home inspection pricing

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Betting Against the odds

Betting Against the odds

Perhaps on some of your views I agree with your way of thinking, But i would rather have a repeat customer instead of making a killing off one and never to see them again.And remember, word of mouth is everything, if you cut someone a break and be fair with them the customer base will increase faster than you realize.After 31 years in business,I never had to advertise to keep in business.You can charge all you want and quote to cover your expenses, but the bottom line here is people are just people, like you and I, if you help them out, fairly, you have earned their trust and most of their friends too.
 
ru,

we are going on our 30th yr, we have customers that have been with us 29 yrs, got a bunch that are with us over 20 yrs. most of them commercial.

on the resi side, we do mostly service work...the exact scenerio this thread is about, occurs 3-5 times a week for us.

we do them all flat rate. the difference is, we spend time figuring out the job before pricing it. we usually find the easy ways at that time, and price accordingly.

we've also found that once we give a fixed price, and they are comfortable with it, 99% of the people want us to finish as quickly as possible, so they can get on with their day.

it's a whole different way of doing business. took us years to learn. but the results are much better than we ever could have gotten on t&m...been there, done that.

you can do right by the customer many ways. we just choose to do right buy the customers who value time and convevience more than money. and they refer us to other people like them.

good luck.
 
btw...word of mouth isn't worth as much today as 30 yrs ago. people move to often and barely talk to their neighbors. look in you local yp, look at the ads of the larger resi service companies...look how many trucks they run and the money they make....then find out how much of their business plan involves word of mouth...word of mouth is great for a small operation....but you are not going to build a 20 truck service operation on word of mouth.
 
emahler said:
btw...word of mouth isn't worth as much today as 30 yrs ago.
Click to expand...

Many of our jobs and sales come from satisfied customer recommendations, so word of mouth still has some affect. That being said, we do not price jobs or complete tasks based on the recommendation we might get. We do it for that customer at that time. The "cap" has come from customers balking at a T&M job...beforehand. The cap is there to set them at ease. Call it a bid if you want. Do it T&M, you certainly can't go wrong on that. But in the past, we have had the occassional customer that insists on some idea of what it will cost them.
 
emahler said:
RU,

Me personally, if you tell me it's going to be $500, and I am comfortable with $500, and you get done in 2 hrs instead of 3, good for you. Here's your money. I have an extra hour to do what I need.

I just don't understand taking all the risk and giving away all the reward. If you are going to do T&M, then it is what it is. But to say $70/hr, max at $350. But you get done in 3 hrs, you only make $210, but if it takes you 6 hrs, you only make $350 (or $58/hr)

It's like sitting at a blackjack table with $1000 and betting $5/hand. You will play for a while, but eventually the house will take all your money.

Operate T&M with a cap enough times, and eventually the house will take all your money.

At least with a fixed price, you should win enough hands to make up for the losses. If you understand the rules well enough.
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Well put. I agree completely.
 
Here in California there's a new (and little known) law that REQUIRES all home improvement/service and repair contracts that are based on time and materials to include a cap or maximum price. So our beloved state insists that the playing field be slanted in the HO's favor. We usually do it that way anyway but I hate when the gov says I have to.
 
aline said:
Maybe the guy charging $3,000 for this job is a crook and is trying to take advantage of the homeowner.

When hiring a contractor you should consider a lot of things other than just the price.
Click to expand...

When someone gives a price and performs the service for that price, why would you consider them a crook? I don't care if they are higher than the next guy or twice what the next guy is. Price is what the market will bear. That guy may have plenty of work, and floated a number that he would take the job if it was agreed upon. That doesn't make him a crook. It just makes him expensive. He feels he gives a premium job at a premium price. do you think you are a crook if you are well paid for your service? The $3000. roof service may not have netted the guy $250/every 20 minutes. Does that make the guys that charge that for an estimate crooks? I say only if you didn't actually get the estimate for the $250 agreed upon price.

Steve
 
emahler

does your company quote the flat rate prices using an estimator or do you schedule the electrician to do the job with the electrician quoting the flat rate and then doing the job on the spot?

The electrician/salesman (sign on the spot right now) is sort of the business model of Mr Electric - Contractors 2000 etc.

We send an estimator (who is also an electrican - me) to bid the job but we dont put pressure to sign on the spot and start the work that second. We schedule our jobs a week or two in advance after a signed proposal is mailed.

That buisness model (here in St Louis) puts the price at 2 or 3 times the amount that we can do the job on a bid (proposal). When I bid the job following the Mr Electric type guy we are at least 1/2 the price.

When I say we are 1/2 the price - my jobs still would come in at $70-$120 hour plus.
 
jimmyglen said:
That buisness model (here in St Louis) puts the price at 2 or 3 times the amount that we can do the job on a bid (proposal). When I bid the job following the Mr Electric type guy we are at least 1/2 the price.
Click to expand...

But do you do better work?

These outfits would be easy to follow and clean-up after.
Read the interesting quote on how "most of them don't screw up alot". It is a classic.
You can't buy advertising worth this much anywhere.

http://www.lestercat.net/house_03/archives/2003/12/some_really_rea.php

Most probably use the high pressure sales tactics, some probably don't.
Who knows, they are independently run, but still all have to go through the same type training.
 
jimmyglen said:
emahler

does your company quote the flat rate prices using an estimator or do you schedule the electrician to do the job with the electrician quoting the flat rate and then doing the job on the spot?

The electrician/salesman (sign on the spot right now) is sort of the business model of Mr Electric - Contractors 2000 etc.

We send an estimator (who is also an electrican - me) to bid the job but we dont put pressure to sign on the spot and start the work that second. We schedule our jobs a week or two in advance after a signed proposal is mailed.

That buisness model (here in St Louis) puts the price at 2 or 3 times the amount that we can do the job on a bid (proposal). When I bid the job following the Mr Electric type guy we are at least 1/2 the price.

When I say we are 1/2 the price - my jobs still would come in at $70-$120 hour plus.
Click to expand...

Jimmy,

before I answer this, and I will, let me ask you a couple of quick questions:

Your rate of $70 - $120, is that for only the time on the job (actual work)? or does it include the travel time for both trips, your estimating time, etc?

Do you take all the work from the Mr. Electric type companies because your price is 1/2? or do they get a pretty decent chunk of work too? What % do you think you take from them?

Thanks
Erik
 
Dnkldorf said:
But do you do better work?

These outfits would be easy to follow and clean-up after.
Read the interesting quote on how "most of them don't screw up alot". It is a classic.
You can't buy advertising worth this much anywhere.

http://www.lestercat.net/house_03/archives/2003/12/some_really_rea.php

Most probably use the high pressure sales tactics, some probably don't.
Who knows, they are independently run, but still all have to go through the same type training.
Click to expand...


good job dnk....

let's look at some numbers...

there are in excess of 100 Mr. Electric locations in the US. They employ in excess of 1000 service technicians in the US. On average, each tech probably does 2 jobs per day, 5 days a week.

so, 1000 *2 = 2000 jobs a day
2000 * 5 = 10,000 jobs a week
10,000 * 50 = 50,000 jobs a year.

And you found one problem, with one location. Hey, not for nothing, but that's a pretty good percentage.

Of course there are more problems, there will always be problems. I don't get your point.
 
emahler said:
let's think about this line....if in order to be competetive, you need to quote it at a loss, why bother?

and if you give them a cap that is above a competetive quote, why won't they go with a lower guaranteed price?

and if your cap is in the field of "competitive quotes", the same quotes that you would lose money on, why do you want to make less money by working T&M? And in cases of T&M with a cap, take all the risks and give the customer all the rewards?

Please, help me understand. Am I just missing something?
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I am lost here also, "in order to be competetive, you need to quote it at a loss"

I am in the business of contracting , not a labor pool, why would anyone take all the risk, and give away all the rewards.

It's all in knowing how to estimate a job, and presenting the offer to the customer that makes the difference.

"Consider your overhead, expenses, time, ect. Add in the amount of profit you wish to secure for a job of this nature and submit a proposal."

This was pretty good advice, if you are having problems getting jobs accepted, at your cost of diong business, plus a small profit, then it may be your area, can not support another contractor, or the economic conditions are on a decline, or the general market is down. Either way you can't have a profitable business without meeting your profit margins, you may be working, and working hard, doing the best work out there, but without planning for profit, you will have a job, and a study stream of bills, but not a business.
 
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Dnkldorf said:
But do you do better work?

These outfits would be easy to follow and clean-up after.
Read the interesting quote on how "most of them don't screw up alot". It is a classic.
You can't buy advertising worth this much anywhere.

http://www.lestercat.net/house_03/archives/2003/12/some_really_rea.php

Most probably use the high pressure sales tactics, some probably don't.
Who knows, they are independently run, but still all have to go through the same type training.
Click to expand...
yayaya

I am glad you read the other forums Darn that RR guy for posting that link.
 
Estimating/Flat Rate/ T&M /Ballpark/ Price Not to Exceed

Estimating/Flat Rate/ T&M /Ballpark/ Price Not to Exceed

Hi all,
We all use different methods of ways to deal with the consumer, not saying one method is better than the other. We look at each Job and use the method that will work usually. Sometimes we fall short. or make a killing. It's all a game, but we usually come out above water. We get many repeat customers, word of mouth customers, and are awarded many quoted jobs also. I'm not trying to say one method is better then what might work for someone else, just stating this has been what's worked for me and my crews.We can sit here and debate how we should treat the consumer fairly, but in my past experiences ,I found being honest and fair usually works for us.I am not against making the ole mighty dollar, by no means, I just use the methods I feel work and in most cases give the consumer a break so they will feel they got what they needed for a decent price.
just my 4-1/2 cents(inflation)
 
I do happen to do a lot of research on straightforward pricing,standardized pricing,upfront pricing ...AKA flat rate pricing. Most of my 3 years of research has been sources in the United States.
Last week I received our Electrical Business magazine for Canadian Contractors. now 3 years ago i wouldnt of known what flat Rate pricing was and who in Canada I could research on what they have found. I found this gentleman working helping Contractors in Canada to understand some more about contractors in the service Business.
http://www.coleman.bc.ca/videolg.wmv

Its plays in winamp
 
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electricguy said:
yayaya

Darn that RR guy for posting that link.
Click to expand...

Why?

Word of mouth means nothing anymore right? He did say that didn't he....

Another classic line....LOL

Word of mouth is everything to the quality Ec's, maybe not to someone who's dad's business relies on finding a new customer everyday, but to the rest of us, we cherish the word of mouth referrals.

20 trucks?
I know guys who has 3 people and are more profittable than a guy with 20 people, and 10 trucks.
The number of trucks an operation has, has jack squat to do with how profittable a place is. If you are envious about how many trucks a place has and think they are doing great because they have so many trucks, you need a rest. You're overworked and not thinking clearly.
 
Dnkldorf said:
Why?

Word of mouth means nothing anymore right? He did say that didn't he....

Another classic line....LOL

Word of mouth is everything to the quality Ec's, maybe not to someone who's dad's business relies on finding a new customer everyday, but to the rest of us, we cherish the word of mouth referrals.

20 trucks?
I know guys who has 3 people and are more profittable than a guy with 20 people, and 10 trucks.
The number of trucks an operation has, has jack squat to do with how profittable a place is. If you are envious about how many trucks a place has and think they are doing great because they have so many trucks, you need a rest. You're overworked and not thinking clearly.
Click to expand...

Fortunately maybe i have Found a professional business management consultant that will explain that better than what i just read
 
electricguy said:
Fortunately maybe i have Found a professional business management consultant that will explain that better than what i just read
Click to expand...

good luck with that. hatred and envy are hard to explain. ignorance and misinformation are even harder.
 
Dnkldorf said:
Why?

Word of mouth means nothing anymore right? He did say that didn't he....

Another classic line....LOL

Word of mouth is everything to the quality Ec's, maybe not to someone who's dad's business relies on finding a new customer everyday, but to the rest of us, we cherish the word of mouth referrals.

20 trucks?
I know guys who has 3 people and are more profittable than a guy with 20 people, and 10 trucks.
The number of trucks an operation has, has jack squat to do with how profittable a place is. If you are envious about how many trucks a place has and think they are doing great because they have so many trucks, you need a rest. You're overworked and not thinking clearly.
Click to expand...


dnk....if you could read, spell and think, you'd be dangerous. you have such a serious agenda with me, it's not fun anymore. please, move on, find another person to stalk. make a blog about me, whatever. but you have got to let it go.


me said:
we are going on our 30th yr, we have customers that have been with us 29 yrs, got a bunch that are with us over 20 yrs. most of them commercial.

on the resi side, we do mostly service work...the exact scenerio this thread is about, occurs 3-5 times a week for us.

we do them all flat rate. the difference is, we spend time figuring out the job before pricing it. we usually find the easy ways at that time, and price accordingly.

we've also found that once we give a fixed price, and they are comfortable with it, 99% of the people want us to finish as quickly as possible, so they can get on with their day.

it's a whole different way of doing business. took us years to learn. but the results are much better than we ever could have gotten on t&m...been there, done that.

you can do right by the customer many ways. we just choose to do right buy the customers who value time and convevience more than money. and they refer us to other people like them.
Click to expand...

btw...word of mouth isn't worth as much today as 30 yrs ago. people move to often and barely talk to their neighbors. look in you local yp, look at the ads of the larger resi service companies...look how many trucks they run and the money they make....then find out how much of their business plan involves word of mouth...word of mouth is great for a small operation....but you are not going to build a 20 truck service operation on word of mouth.
Click to expand...

no where do i say anything that you attributed to me. that's sad.

we have long term customers, we love word of mouth. but.....and here is the big but...it's not the same industry as it was 30 yrs ago. times change...some of us change with them....some remain stuck in the dark ages....you've made your point, now move along.
 
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