Hourly rates

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aline said:
So what happens when you do a job that has little or no materials? Do you lose money on that job because you were counting on material markup for your profit?

I try to cover as much of my expenses as possible in my hourly rate and have profit built into my hourly rate as well. That way if there is little or no material involved in the job I still cover my expenses and make a profit. Some customer's already have the materials.

I still markup my materials but try not to rely on it to cover expenses. I prefer material markup to be mostly extra profit. High markup on materials is why customer's start wanting to buy there own materials.
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I don't do much work that doesn't involve materials, trouble-shooting I suppose. I figure it balances out with the work I have that involves a lot of pricey materials/fixtures. I also don't work on jobs where the customer buys materials, unless it's a friend or special circumstance.

So you think my mark-up is high? Without your numbers, I can't compare. I get the point about using the hourly rate though.....I'll think about it.

My rate when I'm working stock & time is $65/hr. When I bid a job I figure it @ $70/hr. There are guys around here bidding custom work at $45/residential opening and billing at $50/hr. I don't know what the higher end is.


And I bill for all the time associated with a job, not just when I'm onsite.
 
weak economy

weak economy

Just because the economy is weak does not mean that I should give my services away at a lower rate.During this "weak" economy I have seen fuel cost sore. Materials at a all time high.Labor cost increases.So I see it as a time to increase my rates. GC ask me to wire a 5800 square foot custom. I am not going to wire it at a reduced rate. Because he is still getting a 5800 suare foot home wired!!!
 
emahler said:
also, don't forget that they charge $90/hr and they calculate time based on their book, not actual time...and the book time is almost always longer than actual time...putting their actually $/hr at well over $100...for every hour of the day...almost no downtime...
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Yes, and the customer is not standing there timing you, like some do electricians. e/m
 
ItsHot said:
Just because the economy is weak does not mean that I should give my services away at a lower rate.During this "weak" economy I have seen fuel cost sore. Materials at a all time high.Labor cost increases.So I see it as a time to increase my rates. GC ask me to wire a 5800 square foot custom. I am not going to wire it at a reduced rate. Because he is still getting a 5800 suare foot home wired!!!
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We have a lot of guys on here, that are great electricians, and give the craft work 150%, however when it comes to business many of them would get a failing grade, and there is no need for this, it is not difficult to learn many of the concepts needed, to manage your business.

One of the concepts, to understand for our type of business, is you need to plan, and react before the economy turns, you may want to consider signing up for some business courses.
 
electric man scott, secret is that the people at the ford dealer put suger in thier pants. That why the people pay try it!!!!! Everybody else knows this!
 
Energy-Miser said:
Yes, and the customer is not standing there timing you, like some do electricians. e/m
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just one more reason to not do resi work on a T&M basis...move to a flat rate and stop the clock watchers...
 
electricmanscott said:
Did a quick run through on a couple of busness cost calculators. Looks like I should be charging about $110.00 bucks or so.
Hmmm..
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that's accurate...is that 10% or 20% calculated net profit?
 
emahler said:
what kind of call? i'll give you an example of whatever you want...
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Just run of the mill, say two outlets are out of power, and the lights in bedroom are not coming on. We have checked all the breakers, none are tripped. I ask, because I am considering a flat rate or combination type system. Thanks, e/m
 
Energy-Miser said:
Just run of the mill, say two outlets are out of power, and the lights in bedroom are not coming on. We have checked all the breakers, none are tripped. I ask, because I am considering a flat rate or combination type system. Thanks, e/m
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A decent service tech will have a handle on the issue within 30-45 mins of troubleshooting...so, the way we did this was to have a diagnostic fee of $175. This allowed us time to troubleshoot. Once we found the problem (say a bad neutral connection in one of the outlets) there would be a repair fee (for example, $45 to replace the outlet and redo the connections)

so for approx 1 hr, we would bill the $175+$45 = $220

very rarely (less than 10% of the time) did it take longer than 30 mins to determine the problem...on those calls you either determined how to replace wiring or devices to repair the problem, or you kept diagnosing for the original diagnostic fee till you found the problem (yeah, you would take a hit, but the averages are in your favor)
 
emahler said:
A decent service tech will have a handle on the issue within 30-45 mins of troubleshooting...so, the way we did this was to have a diagnostic fee of $175. This allowed us time to troubleshoot. Once we found the problem (say a bad neutral connection in one of the outlets) there would be a repair fee (for example, $45 to replace the outlet and redo the connections)

so for approx 1 hr, we would bill the $175+$45 = $220

very rarely (less than 10% of the time) did it take longer than 30 mins to determine the problem...on those calls you either determined how to replace wiring or devices to repair the problem, or you kept diagnosing for the original diagnostic fee till you found the problem (yeah, you would take a hit, but the averages are in your favor)
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That sounds pretty good. A lot of our callers are pretty tight with the money. How do you advertise your rates? When they call, do they normally ask about your rate? If they do, what percentage will turn it down? If they don't ask, do you tell them your rate anyway, or go out there, do the job and just present them with the invoice? Trying to see what strategy works best with flat rate service billing. e/m
 
Energy-Miser said:
That sounds pretty good. A lot of our callers are pretty tight with the money. How do you advertise your rates? When they call, do they normally ask about your rate? If they do, what percentage will turn it down? If they don't ask, do you tell them your rate anyway, or go out there, do the job and just present them with the invoice? Trying to see what strategy works best with flat rate service billing. e/m
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never price over the phone...get to the job, but give them the price before you do anything...when we did resi, we stayed in a small area, and actually didn't charge a dispatch fee (it was a decision we made)...so we would go to the site, walk in without tools and do a quick look around...then we would explain to the HO that it wasn't anything obvious, so we'll need to diagnose it and the cost for that is only $175. during that quick walk through you are doing nothing but selling yourself and the company...at this point, the $175 becomes irrelevant if you've done the job of selling yourself...

from there, it's all about finding problems and recommending fixes...

residential service can best be thought of like this...if you take your car to the mechanic for an oil change, and while he has the car up on the life, he notices a leak in your break line...do you want him to tell you about it or not?

residential service is all about numbers and averages...let them know about everything from surge protectors, to dimmers, to timers for exterior lights, to whatever...the more you tell them about, the more they will buy...we've had countless $175 service calls turn into $2000+ projects...

but, and here is the key...be ready, willing and able to do the $175 call and find the problem...the rest are options and not all customers will buy them, and that's ok...
 
Energy-Miser said:
T If they do, what percentage will turn it down?
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That's sort of the main issue the whole system hinges on. You need a steadily ringing phone (and the requisite advertising), since it is only a percentage of the folks that call will bite on the diagnostic fee and book and appointment. That percentage is higher or lower depending on how well the person that answers the phone is trained.
 
if you price over the phone, you are nothing but a number...you need to get there in person to sell yourself...

if we gave our diagnostic out over the phone, we'd close 1 out of 10 calls...but if we gave it out while on site, we'd close 8 out of 10 calls...
 
mdshunk said:
That's sort of the main issue the whole system hinges on. You need a steadily ringing phone (and the requisite advertising), since it is only a percentage of the folks that call will bite on the diagnostic fee and book and appointment. That percentage is higher or lower depending on how well the person that answers the phone is trained.
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this is true...mostly it depends on the number of calls you need to book per day...a one man shop needs 6-8 calls a day to schedule 4 and do 2.....

a 10 man shop needs 60-80 calls a day to accomplish the same thing...
 
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