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

[Mr. Wizard]

Why does that make it wrong to make enough to cover health insurance, the cost of a new truck even though the 1 you have now is paid off, retirement benefits, and have enough in the bank to cover a years woth of expenses if times go bad or you get hurt?

It doesn't make it wrong. I believe that we should get paid for what we do, and (hopefully) get paid well. An owner should be all about growing the business, and that includes a new truck, retirement, insurance, the whole nine yards. But my point is that if an EC is content with what he has and content with what he's getting, than the EC shouldn't be chastised on his prices. I know of several EC's that are two man operations. They don't charge as much as the big boys, but with just the two of them, and maybe sometimes an extra hand, they make a darn good living for themselves. The bigger jobs they'll refer to one of the larger shops, and don't bite off more than they can chew. I also know of some shops that have priced themselves out of business. Just use whatever numbers work for you, and sooner or later you'll know if you're too cheap, too high, or just right. And if it's just right, why change it?

 

[satcom]

Why does that make it wrong to make enough to cover health insurance, the cost of a new truck even though the 1 you have now is paid off, retirement benefits, and have enough in the bank to cover a years woth of expenses if times go bad or you get hurt?

Why are you using common sense, you need to learn that the half full glass is a better way of thinking, better to work harder not smarter.

 

[Mule]

Why does that make it wrong to make enough to cover health insurance, the cost of a new truck even though the 1 you have now is paid off, retirement benefits, and have enough in the bank to cover a years woth of expenses if times go bad or you get hurt?

Its NOT wrong at all...in fact those are the same things we are striving for. Just completing our first year in business, we have our two trucks (06&04) paid for, as well as, all of our tools,inventory, built a small office whse, sidewalks, carport for the trucks, computer, bla bla.....and we do have medical insurance. For 09' we are focusing on getting back to our 401k contributions and, that years savings your talking about. But the first year has been a bit of a juggling act as we have to be fast learners to survive in this climate.

I think what's true here, is we all have to realize that things can be drasticaly different in the various areas of the country, and we need to respect one anothers particular situations, not being too quick to judge without considering all of the facts....we all have a wondefull trade in which we all have common interest, and a wonderfull forum to help us share it.

 

[satcom]

I think what's true here, is we all have to realize that things can be drasticaly different in the various areas of the country, and we need to respect one anothers particular situations, not being too quick to judge without considering all of the facts....we all have a wondefull trade in which we all have common interest, and a wonderfull forum to help us share it.

No matter wher you are in the country, and what the business conditions are, you still have to operate a business, like a business, Muel, just so you understand we are discussing a topic here, not being critical of you, the entire EC's industry has been in the dark about business practices, for many years, only recently with a new generation has there been an intrest in , making it better.

 

[Mr. Wizard]

No matter wher you are in the country, and what the business conditions are, you still have to operate a business, like a business, Muel, just so you understand we are discussing a topic here, not being critical of you, the entire EC's industry has been in the dark about business practices, for many years, only recently with a new generation has there been an intrest in , making it better.

With that being said, a business can still function and operate like a business - profit and all, with lower numbers. The amount of cash, liquid or otherwise, flowing through your shop at any given time doesn't make a business. It's how that money is handled. A successful business of any size that can pay their bills and turn a profit is doing something right, regardless of how much money is involved. The more money the better :grin:, but use what works for you.

 

[Mule]

the entire EC's industry has been in the dark about business practices, for many years, only recently with a new generation has there been an intrest in , making it better.

Uh? ....Here I thought the sun just had not come up yet. Glad you pointed that out to me......Is this why folks are so far in debt these days, failed mortages, $40-50,000 vehicles, .....Glad the "New Generation" is here to save the day, There's always room for improvement for sure.......:smile:

 

[celtic]

No matter wher you are in the country, and what the business conditions are, you still have to operate a business, like a business, Muel, just so you understand we are discussing a topic here, not being critical of you, the entire EC's industry has been in the dark about business practices, for many years, only recently with a new generation has there been an intrest in , making it better.

Satcom does bring up an interesting point about the "new generation".

I haven't really seen any trade publications aimed specifically at ECs that covers the "How much do I charge...?" train of thought.
There are trade publications aimed at plumber, HVAC, mechanical contractors that DO address this issue of "price".

If someone is sitting on that trade publication aimed at ECs that covers pricing; estimating; flat vs. T&M; etc....please spill the beans for the class!


:smile:

 

[Mule]

I've got it !! So work is slow, so the folks on this forum write a book on the subject, publish and put it up for sale....It would be called "New Generation Electrical Contracting" Then all of us, could buy one, and split the profit........

See there I've got scruples !!

Just Kidding !!:smile:

 

[emahler]

Satcom does bring up an interesting point about the "new generation".

I haven't really seen any trade publications aimed specifically at ECs that covers the "How much do I charge...?" train of thought.
There are trade publications aimed at plumber, HVAC, mechanical contractors that DO address this issue of "price".

If someone is sitting on that trade publication aimed at ECs that covers pricing; estimating; flat vs. T&M; etc....please spill the beans for the class!


:smile:

there used to be one, but they couldn't get enough circulation to make it profitable

 

[SEO]

Electrical contractors keep everything a secret. I know many perhaps hundreds of EC's and only a few will share anything with each other. After all everyone is in competion with the other. Electricians will talk code until they are blue in the face but not business. There are probably more ideas shared on this forum than anywhere.

 

[emahler]

Electrical contractors keep everything a secret. I know many perhaps hundreds of EC's and only a few will share anything with each other. After all everyone is in competion with the other. Electricians will talk code until they are blue in the face but not business. There are probably more ideas shared on this forum than anywhere.

actually, electricalknowledge.com used to have a lot of talk about it...but then a few guys came in, and literally ruined the site by driving away posters...now it's got tumbleweed...

 

[bradleyelectric]

I talk about sales and pricing with all the guys I know. I think it's very interesting when someone says to me that xyz is charging $85 an hour and if they are doing it for that then we should be able to do it for $70/ hr. I'm more than happy to let them know I have no desire to do service work for $70, or $85/ hr. I tell them what I want to make an hr and how I do it. Again this is residential service work. Reason being I can bill a different number of hours a day if we are doing 2 hr jobs as opposed to 80 hr commercial service jobs or 650 hr construction jobs. Some areas of the business are more profitable than others.

 

[Deep South]

Great plan! We do not to exceed but adding the claus without additional autho is very good wording. I always learn something on these posts.

 

[Greg Swartz]

When I incorperated and created another entity that I work for.I seperated the business from my personal life. The question is: do you have a job or a business. I am an employee and the business pays me a salery. When managing the company, the job must pay the insurence, trucks, my wage or the serviec tech, the accountant and all the other overhead. Plus a profit for the company. The company account is not my money. My wage is not profit. If work falls off a cliff, the business can still pay me my salery. Terry

Agreed. This is how we run our business. While I am the President, I am also an employee. I receive a paycheck. The company money is not mine, although I do decide where all the money goes.

... the entire EC's industry has been in the dark about business practices ...

Oh how true that is! Many ECs I see that will still do a service changeout for $800 or less. They think they are working for wages, and not to grow a business. Not to cover lost time. Not to cover for time spent giving bids. Meeting with customers for estimates...
We get a Master's license, and we think we can run a business...

Electrical contractors keep everything a secret. I know many perhaps hundreds of EC's and only a few will share anything with each other. After all everyone is in competion with the other...

I have been struggling with this one. I want to share with other ECs, but cannot seem to let go of the concern that one will use the knowledge against me.
Although, recently, I did have a job that I did not bid because a "friend" contractor was there.
They called me up the next day and said "Here. This job is too big for us, and they called us to do it."
So, it can work out... but we all have to be careful.

 

[Sparky555]

My helper and I worked 9 hrs yesterday on a service conversion, material prices was just under $400. Havent billed yet but the price is going to be somewhere around $1500-$1600 and we were happy as Larks....customers next higher price was $2000

Honestly, I read the WHOLE thread. A thought for your consideration Mule. The next higher price was $2k. Wouldn't your customer be happy with $1900? I don't mean to suggest it like a used car salesman "leaving money on the table" way. I think you mentioned not adding to your retirement last year. That extra $3-400 is what could have gone into your retirement. Everyone's still happy, right?

 

[Mule]

Honestly, I read the WHOLE thread. A thought for your consideration Mule. The next higher price was $2k. Wouldn't your customer be happy with $1900? I don't mean to suggest it like a used car salesman "leaving money on the table" way. I think you mentioned not adding to your retirement last year. That extra $3-400 is what could have gone into your retirement. Everyone's still happy, right?

Thanks, but we like our price structure just as it is......

 

[Mr. Wizard]

Thanks, but we like our price structure just as it is......

I'm not taking sides or shooting anyone down, but mule has a point. Sometimes you just have to leave well enough alone. Did you know that the next lowest price was $2000 before you placed your bid? Probably not, but maybe. If so, you may have inched your price up a little. A lot of contractors do that, keep inching it up and inching it up, until that contractor finds he has overpriced himself. And by then, that contractor has already left the sour taste of greed in peoples' mouths, and then its another one bites the dust.

 

[Mule]

I'm not taking sides or shooting anyone down, but mule has a point. Sometimes you just have to leave well enough alone. Did you know that the next lowest price was $2000 before you placed your bid? Probably not, but maybe. If so, you may have inched your price up a little. A lot of contractors do that, keep inching it up and inching it up, until that contractor finds he has overpriced himself. And by then, that contractor has already left the sour taste of greed in peoples' mouths, and then its another one bites the dust.

Thanks but...., I really dont want to talk about our rates any more. I have a different business head, and Im not changing anytime soon. I am at peace with our structure and that's that... I dont go around telling others that I think they are charging too much....So lets leave it lay.

 

[emahler]

Thanks but...., I really dont want to talk about our rates any more. I have a different business head, and Im not changing anytime soon. I am at peace with our structure and that's that... I dont go around telling others that I think they are charging too much....So lets leave it lay.

yet....you continually start threads about rates and who is charging what....reminds me of the scene from Casablanca when the casino is raided and the local official, as he's taking his winnings from the casino says something to the effect of "i'm shocked there is gambling going on in here"

 

[Sparky555]

yet....you continually start threads about rates and who is charging what....reminds me of the scene from Casablanca when the casino is raided and the local official, as he's taking his winnings from the casino says something to the effect of "i'm shocked there is gambling going on in here"

I felt the same way. I guess I'll keep the responses to your threads to the point of your question.

"Ok, there's been talk in the past on the pro's and con's of flat rate pricing. So, Im curious who's doing it, and how's it working for you?"

I've used flat rate pricing for a few years and have returned to T&M on only one small commercial job. My pricing is set for a small net profit and I've been able to build a shop, pay a respectable salary, buy a new van, and fully fund my retirement. I'll never go back to T&M.