I was surprised to hear recently that one of the biggest(non union) contractors in our local area has reduced their labor rates on service calls to $50/hr. It's getting real close to the time where many of us small one and two man shops are going to be closing our doors.Big union boys are only at $75-80, it's going downhill fast.
Getting cheaper everyday
- Thread starter nizak
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Is that $50 a burden rate or bare labor?
Chenley
Member
- Location
- Western KY
They could be dropping their labor rates and increasing their markup on materials or adding other charges as emahler stated.
Their $50 rate could end up costing $100 or more, once they get in the door, now all they have to do is wait for the other EC's that think that is their price to drop theirs and wait for them to go broke trying to operate at a loss.
The rate alone means nothing, as said how do they bill, and who are they sending?, on the call, and are there any other charges they use to build the bill?
jrannis
Senior Member
- Location
- Fort Lauderdale/ Miami
Know your costs, dont play the "where is the bottom game"
Dont charge by the hour. Charge per job.
Dont charge by the hour. Charge per job.
Fulthrotl
~Autocorrect is My Worst Enema.~
- Occupation
- E
yeah. what he said. ^^^^^ you guys taught me that *last* year.
are we still on that lesson?
bradleyelectric
Senior Member
- Location
- forest hill, md
Always will be. That and what the other guy is charging ie what the market will bear. I don't think we will ever reach the summit with these things. To many electricians that have been paid by the hour there whole working life get licensed and figure how do I find out how much can I charge?
They call the big contractor down the road and ask him how much to twiddle my thumbs, and figures if he can twittle his thumbs for $xx than I can twittle my thumbs for 5 dollars an hour less, and the big business research has been completed. No thought is given to business principles.
RH1
Member
- Location
- Rick From Los Angeles
Exactly, unfortunately, we must compete with these guys. This phenomenon seems unique to the building trades and electrical in particular. You never see lawyers or dentists low balling and bottom feeding.
This is the most difficult aspect about running an electrical business, when we quote a job, the average customer will compare our prices with the prices of those who don't know what they're doing. The customers don't know these guys are Dummies, but will accord them much respect and credibility because they were "reasonable" and we we're not.
In the mind of the consumer, the correct price is the lowest one, any prices higher than the low price are evidence of "price gouging" or "profiteering". This mindset has grown over the last 15 years and is now how the average person chooses an electrical contractor.
The conundrum is this: If you can't deliver the lowest price, you will be out of business, but if you can deliver the lowest price, the same result awaits you.
This is why I say the golden age is electrical contracting is over. What was once a legitimate career field has degenerated into a pack of rats fighting for scraps.
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Over the years, I seen these guys come and go, they usually have the knowladge to do good electrical work, but as you noted, they have been paid by the hour there whole working life, and lack the needed business experience, so they try to look at others thinking they can learn from following what others are doing, the problem with that thinking is, the other guys they are looking at, may be working for wages, and operating at a net loss, and in many cases buying those new trucks, and nice homes, from a working wifes income, so unless you have other income, you may want to learn all you can, about operating a business for profit. The main reason, most people choose to operate a business, is to better their living standards, and build assets. Building a profitable business, can be easier then fighting to keep a starving business alive, but you will have build it, on basic business practices.
AV ELECTRIC
Senior Member
The survivors will do well in the future the rest will be thrown on the garbage heap. Thats buisness.
RH1
Member
- Location
- Rick From Los Angeles
That assumes there's a finite number of dopes and once they're gone, the knowledgeable will be left to operate in a normal industry. The fact is, IMHO, that there is a constant, never ending, infinite supply of dopes entering this business. For every one dope who goes out of business, there's 2 more to take his place. This industry is over run by dopes. You and I can recognize the dopes, but consumers cannot.
I think there are many reasons for the "dope invasion" of our industry, extremely low barriers to entry, the low prestige accorded people working in the trades and last but not least, our society is able to create dopes at an ever growing rate.
Once upon a time, truck drivers were "Kings Of The Highway", they were regarded with respect and thought of as professionals, this is back in the 1950s. Now truck drivers are considered sub human forms of life and universally disrespected. Where once they wore professional looking hats now you only see baseball caps and turbans. Every industry has it heyday, then decline is inevitable.
My point is this, this industry is done, put a fork in it. Call me a pessimist, but I think of myself as a realist. The change has been imperceptibly slow and undetectable, like the proverbial frog in the boiling water, but I ask you guys who have been in this game 20+ years to take a step back and look at this industry, has it gotten better or worse?
The worst is yet to come, this recession will change things permanently. Once we pull through this, the landscape will be forever changed. I have been in the process of migrating out of electrical construction into a different industry, I've been doing this slowly for about 2 years.
I just don't see a bright future for electrical contracting.
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AV ELECTRIC
Senior Member
Rick i understand where you are coming from . The american public wants a sale were programed for the lowest price. Are technoligy has made it easier and faster to do are work you got the big box stores teaching homeowners how to be dangerous. Desperate people saying they can do any kind of work. All we can hope for that we will get through this it will take a while. trying other things is a good idea you need to pay the bills. I believe electricians in the future will do well .Less young people getting in older people retiring i think there will be a shortage of electricians in the future but that may be down the road .
bradleyelectric
Senior Member
- Location
- forest hill, md
This isn't the first down turn in the last 20 years. Remember all the talk about how war raises the economy and at the beginning of the first gulf war we were all trying to figure out how come it didn't work out that way for us? Prices and throats were being cut and the end was near, than we had the longest good run in 200 years.
Don't waist your time competing with the bottom feeders. Raise your prices and if someone is looking for the cheapest price give them a phone number where the can find it. Keeps them busy working on clients that are looking for them and not going after clients you want. When a call comes in make it the only call they will make. Learn to sell the job.
petersonra
Senior Member
- Location
- Northern illinois
- Occupation
- engineer
There have always been guys who got their work by being the low priced bidder. It might be a little more acute these days for a variety of reasons, most of which are political or emotionally charged and probably can't be discussed here.
Electrical contracting has a fairly low cost of entry. A guy with a van or a pickup truck only needs maybe $10,000 to start up an EC business. Same for many other contracting fields.
A lot of these guys, just like the majority of most small business owners, are not making a lot of money. In many cases they could do far better working for someone else. But they like having their own business, even if it is not financially as advantageous to them as working for someone else could be.
Electrical contracting has a fairly low cost of entry. A guy with a van or a pickup truck only needs maybe $10,000 to start up an EC business. Same for many other contracting fields.
A lot of these guys, just like the majority of most small business owners, are not making a lot of money. In many cases they could do far better working for someone else. But they like having their own business, even if it is not financially as advantageous to them as working for someone else could be.
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