the ROI is around 500%.

 

[OK Sparky 93]

My price to replace an outlet comes out to 29 a piece no gfi.

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.

I’d like to understand! I too use flat rate (provided software), for service work. It has it has tasks from $50-$1200. Every job has a dispatch fee. I don t have my rate set as high as you, however if I charge for each and every thing, then I do ok.

It has an allowance of .25 for a receptacle, I think the NECA shows .20, either way at $250-$300 the range is $50-$75 for an outlet replacement. Are you covering the cost of the outlet in that? Is this rate covering the trip to the job?

Most task show a small markup for materials and others show less than what I pay at the supply house.

 

[letgomywago]

I’d like to understand! I too use flat rate (provided software), for service work. It has it has tasks from $50-$1200. Every job has a dispatch fee. I don t have my rate set as high as you, however if I charge for each and every thing, then I do ok.

It has an allowance of .25 for a receptacle, I think the NECA shows .20, either way at $250-$300 the range is $50-$75 for an outlet replacement. Are you covering the cost of the outlet in that? Is this rate covering the trip to the job?

Most task show a small markup for materials and others show less than what I pay at the supply house.

My Trip fee is 170 and includes one gfi or Adriani dimmer. This is the labor cost for one gfi replacement along with the whatever wire nuts ect to make it happen.

 

[OK Sparky 93]

My Trip fee is 170 and includes one gfi or Adriani dimmer. This is the labor cost for one gfi replacement along with the whatever wire nuts ect to make it happen.

Letgo at you a one man shop? How many calls like that can you or do you make in a day?

Is that include a markup on material?

For me the gfci is probably the higher cost $25. No markup that’s $145 that covers your time at the supply house, the 20 minutes roughly one to job and for some reason you try and build a relationship with that customer and you are on the job way longer than it takes to do the job. So let’s say 12-17 minutes to do the job and invoicing and that relationship building it’s twice that. I see it being slightly more than being an hour total.
Do you, if so how, allow customers to supply their own material?

 

[letgomywago]

Letgo at you a one man shop? How many calls like that can you or do you make in a day?

Is that include a markup on material?

For me the gfci is probably the higher cost $25. No markup that’s $145 that covers your time at the supply house, the 20 minutes roughly one to job and for some reason you try and build a relationship with that customer and you are on the job way longer than it takes to do the job. So let’s say 12-17 minutes to do the job and invoicing and that relationship building it’s twice that. I see it being slightly more than being an hour total.
Do you, if so how, allow customers to supply their own material?

I still have a my EC stuff in WA and did that for a couple years but I'm working at a 3 man small shop here on the oregon coast that I do bids for along with the actual jobs

Here's how I try to stack my days more or so the same

2 small 1 hour or less service calls and a small remodel or service change.

Rough or trim on a big job and I do 1 or 2 calls around it

Hot tubs or car chargers with a lot of pipe use up most of a day but a small one I'll stack with 1 service call

Doing service calls won't make you rich but they get your name on their phone and fridge as the go to person. Most I've done in a 8 hour day is 6 but that only works if they're all simple. Best way to make a decent amount and keep yourself productive is to plan on a couple hours max in the day doing small calls around a bigger project. I also do what I can to make my installs cookie cutter and avoid trips to the supply house.

Don't stock anything but white and if you push decora for kitchens you don't need many trick plates. Upsell what you have you could even end up selling to a person who didn't know they wanted the "pretty square switches". Outdoor pvc stuff I use the same 20 parts in a big sorter. Have a smattering of Blanks and boxes but don't go crazy and go for the slider type boxes for new and old work and 4 squares for metallic and surface wiring methods.

Only sell for small jobs 1 or 2 types of can or wafer light don't over complicate it. I like to sell the flat flat wafers but the 3 man shop im working with here likes the beveled that need to be away from a joist or truss. Either way only sell one. One install and always sell with a dimmer if you can.

Don't stock keyless fixtures stock the cheap halo disk lights you can sell them for more and the people will think you're not selling a poor cheap looking product even though total cost is near what a keyless and a dimmable led bulb are.

 

[Seven-Delta-FortyOne]

I didn’t read the whole thread, but it seems you are confused about some basic business concepts.

First off, “markup” is just that. Markup. It’s meaningless until you define what it’s used for.

And now this is where the problem develops for most small contractors.

They figure labor (+labor burden if they’re smart), materials, and maybe 1 more thing, like “gas”, as was mentioned earlier.

What is missing is figuring out YOUR OWN overhead, and applying it.

Any number anyone gives you, is irrelevant. You need to figure your own overhead, and apply it properly.

I made a couple of long posts about this this on the Contractors FB group, and copied them to ContractorTalk.

I’ll post them in a separate thread here.

 

[TheGingerElectrician]

You really shouldn't have to mark up more than 30-40% for material. When customers ask me how much the material cost I always tell them we don't sell materials we sell service. I mostly use material markup to account for the miscellaneous material that might have gotten missed when doing my material takeoff for material quotes and random items used off the van. The Labor should always cost more than your material. If it doesn't then you need to look at your price structure. Do some research on upfront pricing, billable hour costs, and crew rate costs to help with pricing.
We use a CRM to build price lists for service items. This is just standard pricing but I teach my technicians to look beyond standard installs. If they know it will take 2x longer to complete than a standard install they are trained to catch that and adjust the price accordingly. I have had to raise my prices significantly in order to avoid closing the business since covid. I stopped apologizing to customers and letting them know that this is just what it will cost for us to get the job done. Losing money to make a customer happy isn't worth running a for profit business. It doesn't mean I can't empathise with them or be understanding. A customer that smells a lack of confidence will eat you for lunch every time. Even if your were right about it from the get go.

 

[ptonsparky]

Generally I made as much from materials as I did from labor.

Not necessarily a good plan. It's the way I did it.

 

[AC\DC]

You really shouldn't have to mark up more than 30-40% for material. When customers ask me how much the material cost I always tell them we don't sell materials we sell service. I mostly use material markup to account for the miscellaneous material that might have gotten missed when doing my material takeoff for material quotes and random items used off the van. The Labor should always cost more than your material. If it doesn't then you need to look at your price structure. Do some research on upfront pricing, billable hour costs, and crew rate costs to help with pricing.
We use a CRM to build price lists for service items. This is just standard pricing but I teach my technicians to look beyond standard installs. If they know it will take 2x longer to complete than a standard install they are trained to catch that and adjust the price accordingly. I have had to raise my prices significantly in order to avoid closing the business since covid. I stopped apologizing to customers and letting them know that this is just what it will cost for us to get the job done. Losing money to make a customer happy isn't worth running a for profit business. It doesn't mean I can't empathise with them or be understanding. A customer that smells a lack of confidence will eat you for lunch every time. Even if your were right about it from the get go.

There no right way as long as you get we’re you want who cares how.
I like to make a lot of material and labor why would I give that money away. Would rather make alot and then when I come to a little old lady that is hurting financially I can not charger her and it won’t hurt me cause I bill enough normally

 

[TheGingerElectrician]

There no right way as long as you get we’re you want who cares how.
I like to make a lot of material and labor why would I give that money away. Would rather make alot and then when I come to a little old lady that is hurting financially I can not charger her and it won’t hurt me cause I bill enough normally

Everyone is entitled to do things their own way. However, I have found these methods work the best when working through issues or questions from customers. Just wanted to share what has worked well for me consistently. I think sharing things like this is what helps us all get better and makes for more productive conversation.

 

[AC\DC]

Everyone is entitled to do things their own way. However, I have found these methods work the best when working through issues or questions from customers. Just wanted to share what has worked well for me consistently. I think sharing things like this is what helps us all get better and makes for more productive conversation.

what's your labor compared to others. I found its better on service work to charge a normal rate and have a high cost of material so clients don't bark at my higher rate I am trying to achieve. Most everything I do is bid though.

 

[TheGingerElectrician]

I like using previous data to job cost and see how much we consistently make on tasks. If it isn't enough then I raise the price. Most people understand when I tell them why it cost so much for us to come and do one item compared to doing many items. We still have to drive there and take time away from another job, pull out our tools, look at the problem with the customer, price it, perform the work, pack our tools ladders ect, do our paperwork and write up a bill, clean up our work area and then drive to the next one. Each of these things takes up time and time equals money... We are basically running a mobile supply shop around town. When I explain this stuff to customers they have been much more understanding. In addition to all that I let them know they are paying for our expertise as well. Onsies and twosies always cost more than what a customer may think. I try to set that expectation in the way our incoming call flow works as well so it's not a crazy surprise when one of the technicians goes out. A question mark for a customer will almost always equal a no from a customer. I like educating my customers so that they understand and it goes a long way.

 

[Fred B]

After COVID, this country went to sleep. Now we are in the "Awakening" mode.

Trained, and licensed contractors are now in the drivers seat. Don't sell your self short, there is now a short supply of trained & licensd contractors. The "Baby Boomers" are retirering, and I am one of them.

Depends where you are. Upstate here the handyman holds the golden ticket, they carry no insurance and not obliged to install to code as no permits being sought, and will far undercut a legitimate electrician, even without adding for any pay above overhead costs. My helpers last year made more than I did by time I calculated all the "free" time spent on sizing systems, chasing parts, permits, and billing time, Continuing Ed, etc.

Just informed by our Codes office that now we will be required to have hours of uncompensated time to even get the permit by being forced for every application to go thru Zoning variance procedure. The last time I had to do that, (legitimate reasons that time, but time consuming) I had almost 20 uncompensated Hrs. just sitting in Zoning board meetings to get the permit.

 

[OK Sparky 93]

I have QuickBooks and have created my own "Flat Rate" book under products & services. At the end of the year, I globally raise all prices a minimum of 5%.

Do you ever actually show a customer the price before the job or tell them what it will be beforehand, or only after if they ask?

I assume you are able to create an invoice drag and drop sort of thing from your price book?