Flat rate pricing....Who's actually doing it?

[Rewire]

What's so hard about that? do it all the time

Not directed at any one person, but, I guess in truth there are two kinds of people, those that want it all, and those whom work together for the common good. And those whom want it all are the reason our economy is in such shambles as we speak. There is nothing wrong with dreaming about building a business larger and larger, but for me, I dont see it in the card's, Im too conservative...

Most businesses fail in the first two years fewer make it to five years.When I listen to business people I always give more credance to the business owner who has passed the five year mark.I believe many businesses fail because they take their own bad advice.The biggest problem I see with electricians is many go into business without one bit of business training,thats no different than a MBA going into business as an electrician with no training.

 

[Mule]

Most businesses fail in the first two years fewer make it to five years.When I listen to business people I always give more credance to the business owner who has passed the five year mark.I believe many businesses fail because they take their own bad advice.The biggest problem I see with electricians is many go into business without one bit of business training,thats no different than a MBA going into business as an electrician with no training.

Probably good advice and medicine for me....I'll take that with a full glass of water.

I tend to be too much in tune with the customer instead of the growth of my small business. However, from my corporate employment days, I set in a 40 hour class on "Customer satisfaction" it was very enlighting, and I find myself using the tatics that I learned in that class. I think businesses that listen to the customer and strive to meet the customers needs at a profit dont go out of business...but I guess the proof is in the pud'n

 

[ohm]

Probably good advice and medicine for me....I'll take that with a full glass of water.

I tend to be too much in tune with the customer instead of the growth of my small business. However, from my corporate employment days, I set in a 40 hour class on "Customer satisfaction" it was very enlighting, and I find myself using the tatics that I learned in that class. I think businesses that listen to the customer and strive to meet the customers needs at a profit dont go out of business...but I guess the proof is in the pud'n

My business model is simple: I keep my rates as is unless I'm working more than I want to or way behind schedule.

Also, how in the world can you flat rate a service call to fix an AFCI tripping? T & M sounds like the only way.

 

[celtic]

The biggest problem I see with electricians is many go into business without one bit of business training,thats no different than a MBA going into business as an electrician with no training.

I agree with a good electrician w/no business sense is doomed.
I do not necessarily agree that an MBA cannot run a successful contracting business.

The business man will hire the good electrician w/no business sense....and if the business exercises extreme diligence in hiring, he may obtain an electrician that also has good business sense ["the full package"].

Take for example: EMCOR

EMCOR was #1 according to EC&M [EC&M's Top 50 Electrical Contractors]

EMCOR's CEO Frank MacInnis is a business man[that started out as a lawyer]. What does he know about the nuts and bolts of putting together a piece of electrical apparatus?
Probably nothing.
Is that a bad thing?
No. He was able to hire someone who did:Salvatore Caputo

Mr. Caputo is the President and CEO of Forest Electric [a subsidiary wholly owned by EMCOR].
Mr. MacInnis appears to have exercised extreme diligence in the hiring of Mr.Caputo...Mr. Caputo was also an electrician who has good business sense.
I doubt EMCOR would have hired someone who was only half "the package" to run Forest Electric.

 

[satcom]

Were you making a literal statement here? It is a law? As in an actual law?

New Jersey Law NJ:13:45A-16.2

 

[peter d]

I agree with a good electrician w/no business sense is doomed.
I do not necessarily agree that an MBA cannot run a successful contracting business.

The business man will hire the good electrician w/no business sense....and if the business exercises extreme diligence in hiring, he may obtain an electrician that also has good business sense ["the full package"].

I agree, and I've said it before, and I will say it again. The most successful contractors I have worked for or observed were excellent businessmen, but lousy electricians or not electricians at all.

 

[ohm]

Celtic, I agree a good manager should be able to go to any company and manage it IF they surround himself/herself with the right people.

A journey of a thousand miles begins with a single step (I didn't just make that up) and even huge jobs are nothing but a bunch of small steps one after another.

But IMHO unless you vastly overquote a troubleshooting job so it can't possibly loose money you probably won't get the job over someone quoting T & M.

 

[bradleyelectric]

The reason people buy is emotionally based. You need to fulfill their emotional needs to make a sale. If you do not tell them a price is to high they won?t know. If you don't believe in the price it is to high. If you do believe in the price it is not to high. It is emotional to you. When you stop believing it is to high is when you will be able to sell it at that price. When you educate the customer to the fact that they are supposed to get additional prices and take the lowest price that is what they will do. When you educate them to the fact that you are going to do a good job for them at a reasonable price they will except your price and ok you to do the job. What the price you present them with is irrelevant. How you present it is what matters.

There will always be people that buy on price alone. You need to know how to identify and dismiss these quickly. They will not want to pay a price that will be profitable and someone that doesn?t know what it costs to be profitable will do it at that price. This is directed at service work.

Competitively bid work is a different ballgame. It still pays different levels depending on the level of service expected. Meaning there will be projects that someone may or may not feel comfortable using you with. If you have not satisfied them emotionally that you can complete the project without a certain amount of hand holding your price will not matter. Some levels don't mind holding hands while others will run you over if your not on top of it.

 

[bradleyelectric]

But IMHO unless you vastly overquote a troubleshooting job so it can't possibly loose money you probably won't get the job over someone quoting T & M.

The problem with this logic is why would you bid a troubleshooting job? Do people ask you how cheap you would do a troublshooting job and hang up and than call you back after calling other people to see how cheap they would do it ? Are you able to tell them how long it would take to do the job? Can everyone troubleshoot to the same level? The way to sell a troublshooting job is by level of service. When they call tell them when you can be there. Not how cheap you are.

 

[celtic]

In my state if the job price is $500 or more, you must have a written contractm and the price of the entire cost must be disclosed before work is started, so flat rate is nothing new here it has been the law since the late 60's

13:45A-16.2(a)
12. Home improvement contract requirements writing requirement: All home improvement contracts for a purchase price in excess of $ 200.00, and all changes in the terms and conditions thereof shall be in writing.

http://www.nj.gov/lps/ca/electric/eleclaws.pdf


Might want to read up of that again :wink:

 

[celtic]

But IMHO unless you vastly overquote a troubleshooting job so it can't possibly loose money you probably won't get the job over someone quoting T & M.

We've had some lively discussions here about T&M vs. Flat on a TS job....I go T&M ~ and get yelled at by some here

 

[Mule]

No way can I compare myself with a one or two man shop to top 50 contractors...apples and oranges, or should I say mustard seeds and watermellons.....

I have a business model, but as a new contractor, I have to remain flexible, dynamic, and responsive to the market and conditions, especially in these times....and would be willing to bet that we will be around at the five year mark. If not, everyone will be down the tubes. But for now, contracting as a small shop is not rocket science.....IMO

I am however curious if contractors use flat rate pricing for repetative installs like panel changes, recessed lights, and the like. I dont use this approach as we are primarily T/M, but I know there has been alot of talk about it....

 

[satcom]

http://www.nj.gov/lps/ca/electric/eleclaws.pdf


Might want to read up of that again :wink:

The law page still says $200 but it was updated to $500

 

[bradleyelectric]

No way can I compare myself with a one or two man shop to top 50 contractors...apples and oranges, or should I say mustard seeds and watermellons.....

I have a business model, but as a new contractor, I have to remain flexible, dynamic, and responsive to the market and conditions, especially in these times....and would be willing to bet that we will be around at the five year mark. If not, everyone will be down the tubes. But for now, contracting as a small shop is not rocket science.....IMO

I am however curious if contractors use flat rate pricing for repetative installs like panel changes, recessed lights, and the like. I dont use this approach as we are primarily T/M, but I know there has been alot of talk about it....

There aren't a lot of people that start businesses thinking they wont be around in 5 years.

 

[celtic]

The law page still says $200 but it was updated to $500

I see where the discrepancy is:

56:8-151 Contracts, certain, required to be in writing; contents.
16. a.
On or after December 31, 2005, every home improvement contract for a purchase price in excess of $500, and all changes in the terms and conditions of the contract, shall be in writing. The contract shall be signed by all parties thereto, and shall clearly and accurately set forth in legible form and in understandable language all terms and conditions of the contract, including but not limited to:

..........

http://www.nj.gov/oag/ca/laws/ContractorsRegistrationLaw.pdf
Dated 12/05


Where as 13:45A-16.2(a) [http://www.nj.gov/lps/ca/electric/eleclaws.pdf]
is dated 08/03.


However, the Home Improvement Contractors Act [HICA] does NOT apply to ECs acting within the scope of their trade:

56:8-140 Inapplicability of act.
5. The provisions of this act shall not apply to:

c. Any person regulated by the State as an architect, professional engineer, landscape architect, land surveyor, electrical contractor, master plumber, or any other person in any other related profession requiring registration, certification, or licensure by the State, who is acting within the scope of practice of his profession;

http://www.nj.gov/oag/ca/laws/ContractorsRegistrationLaw.pdf

IMHO, $200 for ECs acting within the scope of their trade.

Now if you have Bam-Bam cutting in boxes for you and fishing wires like a madman ~ you may very well have an additional $500 in repair work :smile: ....and one might also need to register under the HICA.

 

[~Shado~]

partly...but not completely....a good flat rate system takes into account different variables...i.e. extend a circuit and install a receptacle...

you would have fixed prices for:

installing a receptacle (the actual device)
installing an old work box
installing a 4" metal box with mulberry cover
installing a new work box
installing an FS box
Installing NM-B in an open wall upto 15', additional price per foot over 15'
etc, etc, etc

so while you will have set prices for items based on your costs....you will use the flat rate manual like a chinese restaurant menu...and choose the correct method for your specific installation...


in terms of your contractor, if your electric is 10% of his total project cost and he's off by 10% on your cost, it's not gonna make a big difference. But it's also not flat rate in the sense of resi service flat rate....

I have to agree with Greg on this one. Maybe its because how its handled in our part of country. As long as I can remember, flat rate is just that...flat price for an install, no variables.

Your description doesn't seem any different than bidding a job. Particularly if using an estimating program...items with cost and labor and profit to install each....collection of items for an assembly. How does this play into being flat rate vs bid? Seems one and the same to me.

 

[ike5547]

Of course, one would expect flat rate contracting to very successful in a state where T&M is illegal. They neglected to mention this unimportant little detail while they were trashing on T&M contractors from other states.

 

[emahler]

I have to agree with Greg on this one. Maybe its because how its handled in our part of country. As long as I can remember, flat rate is just that...flat price for an install, no variables.

Your description doesn't seem any different than bidding a job. Particularly if using an estimating program...items with cost and labor and profit to install each....collection of items for an assembly. How does this play into being flat rate vs bid? Seems one and the same to me.

The only differnce is pricing onsite, getting approval, and performing the small job, collecting payment, repeat with next customer. All done by the tech in 1 trip.

Vs

sending out an estimator to look at the job, going back to the office, doing the estimate, sending it to the customer, waiting for approval, getting approval, translating SOW to installation team, sending installation team to job, installing job, invoicing customer, waiting for payment, repeat with next job.

 

[Mule]

There aren't a lot of people that start businesses thinking they wont be around in 5 years.

Just remember to check me out when that time comes.....I'll still be plugn along........ And. I still be saying good things about your old ford tractor too...

 

[Mule]

Of course, one would expect flat rate contracting to very successful in a state where T&M is illegal. They neglected to mention this unimportant little detail while they were trashing on T&M contractors from other states.

Man, am I sheltered, T/M being illegal???.....I guess a man's word or a hand shake is worthless in some areas....wrong color of state for me...