Hourly rate / service call / flat rate

[OK Sparky 93]

Good morning all!

This subject I am sure has been covered, many times, however for me this is easier.

I understand the need for flat rate pricing, in that you get that call and someone wants to know “how much will it cost”.

Now, when it comes to an hourly rate, or T & M, I go to a job and am there all day, then based on financial reports, I have established an hourly rate, at the end of the job, let’s say I add an hour of time for chasing down parts and what not, figure my material cost, and the profit I think I would like to make, write an invoice, get paid, and on to the next. Maybe flat rate would be better.

Now for, that call you get because my outdoor GFCI isn’t working.

You get there, maybe after you write the invoice, you have a 1/2 an hour on site. You have at least a half hour if not more, to have the part on your truck to begin with.

I don’t know about the rest of you but I can’t go anywhere that doesn’t take me 20-30 minutes, unless it is around the corner.

Is that an hour of time, is that an hour of time plus a 1 hour minimum, is it an hour, but a minimum1&1/2, or something different?

How do you guys handle these scenarios?

 

[mtnelect]

On service calls I charge a "Diagnostic Charge" of $75.00. When the problem is identified a "Flat Rate" is given for the complete repair and if approved by the customer I waive the "Diagnostic Charge".

 

[OK Sparky 93]

On service calls I charge a "Diagnostic Charge" of $75.00. When the problem is identified a "Flat Rate" is given for the complete repair and if approved by the customer I waive the "Diagnostic Charge".

How did you come up with the rate?

It can’t be actual time, to waive your trip charge and be profitable for an actual hands on 15 minute device swap.


I would think there was an industry standard for an actual time, or proposed time, kind of like an auto mechanic.

 

[James L]

I would think there was an industry standard for an actual time, or proposed time, kind of like an auto mechanic.

I think there are books showing flat rates like that. I have no idea what the name would be.

Just go to Home Depot or Lowe's and get a price for swapping some ceiling fans, and you'll get their flat rates. It's about $80 each, and I don't think they really discount for having numerous (which could run into all day).

When I ran service every day (many moons ago), the charge was $65.00 to show up, and $65.00 per hour with a minimum of 1 hour. After that was 1/2 hour increments. Materials were marked up 100%

Whatever your rate, it must take into account that not every hour is billable. But all that down time has to be paid for.

Imho, the best way to figure that is on a large sample size, like 6 months to a year.

Out of 2,080 normal work hours in a year, how many are spent on actual billable time?

I'd figure 80 hours for vacation for the year.
Do you clean your van on customer time or afterward? Do you shop for materials on customer time or afterward? Do you give free estimates or is there a service fee for that?

Everyone has time spent working which is not directly billable. All that time needs to be added up and absorbed into your rate.

I would guess that the average service electrician has somewhere around 1,200 to 1,500 billable hours in a year.

Suppose you have an "all day, every day" rate of $95.00 - multiply that by 2,080 time clock hours and it's $197,000 - then divide ️ that by 1,500 actual billable hours and you come up with a rate of $131.00 per hour.

In short, if you charge $130.00 per hour, it should bring in $200k in a year

 

[mtnelect]

How did you come up with the rate?

It can’t be actual time, to waive your trip charge and be profitable for an actual hands on 15 minute device swap.


I would think there was an industry standard for an actual time, or proposed time, kind of like an auto mechanic.

The "Diagnostic Charge" is just to get my foot in the door. Don't want to discourage the customer.
In today's environment a lot of electricians never show up ... So, customers are thrilled you are even there !

 

[mtnelect]

Over the years I have created my own "Flat Rate" price book through "QuickBooks" I didn't know that "Bitcoin" was also using it !

 

[OK Sparky 93]

As of now for myself, I have air am establishing a rate of $125 for prolonged work plus material and a 20% markup for the entire job cost.

If I am called to your abode resi, or commercial, and I strap on the tools, it is $150. I will include a switch or a basic outlet in that.
If it is a GFCI, which I carry, that will be additional. I don’t carry everything, so if I have to chase it down, I am clocking time.

I will talk to you for free, and hope that I can sell and close.

Most if not always, if I get called out because something isn’t working, it’s because they want it working.

Most often diagnosing the issue means digging into, that could be 15 minutes, once your there. Or it may be an hour. You pull out a 50 year old outlet, wires are loose.

Now do you charge $75, and put the outlet back in with out correcting the issue and tell the customer what you found and tell them how much it will now cost them for you to do it all over again to fix the issue.

I am more interested in flat rate service work whether it be residential or commercial, so that you will not scare off the customer and you will be more profitable, than T&M plus markup.

As I ponder, waiting for vehicle repair, customer wants me to add an outlet on patio soffit. So I figure around 50’ of 12/2, some staples, a box maybe 3 boxes a gfi and a flip lid, some wire nuts. Every part that it’s going take I might forget a small item so maybe I have a miscellaneous fee.

When it is all said and done, I allow 2 hours @ my 125 rate, the material at around $65, plus 20% I’m at $430ish.

Is this legit?

Is this a flat rate price?

I can’t change my rate

A month I probably would have said to the customer around $250. It seems fair, but it would probably be doing it for free. I have seen the outcome for work that should have been done for free, most likely by moonlight electric, or the car stereo installer.

 

[petersonra]

Good morning all!

This subject I am sure has been covered, many times, however for me this is easier.

I understand the need for flat rate pricing, in that you get that call and someone wants to know “how much will it cost”.

Now, when it comes to an hourly rate, or T & M, I go to a job and am there all day, then based on financial reports, I have established an hourly rate, at the end of the job, let’s say I add an hour of time for chasing down parts and what not, figure my material cost, and the profit I think I would like to make, write an invoice, get paid, and on to the next. Maybe flat rate would be better.

Now for, that call you get because my outdoor GFCI isn’t working.

You get there, maybe after you write the invoice, you have a 1/2 an hour on site. You have at least a half hour if not more, to have the part on your truck to begin with.

I don’t know about the rest of you but I can’t go anywhere that doesn’t take me 20-30 minutes, unless it is around the corner.

Is that an hour of time, is that an hour of time plus a 1 hour minimum, is it an hour, but a minimum1&1/2, or something different?

How do you guys handle these scenarios?

We charge door to door for service work. If your guy has to drive a half hour to the job site and another half hour back, and you are paying him for that time, you need to account for that cost somehow.

It is not rocket science. Charge enough that you make a profit.

 

[OK Sparky 93]

Being a one man shop, I feel like I am already more than a multi crew shop, so I have been charging, for the drive to but eating the drive in. Unless it more than 1/2 hour one way.

I have a friend that does demo work. He says he charges $250 an hour, and one minute over is another $250. He says” I don’t hold any certifications, you do”.
That I should be charging $250/hr.

That the customer is paying for the service I provide. Now I believe, I provide great customer service and I know the quality of my work.

$250 an hour seems a little high.

 

[petersonra]

Being a one man shop, I feel like I am already more than a multi crew shop, so I have been charging, for the drive to but eating the drive in. Unless it more than 1/2 hour one way.

I have a friend that does demo work. He says he charges $250 an hour, and one minute over is another $250. He says” I don’t hold any certifications, you do”.
That I should be charging $250/hr.

That the customer is paying for the service I provide. Now I believe, I provide great customer service and I know the quality of my work.

$250 an hour seems a little high.

If people are willing to pay it, it is not too high.

 

[kwired]

Now for, that call you get because my outdoor GFCI isn’t working.

You get there, maybe after you write the invoice, you have a 1/2 an hour on site. You have at least a half hour if not more, to have the part on your truck to begin with.

I don’t know about the rest of you but I can’t go anywhere that doesn’t take me 20-30 minutes, unless it is around the corner.

Is that an hour of time, is that an hour of time plus a 1 hour minimum, is it an hour, but a minimum1&1/2, or something different?

How do you guys handle these scenarios?

Many do have a minimum service charge that they will charge regardless how short of time they are on site. Often it is at least what they would charge for an hour of time, sometimes even more than that.

You do have to consider that even though you are at a site for 10 minutes it may have taken up an hour or two of time before you get to performing other billable time again.

Some could choose to be lenient in some cases like if we stop by at our convenience and on the way to or from other jobs, we may not charge the full minimum service charge we would if you demand we come out immediately. But it might be a few days before we can do that.

 

[OK Sparky 93]

I appreciate everyone’s insight.

Now those of you that have come up flare rate charges, how do you develop those, and be more profitable, than T,M & P?

 

[mtnelect]

In QuickBooks you can create a "Product & Services" file, which is my "Flat Rate Book". And annually I update price increase automatically.

 

[brantmacga]

you need a stocked service vehicle to do flat-rate service profitably.

 

[kwired]

you need a stocked service vehicle to do flat-rate service profitably.

and probably need to mostly serve a particular type or two of customers or limit yourself to specific product types, if not then either live in a higher population area or serve a pretty large territory to help assure there are enough customers to keep that service vehicle busy enough.

Had problems with a newly installed Generac generator recently, I think should been a warranty issue as it was problems we had at first time running the thing. They sent out an authorized service person that had to drive a couple hundred miles from his shop. Apparently they didn't think setting some parameters that AFAIK we never even accessed is covered by warranty. He probably had about any part that unit may have needed on his truck outside of parts that would take some sort of major overhaul before they would even be accessed. Mileage on that one was about 3 times the service call charge.

 

[blueheels2]

I have a 225$ Service call fee. If I replace a gfci I am going to double the parts and that to the 225$. After that everything is a flat rate price. Rate was 150 but recently went up to 170 and contemplating 200$ after the new year. It’s hard out here for an electrician.

 

[kwired]

I have a 225$ Service call fee. If I replace a gfci I am going to double the parts and that to the 225$. After that everything is a flat rate price. Rate was 150 but recently went up to 170 and contemplating 200$ after the new year. It’s hard out here for an electrician.

Are you saying $225 is the minimum charge but otherwise hourly rate is $170? Otherwise is confusing, looks like you have a 225 rate but yet is now 170 and considering to go to 200, both of which are less than what you initially said the rate is? If that is right what exactly is the flat rate pricing about, other than maybe for installations vs service work?

 

[petersonra]

I have a 225$ Service call fee. If I replace a gfci I am going to double the parts and that to the 225$. After that everything is a flat rate price. Rate was 150 but recently went up to 170 and contemplating 200$ after the new year. It’s hard out here for an electrician.

good for you. no reason to work for peanuts if you don't have to.

 

[kwired]

good for you. no reason to work for peanuts if you don't have to.

He stepped it up to cashews

 

[blueheels2]

He stepped it up to cashews

Yeah no doubt. Folks out here charging 3-400 an hour. But I hate SEO and ppc. Got to pay to play. I’ll get back into that eventually but I have a terrible taste in my mouth when it comes to that stuff.