Electrician's Success International???

[emahler]

Paul Allen, if you don't mind, a couple of questions...

since you are ESI, i'll take it that you have met other ESI memebers?

of all those members that you have met, how many used to operate a resi service business using T&M?

How many would ever go back to operating a resi service business using T&M?

Thanks

 

[Paul Allen]

Brian,
To answer your question, there are many Elect. contractors who are highly successful and that is obivious. They have nice things, nice trucks and do quite well. They do better than most in our industry and maybe better than I will ever do. I would never judge them based on what my mistakes have been, or my ability to run a company. I have seen in our area that its not the norm though. We see people in our industry who are in a LOT of debt to be where they are, Or just price jobs based on what everyone else is doing. I'm sure in The D.C. area there are EC's that come and go in the business because of this.They cannot survive because they dont know how to truly calculate their costs of doing business. It's true in all forms of business. In the residential service industry, the costs of doing business are much different that a construction conpany, and it is a different animal. As the next person in our forum remarked, They are expensive, but they can get it done, Why is that? A service company has to have the overhead and personnel to answer the phones and provide the service people desire, if they don't, people call someone else. How do you provide and pay for this overhead? By charging properly for your services. I am not telling anyone how to run your business, or being critical about what anyone does, but no matter what you part of our industry you are in, you better know what your costs are, and charge more for the work being done that what it costs you if you want to make a profit.

 

[Paul Allen]

Emahler,
To answer your question, I know of no one who is in our organization who would ever go back to T&M. It dosent make sense. I look at flat rate pricing as what the Auto Dealerships do. They give you a price to fix your car, then tell the mechanic the pay rate for this car to fix this problem, The car gets fixed, the customer is charged the quoted price and everyone is happy. The tech, if he is good, makes above the posted hourly rate for his time, As being in this line of work for a while I know that it is possible to make 2-3 times your hourly rate for a paticular job. The customer still pays the same price, and the mechanic is making 60+ dollars per hour. With flat rate pricing, the customer is not held responsible for incompetence of the tech either. A Tech that quotes a price loses money if he messes around, or dosent do the job, Instead of handing the customer a large bill for spending all day to fix their problem. I think it is a Win Win Win situation for owner, customer, and technician.

 

[khixxx]

Emahler,
To answer your question, I know of no one who is in our organization who would ever go back to T&M. It dosent make sense. I look at flat rate pricing as what the Auto Dealerships do. They give you a price to fix your car, then tell the mechanic the pay rate for this car to fix this problem, The car gets fixed, the customer is charged the quoted price and everyone is happy. The tech, if he is good, makes above the posted hourly rate for his time, As being in this line of work for a while I know that it is possible to make 2-3 times your hourly rate for a paticular job. The customer still pays the same price, and the mechanic is making 60+ dollars per hour. With flat rate pricing, the customer is not held responsible for incompetence of the tech either. A Tech that quotes a price loses money if he messes around, or dosent do the job, Instead of handing the customer a large bill for spending all day to fix their problem. I think it is a Win Win Win situation for owner, customer, and technician.

Is this flat rate you speak of only for light commercial and residential service work?

 

[satcom]

Is this flat rate you speak of only for light commercial and residential service work?

Flat Rate, is nothing more then a contract price, in my state every job over $500 must have a signed contract.

The difference is how you price your contracts, a service contract or (Flat Rate) would be priced at a higher rate, to cover the cost of doing service work. a scheduled long term installation project may be priced at a much lower price.

Industral work is a contract project, usually an estimated job, with a bottom line bid price a (Flat Rate)

I think many are looking at flat rate as something new, our state has required it since the early 60's, only exception was if job was less then $300, than that was increased to less then $500.

 

[Joe R]

2 quick ?1) is there a flat rate price book that a contractor can buy and adjust to his area of business.

2) what if contractor "a" flat rate quotes ex. $200 to replace a gfi but finds out after he gets into the job the wiring is bad and the breaker has damage and the panel has a hot spot on the buss bar where the brkr stabs in and the panel needs replacement. does he break out the "book" and starts flat rate pricing the additional work, while the customer keeps saying "u said $200 to fix the problem !" then what.

 

[satcom]

2 quick ?1) is there a flat rate price book that a contractor can buy and adjust to his area of business.

2) what if contractor "a" flat rate quotes ex. $200 to replace a gfi but finds out after he gets into the job the wiring is bad and the breaker has damage and the panel has a hot spot on the buss bar where the brkr stabs in and the panel needs replacement. does he break out the "book" and starts flat rate pricing the additional work, while the customer keeps saying "u said $200 to fix the problem !" then what.

1) Yes there are flat rate books that can be purchased, they usually do not come with pricing, you need to have your operating and overhead costs established, and a profit goal, before you can price the books.

2) Joe, that will not happen with someone that has trainning in quoting jobs.
That is the result of someone that does not have the skills, or tools to quote.

 

[LarryFine]

2) what if contractor "a" flat rate quotes ex. $200 to replace a gfi but finds out after he gets into the job the wiring is bad and the breaker has damage and the panel has a hot spot on the buss bar where the brkr stabs in and the panel needs replacement. does he break out the "book" and starts flat rate pricing the additional work, while the customer keeps saying "u said $200 to fix the problem !" then what.

2) Joe, that will not happen with someone that has trainning in quoting jobs.
That is the result of someone that does not have the skills, or tools to quote.

How on earth does training tell you the extent of damage and/or cost of repairs to a service call you haven't yet responded to?

 

[satcom]

How on earth does training tell you the extent of damage and/or cost of repairs to a service call you haven't yet responded to?

There is no way I can give a quote for work without looking at it.

Who would give a price without looking at the job, that is not what pricing books are designed to do. The trainning shows you how to use the books.

 

[Joe R]

There is no way I can give a quote for work without looking at it.

Who would give a price without looking at the job, that is not what pricing books are designed to do. The trainning shows you how to use the books.

My point is lets say contractor "A" goes out to job and looks at the scenerio i described gives the price after realizing just changing out the gfi will not solve the problem and the price goes from $200 to $1900. customer says no. tech has 1 hr into job, who pays for the 1hr or is this something that is figuerd into the flat rate pricing.

 

[satcom]

My point is lets say contractor "A" goes out to job and looks at the scenerio i described gives the price after realizing just changing out the gfi will not solve the problem and the price goes from $200 to $1900. customer says no. tech has 1 hr into job, who pays for the 1hr or is this something that is figuerd into the flat rate pricing.

Joe, with all respect that is not going to happen with a company that knows the system and how to use it, I don't believe anyone that spent thousands of dollars to learn any system, is going to give a step, by step how to, on any forum.

The OP questioned the value of signing on with a service management company, IMO there is value if you need the information.

 

[Joe R]

o im not trying to get something for free or take away anybodys info thru this forum if that is what u r saying:roll: its just something i thought might happen on a typical service call.:smile: that been said i never asked what price for what or how much per hr my post is all examples.

 

[romexking]

How on earth does training tell you the extent of damage and/or cost of repairs to a service call you haven't yet responded to?

That is exactly why we don't quote prices over the phone. It is imperitve that the circumstances leading to the problem are examined. This is also part of the "value" that we provide the customer. What if you just changed the bad GFCI and never looked at the rest of the wiring? Would your low price (to just change the GFCI) have really benefited the customer?

But to answer the question of what to do if you find all of the problems AFTER you have quoted a price, well, your scenario is extreme, but your word is your word...fix it right and eat the cost. Most contractors call their pricing "upfront" or "guaranteed" for a reason. If you deviate from that, you have lost all credibility.

Rich

 

[Joe R]

That is exactly why we don't quote prices over the phone. It is imperitve that the circumstances leading to the problem are examined. This is also part of the "value" that we provide the customer. What if you just changed the bad GFCI and never looked at the rest of the wiring? Would your low price (to just change the GFCI) have really benefited the customer?

But to answer the question of what to do if you find all of the problems AFTER you have quoted a price, well, your scenario is extreme, but your word is your word...fix it right and eat the cost. Most contractors call their pricing "upfront" or "guaranteed" for a reason. If you deviate from that, you have lost all credibility.

Rich

my point exactly i don't think anyone is willing to eat a lose of $1700 bucks! MY GOD THATS TO MUCH! But now i see how flat rate pricing works i looked up 2 sites that sell flat rate pricing books and they give the what ifs, in my senerio if the customer says no, a trip charge would cover the techs 1 hr

 

[LarryFine]

That is exactly why we don't quote prices over the phone. It is imperitve that the circumstances leading to the problem are examined. This is also part of the "value" that we provide the customer. What if you just changed the bad GFCI and never looked at the rest of the wiring? Would your low price (to just change the GFCI) have really benefited the customer?

Okay, so a customer calls with the inoperative-GFCI receptacle complaint. What do you tell them? How much do you charge to come out and give a price for the repair?

 

[Joe R]

Okay, so a customer calls with the inoperative-GFCI receptacle complaint. What do you tell them? How much do you charge to come out and give a price for the repair?

That is where the trip charge comes into play Larry i have seen some phone book ads with the catchy line " ask about our "$19. 95 service call".

 

[emahler]

Okay, so a customer calls with the inoperative-GFCI receptacle complaint. What do you tell them? How much do you charge to come out and give a price for the repair?

however much you want...you determine all your prices, from dispatch fee to 200A service upgrade...

as I've said before, a flat rate manual is customized to each company, based on that companies costs.

the reason most flat rate companies are higher? very simple. in setting up a flat rate book, you do a break even calculation. Once you do that break even calc, you have right in front of you, in black and white, the absolute minimum you can charge and still cover costs.

at that time, you have 2 options...charge that rate, or charge less. if you charge less, you can either cut back services or take a loss.

but you are forced to make a decision.

Most 'going rate' guys have never done a break even calc. They are blissfully ignorant to their true costs...

 

[don_resqcapt19]

In my opinion, if you have an honest contractor, T&M is almost always best for the customer. In some cases flat rate or a contract bid will be better. In the case of the flat rate, the other customers are picking up the excess costs for the ones that run over, and in the case of the contract, the only time the customer comes out better than on T&M is where the estimator has made an mistake.
Don

 

[emahler]

In my opinion, if you have an honest contractor, T&M is almost always best for the customer. In some cases flat rate or a contract bid will be better. In the case of the flat rate, the other customers are picking up the excess costs for the ones that run over, and in the case of the contract, the only time the customer comes out better than on T&M is where the estimator has made an mistake.
Don

Don, you are 100% correct in terms of what the customer actually spends....

however (oh, no, here he goes again)

T&M rewards bad contractors and punishes good ones. Plus, I have yet to meet an honest contractor that can turn a profit on $50/hr these days...

Think about that for a moment...I can do a job in 4 hrs, HappySlappy Electric takes 8.

Customer doesn't know the final bill, all they know is the hourly rate...

In order to get that job, I have to compete with HappySlappy's rate....so we both charge $50/hr....(easier math)

Now, I would only earn $200+ my material, incompetent HappySlappy would earn $400 +materials.

How is that fair to the contractor, or the electrician, who just because he is competent has to work 2x as much to earn the same money? (not hour wise, but production wise)

Not only that, when a customer is paying T&M, they are watching the clock...I hate having someone watch the clock...

But, Don, where you and I disagree is...I think it's more fair to the customer to make a decision based on the final price, and gives the EC incentive to be more efficient.

 

[aline]

what if contractor "a" flat rate quotes ex. $200 to replace a gfi but finds out after he gets into the job the wiring is bad and the breaker has damage and the panel has a hot spot on the buss bar where the brkr stabs in and the panel needs replacement. does he break out the "book" and starts flat rate pricing the additional work, while the customer keeps saying "u said $200 to fix the problem !" then what.

I charge a dispatch fee to go out and look things over. Then I quote a price only after I've looked things over. If the customer agrees with the price the dispatch fee is waived. If the customer doesn't agree with the price then I collect the dispatch fee and leave.

The first thing I do is go to the panels, pull the covers and check the condition of the panel, breakers and wiring. You can tell a lot from looking at the panels.

Then I take a quick look at the rest of the wiring. I look for broken receptacles, obvious code violations etc. This often tells me wether or not the wiring has had unqualified persons working on it. This can also generate extra work for you while you're already there. You can offer the customer discounts for the other work if he agrees to have it done while you're there.
I don't mention the other work until after I've solved the original problem.

After this then I would go to the GFCI recepatcle that's giving them the problem. If I was pretty certain the GFCI receptacle was bad I would explain to the customer that the GFCI receptacle appears to be bad and replacing it should solve the problem.

I would also explain to the customer that if for some reason this does not solve the problem that they will not be charged for me replacing the GFCI. If I find the wiring to the GFCI is bad and needs replaced I would quote them a price for that.

This way I'm only eating the cost for replacing the GFCI.

The same would be true if I quoted a price to install a light fixture and after I took the old fixture down I found the wiring was bad, needed repaired or someone ran lamp cord to the fixture. I would show this to the customer and quote a price for repairing or replacing the wiring. I would not do this as part of the fixture replacement quote.

If an auto mechanic quotes you a price to replace your brakes and after getting into the job he finds the rotors need turned he calls and explains that the rotors are bad and need turned or replaced and then quotes an additional amount for this.

Your car is running poorly and you take it to a mechanic. He tells you a tune-up should solve the problem and quotes you a price for the work.
The tune-up doesn't help and he looks further into the problem. He discovers the engine needs completely rebuilt.

Would you expect him to rebuild the engine at no cost because he said a tune-up should solve the problem?

Or would you expect him to not charge for the tune-up and quote you a price to have the engine rebuilt?

If you don't like the price for the engine rebuild he eats the cost of the tune-up but still charges for diagnosing the problem.
It's not his fault you don't want to go ahead with the repair.

So what I'm saying is that I would eat the cost of replacing the GFCI receptacle but would still charge for diagnosing the problem. If I can't figure out what the problem is I don't charge anything not even the dispatch fee.