Electrician's Success International???

[JohnConnolly]

Is this one of those "We charge by the job, not by the hour" things?

If you have the balls to charge 289 bucks to replace a CFGI outlet or 20 amp breaker you can make a TON of money. None of my guys want anything to do with that type of business practice.

 

[emahler]

Is this one of those "We charge by the job, not by the hour" things?

If you have the balls to charge 289 bucks to replace a CFGI outlet or 20 amp breaker you can make a TON of money. None of my guys want anything to do with that type of business practice.

tell your guys they can earn $80,000+/yr and see how they feel...

 

[shelco]

"that type of business practice?"

This is not a rip off situation. You need to fully understand what this is all about before making this type of judgement. When all things sugar off you realize how this "hourly cost" works. It is about sound understanding of business. It is difficult to explain fully in a post but there is much much more to it than setting a so called rate.

Just before our service tech leaves the customer he leaves an evaluation form to be sent back to us. We get about 80% returned and none of these have posed price of the job as an issue, they simply rave about the service. "VALUE"
Yes techs can make 80G per year.
without selling something to a customer that they don't need. This is a fireable offence in our company.

 

[iwire]

This is not a rip off situation.

I would not say it's 'rip off' but as I understand it the goal is to pocket more money on each job then you would if it was T&M is it not?

Assuming that your T&M rate was profitable it's hard to say your not trying to dig deeper in the customers pocket.

You need to fully understand what this is all about before making this type of judgement.

I love that, if someone just is not interested in that style of operation they simply just don't understand.

The kid at Bestbuy tried that tactic when I would not buy the extended service policy.....he told me I just did not understand. :roll:

My point here is that there are many successful businesses out there and they do not all have to use the same model.

Yes techs can make 80G per year

How many really do?

Those that do how many hours did they have to work?

What time are they getting back home to their families?

What is their typical 'base rate'?

What happens to the techs rate when the job does not go as easily as the last 50 did?

Are you 'always hiring' as incentive to keep the current employees motivated?

To each their own and obviously the system can work and some techs must like it. I would hate it, if I wanted to work by the piece I would have gone into another line of work.

JMO.

 

[LawnGuyLandSparky]

Yes: charge more, and always advertise for new employees; the latter keeps the guys motivated.

In the neighborhood of $15K.

I worked for a company that utilized "churning." It drove me to my decision to join a union. With about 16 employees, there was only one that remained a year after I quit.

On one front, they make the work experience miserable for the employee. They pay based on age, and negotiation skill (or lack thereof) not experience, knowledge or speed. Rule #1 is never discuss your wage as that would upset the whole apple cart. Rule #2 is make sure you know every other shop in the area that does the same thing, and team up against the employees by placing a heavy perceived value on longevitity.

This was a very profitable business model for the owner, who claimed he was barely profitable (keeps employees from asking for raises, and feeling they're lucky to have a job.) Although in the 80's he drove a Jaguar, his wife and daughter matching Mercededs Benzs, and son-in-law had a BMW, this was all from his "other business..."

 

[aline]

Is this one of those "We charge by the job, not by the hour" things?

If you have the balls to charge 289 bucks to replace a CFGI outlet or 20 amp breaker you can make a TON of money. None of my guys want anything to do with that type of business practice.

If you have the balls to charge 289 bucks per hour on a T&M job you can also make a TON of money.

Personally I've never been able to get $289 to replace a GFCI recpeptacle. And I've never been able to do a job T&M and charge $289 per hour either. I wish I could. I'm not that good of a salesman.

Giving the customer a price upfront to replace a GFCI receptacle instead of doing it T&M doesn't necessarily mean it's going to cost him more. It may end up costing him less.

It all comes down to knowing what it costs you to go out and replace the GFCI receptacle and charging enough to cover those costs and make a profit.
Whether you do it T&M or whether you do it for a flat rate upfront price you have to know your costs and charge enough for the job.

What takes balls is to truely know what it costs you to send an electrician out to a customer's home to replace one GFCI receptacle and charge enough to cover those costs and make a profit. I think a lot of contractors loose money on a job like this but figure they'll make it up on other jobs. They don't have the balls to charge enough to make a profit on this small of a job.

If you know how long it's going to take and you know what you need to charge per hour to make a profit why can't you give the customer an upfront price to do the job instead of doing it T&M without overcharging him?

 

[emahler]

it's for everyone, that's for sure...

i can't speak for anyone but us. Our resi guys, that work almost strictly flat rate, are paid with a base salary and commission.

If they generate $300k gross for the year (with an average of 13%) in material, they earn about $75k in the wallet. Their total package is over $100,000 with benefits, truck, cell phone, etc.

They work an average of 40 hrs, very little nights and weekends (that is just us, there are other outfits that work their guys 70-80 hrs/week)

but they work hard when they work. They don't take 10 coffee breaks, or 1 hr lunches, or really waste time.

They know that if they get a job done in 4 hrs instead of 5, they make the same money.

Sure there are worries of guys price gouging, or cutting corners, etc...but you have that with T&M shops too. How many T&M guys will install used parts and charge for new? How many T&M guys will milk a job because they don't have another one lined up?

When you pay someone commission, they earn what they are worth. If they screw up and have call backs, it comes out of their pockets (for the record, we pay them their base hourly for a call back, but the commission they made now gets chewed up) If they are efficient, they earn well. If they are really good, the customers with request and refer specific guys..

If you simply want to put in your time and collect your check, it's not the way to go.

One of the biggest downfalls to paying hourly is being equitable to all involved. It's very frustrating to a good producer that he is making the same hourly rate as the slacker. Or maybe he's making a few $ an hour more, but not $500/week more.

Or worse yet, you have two guys...one produces, one slacks..what happens? The slacker takes 8 hrs to do 5 hrs worth of work. The producer takes 4 hrs to do 5 hrs worth of estimated work...what's his reward? another job that day. More work. For the same pay as the slacker.

Whichever route you go you run the risk of problems...it all depends on your personality and the course of action you want to take...

good luck

 

[JohnConnolly]

tell your guys they can earn $80,000+/yr and see how they feel...

I have told them all about it. I operate in a huge metropolitan area and there are a LOT of service CONtractors doing business like this. Part of me says bravo, get what you can, while another part (my conscience) say no.

If you have the balls to charge 289 bucks per hour on a T&M job you can also make a TON of money.

That's the thing. You ARE charging that kind of money for your labor but you are hiding it.

Giving the customer a price upfront to replace a GFCI receptacle instead of doing it T&M doesn't necessarily mean it's going to cost him more. It may end up costing him less.

That's not gonna happen. That is what you try and sell to the customer but the fact is that when I do a service call it will ALWAYS be cheaper @ T&M.....ALWAYS.

If you know how long it's going to take and you know what you need to charge per hour to make a profit why can't you give the customer an upfront price to do the job instead of doing it T&M without overcharging him?[/

I can and do but it is based on the specific job, not pulled from an inflated price sheet.

 

[shelco]

iwire
When I said you need to understand the system I was not inferring that if you don't agree that you don't understand. All I was saying is that you need to look at the model in order to know how this system works and how these numbers are derived and I could not explain it in a post. I appologize if it came off that way.

As for continued advertising for help, no I do not employ this method for purposes of fear of job in order to produce. It is not my style. I do however advertise occassionaly to keep a folder full of qualified applicants to use when I need to add another tech.

As for how many earn 80 grand per year? I do not know the exact number but I do know that it is not rare. They work no more hours that any other service electrician.

If 289 per hour is the rate and to change out a GFCI takes 1/2 hour then the cost to the cusomer is $144.50. I do not think that this is taking advantage of the customer. You tell them up front what the cost is and they have the choice of having it done or not.
It works for me and my customers keep comming back. We all have our way of doing business. what works for one may not work for another.

 

[emahler]

again, I speak for no one but me...

when we figured out our cost of providing top level service to our residential customers, we realized we needed approx. $1050/day/truck (not including materials)

That puts us at an hourly rate of $131.25 for an 8 hr day.

But, performing resi service, we are lucky to average 5 hrs/day on the job (the other 3 is getting material, travel, etc)

So that gives us a "billable hourly rate" of $210.00

We made a choice to use that hourly rate, which allows us to pay our techs good money, pay for their benefits, paid vacations, paid holidays, new trucks, etc, etc, etc. and plug it into a flat rate pricing program.

This flat rate program allowed us to adjust material prices to our pricing, adjust labor hours to our historic labor hours, adjust the manual to be customer to us.

It allowed us to send technicians out and let them price work for the customers fairly accurately.

We never wanted to be the cheapest price, we just wanted to offer the most value we could.

When we realized our actual hourly rate, we had 3 choices....

1) Lower our hourly rate to "accepting going rate" which is about 1/2 of what we needed...and then somehow bill 16 hrs for an 8 hr day.

2) attempt to sell our services at $130/hr including charging for travel.

3) go to a flat rate and give the customer a complete price up front.

We didn't see option #2 working to well...people have a certain mindset, I wasn't going to change it.

We didn't have the stomach for option #1. Didn't feel right trying to squeeze 2 hours for billing out of every 1 hr in the day.

So we went with option #3. It allowed us to offer the service that the customer wanted, give them a price before we start, and let them have control.

So, for us it was a good option. I will also add, that I know several hundred contractors (plumbing, HVAC, and electrical) across the country who run a flat rate company. I do not know any who would ever go back to T&M.

As for T&M service calls - I can troubleshoot with the best of them. Why should I be paid less because I can find the problem faster than some schlub? That logic boggles my mind.

 

[iwire]

To each their own but please don't try and tell me the reasons are for the benefit of the customer and the employee, it's for the owner....and there is nothing wrong with that.....just admit that is the reason.

That puts us at an hourly rate of $131.25 for an 8 hr day

I have never owned a business and I do not live in NJ but that number seems really inflated to me.

 

[emahler]

To each their own but please don't try and tell me the reasons are for the benefit of the customer and the employee, it's for the owner....and there is nothing wrong with that.....just admit that is the reason.



I have never owned a business and I do not live in NJ but that number seems really inflated to me.

I can assure you that with the costs of advertising, cell phones, insurance, shop, trucks, fuel, equipment leases, equipment repair, training, benefits, office staff, etc, etc, etc...it is not inflated in the least bit.

Granted, we could lower that rate by cutting some services....no uniforms, no taking the trucks home, no live person to answer the phone, no advertising, no....you get the picture.

But I assure you without one ounce of hesitation, it's not inflated.

What does your company bill you our at? Do they bill travel?

Now, I will say, that rate is for residential.

Our commercial rate can be a little lower since we don't have as much overhead.

 

[emahler]

To each their own but please don't try and tell me the reasons are for the benefit of the customer and the employee, it's for the owner....and there is nothing wrong with that.....just admit that is the reason.



I have never owned a business and I do not live in NJ but that number seems really inflated to me.

just saw the 1st part...Iwire, understand one thing....as an owner I am in this for the money. Plain and simple.

But, and this is the big but, in order to get that money, I have to make sure everyone else involved gets what they want in life.

If I don't make my techs happy, they don't make me money.

If I don't make the customers happy, they don't give me money.

So, all of these things are for the company to make more money. But the process involves helping others reach their goals.

If you don't do that, you will never really succeed.

 

[mdshunk]

I have never owned a business and I do not live in NJ but that number seems really inflated to me.

There's not really a good way for a contractor to "open his books" to prove such things. Suffice it to say that I wholeheartedly agree with Mr. Mahler in saying that the number is not inflated. I know I've got weeks that approach $220 an hour.

 

[iwire]

Our commercial rate can be a little lower since we don't have as much overhead.

Not doubting you but why is it lower?

Or maybe I should ask why the overhead is higher for residential?

 

[iwire]

I know I've got weeks that approach $220 an hour.

So how do you keep the doors open?:-?

 

[emahler]

Not doubting you but why is it lower?

Or maybe I should ask why the overhead is higher for residential?

our commercial is all for the same customers...less time spent selling and dealing with non-productive items.

they pay travel time.

We don't have to babysit them like resi customers

We don't have to cover $1000's of dollars a month in YP advertising

We know the systems - don't have to stock as many parts.

etc, etc, etc.

 

[iwire]

Makes sense, thanks.

 

[emahler]

So how do you keep the doors open?:-?

by charging that much...

charge any less than your break even point, and you lose money and close your doors.

you can be the cheapest in town, or you can be the best value. rarely are they they same company.

Residential and Corporate commercial (which is what you do) are 2 very different animals and must be treated completely different.

 

[George Stolz]

Not to divert the topic, but if an ESI company started a second company to use ESI's techniques and avoid the vig, do they prohibit that?