Flat Rate Contracting

[petersonra]

so? if you are billing honestley, you will make $600 for labor, no matter what..($75 x 8 hrs)...the more jobs you do, the more your costs....the less profit you make....

This is one of the big problems with ECs. They are selling hours of work, and customers are buying some task they want done. Flat rate pricing focuses on what the customer wants to buy, as opposed to what the seller wants to sell. Want to guess which seller makes more money overall?

 

[bradleyelectric]

Yes. I do have a 2nd job that provides benefits, etc.

Ok. So your not charging enough to pay yourself benefits and down time. Don't think the guy that was charging enough to do that was ripping the person off. You are the 1 that is not charging properly. Just because the other contractor missed something doesn't mean it wasn't in his book. It quiet possibly means he missed something.

 

[bradleyelectric]

This is one of the big problems with ECs. They are selling hours of work, and customers are buying some task they want done. Flat rate pricing focuses on what the customer wants to buy, as opposed to what the seller wants to sell. Want to guess which seller makes more money overall?

The usual consensis on here is the flat rate people are getting a lot more money for their time. Do you say different?

 

[aline]

I always chagre time from leaving the shop until I return. That could also mean picking up materials, getting gas on the way, stopping to get a rat burger to eat enroute.

How do you explain this time to the customer when you charge and hour for the travel time to get to the customer's home because you stopped at the supply house, gassed up the truck and stopped for a rat burger, and the customer knows it should only have take you 15 minutes to drive to their home?

Customer:

Why should I pay for you to drive to the supply house to pick up parts that you should've had on your truck already?

Did you pick up parts for other jobs you're doing that day as well? If so why am I the only one paying for all this time and not the other customer's you're doing work for today?

Why am I paying for all your time spent gassing up the truck when some of this gas is going to be used for the other jobs? Shouldn't some of these other jobs help pay for the time spent gassing up the truck?

Why in the world should I pay for your time to stop and get a rat burger?

How do I know it really took you that long to get back to the shop?
Was traffic really that bad?

 

[satcom]

Originally Posted by satcom



Apparently there is a short memory here. You stated the cost was $527 for 45 min work. Do the math.
I never said the tech got the money, the charge for the tech was over $500 hr. and there is NO dealership charging that for a tech. The dealers work out of a cost book which states the time it will take for a particular job and the cost. They use cost books because most items are a known as to time and material on replacements. Diagnostics are by the hour with estimates and can change but the hourly is known and not in the $500 range. Thats about 4 times the going rate at any dealer. Really, dont exaggerate.
I only use the dealer where my vehicles are purchased. General Motors to be precise and get a lot more work for $500 than you get.

:smile:

Good for you, I am happy you get more work for your money. I pay for service, we also have some auto shops here with lower rates, but no one enjoys taking their car back many times to get it right or be stuck on a roadside in the middle of the night, I understand why the owners have to charge higher rates to supply good service, and i actually felt i got a good deal. I don't know how they work in your area but here they troubleshoot and then call you to get an approval for doing the work, no hourly rate.

 

[emahler]

this is classic....a guy doing this as a side job complaining in public about the high price of a full time legitimate contractor who does this for a living....the irony...

 

[aline]

Yes. I do have a 2nd job that provides benefits, etc.

Yes, married, no benefits:grin:

No employees at this time. Had them in the past. They didn't need benefits fortunately.

Yes. I do have a nice truck that is fully stocked for most jobs.

I do a fair share of service and repair work. There are slow days as well as busy days. There have been days when changing outside flood light bulbs for a couple of customers for an hour resulted in 3 hrs of billable time.

I understand that everyone has different overhead costs. I understand that there would be a difference in the cost of a job from one contractor to another. As my son is getting ready to join me in the trade, my overhead will probably change and my productivity will go down.

Please post back when you don't have a second job with benefits, when you only do service and repair work, when you have ten trucks on the road, when you have empoyees you're providing benefits for, when you have a shop and office you're paying for (instead of working out of your home), when you have office personnel that need to be paid, more advertising expenses, more fuel expenses, more unbillable time from idle techs between calls, etc.

I would be curious if your views on how much this job should cost would change.

When I first started contracting I had a second job too. It was a rude awakening when I quit the second job and had to rely on just the contracting business for everything. My views on what jobs should cost quickly changed.

 

[satcom]

this is classic....a guy doing this as a side job complaining in public about the high price of a full time legitimate contractor who does this for a living....the irony...

It is amazing how all the guys that are not, a full time legitimate contractor and does this for a living, have all the answers, and costs of business operations.

 

[roger3829]

How do you explain this time to the customer when you charge and hour for the travel time to get to the customer's home because you stopped at the supply house, gassed up the truck and stopped for a rat burger, and the customer knows it should only have take you 15 minutes to drive to their home?

Customer:

Why should I pay for you to drive to the supply house to pick up parts that you should've had on your truck already?

Did you pick up parts for other jobs you're doing that day as well? If so why am I the only one paying for all this time and not the other customer's you're doing work for today?

Why am I paying for all your time spent gassing up the truck when some of this gas is going to be used for the other jobs? Shouldn't some of these other jobs help pay for the time spent gassing up the truck?

Why in the world should I pay for your time to stop and get a rat burger?

How do I know it really took you that long to get back to the shop?
Was traffic really that bad?

Duh. I don't do them all on the way to/from the same job. I don't tell them i stopped for gas or food. I NEVER pick up material for more than one job at a time of course.

 

[aline]

No employees at this time. Had them in the past. They didn't need benefits fortunately.

I used to work for an employer who didn't think I needed benefits and didn't need to be paid overtime either.

Fortunately I was able to get a job working for someone else.

And to think he was suprised and upset when I gave him my two weeks notice.

 

[aline]

Duh. I don't do them all on the way to/from the same job. I don't tell them i stopped for gas or food. I NEVER pick up material for more than one job at a time of course.

So how do you explain the hour charge for this when the customer knows it should only take 15 to 20 minutes to drive to their home?

Do you tell them you took the long way there.

Seems to me the customer would complain and say the should only be charged for 15 to 20 minutes. Unless your hourly rate is lower by enough than everyone elses so they just don't care.

I've had customer's complain when I charge to leave the job to go pick up a part they felt I should've had on my truck even though it was an odd ball part.

 

[roger3829]

It is amazing how all the guys that are not, a full time legitimate contractor and does this for a living, have all the answers, and costs of business operations.

So. Because I am not full time, I'm not a legitimate contractor?? How do you figure that?? I guess I should go BACK to doing full time contacting just so I can have ALL the answers just like you do.

I did this full time for over 10 years. With employees, with benefits, with multiple trucks on the road, with employee down time. I know what it's all about.

 

[aline]

Here's something to think about.

I had carpel tunnel surgery performed on both my wrists.

For the initial office visit I waited in the waiting room for over an hour. Then waited for another 1/2 hour in the exam room. The doc spen 15 minutes with me and sent me to the registration desk to schedule the surgery. I was billed for this time.

When I went in for surgery at 9:00 am things were backed up and sat waiting until about 3:00pm when they could finally get me in for surgery. The doc came and told me the surgery would take about 45 minutes to perform. He had been doing these all day that day and was a bit behind. I woke up about an hour later and left the hospital about a half hour after waking up.

My insurance company was slow in paying the bill so the doc sent me a bill for the surgery. The bill was about $4,600.00. I had both wrist done at the same time so it was about $2,300.00 per wrist. He had each wrist listed seperately on the bill. Think about how much this comes out per hour when you consider it only takes him 45 minutes. He sold a service not an hourly rate.

This was only his bill for the surgery. There was additional billing for the anesthesiologist and charges for the operating room and supplies.

The insurance was slow in paying because they said they wanted the bill reduced since he did both wrists at the same time.

I'm sure he drifts of to sleep just fine watching his 65 inch plasma tv in the master suite after a nice soak in the hot tub.

These are the same customer's we worry about overcharging because we charge $152 to install a GFCI receptacle.

 

[brantmacga]

I did this full time for over 10 years. With employees, with benefits, with multiple trucks on the road, with employee down time. I know what it's all about.

I'm surprised you made it that long after reading this:

They will not be doing the work, needless to say. The whole job should be less than $300.00 including GFCI protecting the other bathroom and I still will make money. I couldn't charge $700.00 and still be able to sleep at night.

 

[petersonra]

The usual consensis on here is the flat rate people are getting a lot more money for their time. Do you say different?

I am inclined to agree that flat rate pricing is advantageous to the contractor. The point I was trying, and apparently failing to make, was that customers see what they are buying in a different light than a EC might.

An EC often is selling hours of labor and some materials, while what the customer really wants is to buy a specific task, such as installing a ceiling fan. By focusing on what the customer wants to buy, as opposed to what you want to sell, you make it easier for the customer to buy from you, as opposed to your competition. That is almost always to your favor.

ECs tend to look at labor as selling hours, as opposed to completing a useful task. Many customers just typically do not care how long it takes, or often what parts are used. They just want their ceiling fan installed, and want to know what it will cost.

 

[aline]

I did this full time for over 10 years. With employees, with benefits, with multiple trucks on the road, with employee down time. I know what it's all about.

If you don't mind me asking, why did you quit doing this?

No employees at this time. Had them in the past. They didn't need benefits fortunately.

You didn't mention that you had employees with benefits in your previous post so one would've just assumed by this statement that you hadn't been there and done that.

 

[roger3829]

If you don't mind me asking, why did you quit doing this?


You didn't mention that you had employees with benefits in your previous post so one would've just assumed by this statement that you hadn't been there and done that.

I stopped doing it full time so I could teach electrical in a Vo-tech High school.

 

[aline]

I stopped doing it full time so I could teach electrical in a Vo-tech High school.

Couldn't you have just hired a manager to run the business so you could teach electrical full time in a Vo-tech High school?

That's the ultimate goal for me is to have a business that will continue to operate whether I'm there or not.

That's what a lot of these companies, that are considered overcharging their customer's, are trying to do or are doing it.

 

[emahler]

i've never met a former contractor who gave up their busness because they were making too much, or even enough, money....most went to work for someone else for more money than they were paying themselves..

 

[roger3829]

Couldn't you have just hired a manager to run the business so you could teach electrical full time in a Vo-tech High school?

That's the ultimate goal for me is to have a business that will continue to operate whether I'm there or not.

That's what a lot of these companies, that are considered overcharging their customer's, are trying to do or are doing it.

That's what my son is going to do........