How much do you charge for a service call

[Rich R]

Just out of curiousity , How do you make any money by charging a $65 service call ?

I charge $125 for first hour and even then rarely make any profit unless it is right down the block. I normally use a set price for jobs but there are a few times I have to charge a service call or as I call it a " Diagnostic fee "

Maybe I'm misunderstanding what you guys are saying. Let me use this as an example. Lets use a generic job so Resi/Comm. doesn't come into play :

Customer calls you up, says that 2 receptacles are not working. You schedule the service call.

You drive 20 minutes to job, you spend another 20 minutes on job to find that in 1 receptacle a backstabbed wire popped loose and make repair. You spend another 20 minutes driving back to shop. Your total bill is $65 ?

How can you make any profit at that $65 price ? or at $75 ? or even at $85 ?

Please show us how much that hour cost you.

(Not directed at JMSBrush , I know you mean a separate charge from hourly but others here do not)

 

[B4T]

To me a service call is just a cheap way of expanding customer base. It is not a money maker. You become a name that might get passed to someone asking.. "do you know of a good electrician"

 

[480sparky]

To me a service call is just a cheap way of expanding customer base. It is not a money maker. You become a name that might get passed to someone asking.. "do you know of a good electrician"

AKA "Loss Leader" in the business world.

 

[jmsbrush]

Rich
I'm a flat rate shop, We price by the Job. Now what you described would be a level 2 troubleshooting price. Which would start in the $200.00 dollar range.
If it was just a Simple receptacle change It would be $49.00 on top of the 65 dollars which would be a total of $114.00
Now that recept only took you 10 mins 5 to 10 mins to bill and talk with your customer.

When you find your true cost, you are going to base your labor rate at 1350 to 1500 billable hours a year. You have to use those numbers because of what you said, " drive time , shop time supply house, estimating and ect. You over head profit are already tied into your flat rate price.♦

 

[powerslave]

In my case we charge $75.00 to dispatch any of the technicians plus the cost of the work to be performed.

 

[jmsbrush]

To me a service call is just a cheap way of expanding customer base. It is not a money maker. You become a name that might get passed to someone asking.. "do you know of a good electrician"

Service work can be a very lucrative business,What is nice about service work is that you get paid as soon as you are done. not waiting weeks to months from general contractors

 

[B4T]

AKA "Loss Leader" in the business world.

A loss leader or leader[1] is a product sold at a low price (at cost or below cost)[2] to stimulate other, profitable sales. It is a kind of sales promotion, in other words marketing concentrating on a pricing strategy. The price can even be so low that the product is sold at a loss. A loss leader is often a popular article. Sometimes leader is now used as a synonym for loss leader and means any popular article, in other words one sold at a normal price.[3]

I did a Google search to see what it was :grin:

 

[fisherelectric]

Minimum for service call....$125.00, gives customer 1/2 hour in the house. After that it's 95.00/hr or portion there-of. Thinking of cutting back a little to $110 min...$85.00/hr...recession pricing. People are definitly checking rates now. We upsell whatever we can...there's usually something.

 

[quogueelectric]

Just out of curiousity , How do you make any money by charging a $65 service call ?

I charge $125 for first hour and even then rarely make any profit unless it is right down the block. I normally use a set price for jobs but there are a few times I have to charge a service call or as I call it a " Diagnostic fee "

Maybe I'm misunderstanding what you guys are saying. Let me use this as an example. Lets use a generic job so Resi/Comm. doesn't come into play :

Customer calls you up, says that 2 receptacles are not working. You schedule the service call.

You drive 20 minutes to job, you spend another 20 minutes on job to find that in 1 receptacle a backstabbed wire popped loose and make repair. You spend another 20 minutes driving back to shop. Your total bill is $65 ?

How can you make any profit at that $65 price ? or at $75 ? or even at $85 ?

Please show us how much that hour cost you.

(Not directed at JMSBrush , I know you mean a separate charge from hourly but others here do not)

Minimum charge 2 hrs by me 150 to go look at it. Fix it and rake leaves for an hour.

 

[zappy]

Minimum charge 2 hrs by me 150 to go look at it. Fix it and rake leaves for an hour.

The customer's leaves?I charged a one hour minimum + a service charge and was done in about a half hour and the customer said well i have another half hour can you look at this please

 

[bradleyelectric]

I believe the OP was asking the people that charge a service charge how much is the service charge. Not out of the people that make service calls how much is your hourly rate. To do work at a lose calling it a lose leader doesn't make it the same as a store drawing people in to buy something figuring you will buy cables with a large markup or get you in to buy the steaks on sale figuring that will be a small part of your total purchase. On average someone needs an electrician once every three years. Without reminding them about you they forget who you were long before than. I've read on this forum a member had a different trade at their home 1 weekend and not remembered who they were the next week. It may be a better idea to actually charge enough to make money on these small jobs and leave the customer feeling like they just had a possitive experience. Then remind them occasionally who you are.

 

[growler]

Any electrician surveying this website will get the mistaken impression that most shops are in the business of making service calls to a home or business for the home/business owner.

Most electricians work for EC's who sub for GC's. When a time ticket comes up, it is $55 an hour. The GC adds on another 5% for his cut. Any part of that change that was in the original bid, say a termination or breakers, etc. they will not get charged time for, its very strict.

Don't try and dissect the cost, its pretty much labor&burden, end of story. Must be good business, because its one of the biggest shops in the US. In other words, working for HOs is not the bread and butter.

I think most people would be surprised at how large the service industry really is. Look at any city and see how much of it was built last year ( new construction ) and how much of it was built in the last 100 years ( service work).

Trying to say that big jobs are billed at $55 an hour is crazy. The last big company that I work for was in 1994 and they had been in business for almost a 100 years ( they had pictures in the main office of the early days with mules pulling the wagons loaded with cable) and work could be billed at more than $55 and hour even in 1994 it just depended on what type of work was being done. Control work in industrail sells for more than running MC cable in commercial. There are no set rates for work and many GCs will tack on a good bit more than 5%.

There are plenty of service contractors in the US that working for home owners is their bread and butter. The residential service industry has grown a lot in the last 20 years and that's why there is more discussion about how it works. Many areas of the country didn't even have residential service companies even 10 years ago so contractors are just starting to learn about the business.

I remember back when you didn't buy chicken in a bucket but that doesn't mean it didn't turn out to be big business.

 

[emahler]

A loss leader or leader[1] is a product sold at a low price (at cost or below cost)[2] to stimulate other, profitable sales. It is a kind of sales promotion, in other words marketing concentrating on a pricing strategy. The price can even be so low that the product is sold at a loss. A loss leader is often a popular article. Sometimes leader is now used as a synonym for loss leader and means any popular article, in other words one sold at a normal price.[3]

I did a Google search to see what it was :grin:

wal-mart perfected the loss leader...the difference between them and us...they would make up for the loss with the other items purchased by the consumer on that trip...we hope and pray that maybe we can make up for the loss at some possible time in the future....

we are bad business men...

 

[emahler]

I think most people would be surprised at how large the service industry really is. Look at any city and see how much of it was built last year ( new construction ) and how much of it was built in the last 100 years ( service work).

Trying to say that big jobs are billed at $55 an hour is crazy. The last big company that I work for was in 1994 and they had been in business for almost a 100 years ( they had pictures in the main office of the early days with mules pulling the wagons loaded with cable) and work could be billed at more than $55 and hour even in 1994 it just depended on what type of work was being done. Control work in industrail sells for more than running MC cable in commercial. There are no set rates for work and many GCs will tack on a good bit more than 5%.

There are plenty of service contractors in the US that working for home owners is their bread and butter. The residential service industry has grown a lot in the last 20 years and that's why there is more discussion about how it works. Many areas of the country didn't even have residential service companies even 10 years ago so contractors are just starting to learn about the business.

I remember back when you didn't buy chicken in a bucket but that doesn't mean it didn't turn out to be big business.

growler, you are debating an instigator...he may or may not have a clue...but he is just instigating on this site...

 

[iwire]

wal-mart perfected the loss leader...the difference between them and us...they would make up for the loss with the other items purchased by the consumer on that trip...

Of course that is what they want but is not always how it works, my wife goes to 1/2 dozen stores buying the loss leaders at each store each week. That means other customers are subsidizing my groceries, great, I don't set the rules. It may be apples and oranges to you it is not that to me as the consumer.

As a consumer I see no difference in Walmart providing a loss leader and contractor giving free estimates. I have gotten free estimates from asphalt, roofing and masonry contractors. The ones I called that wanted money to come out where out of the running for the work, simple as that.

 

[emahler]

Of course that is what they want but is not always how it works, my wife goes to 1/2 dozen stores buying the loss leaders at each store each week. That means other customers are subsidizing my groceries, great, I don't set the rules. It may be apples and oranges to you it is not that to me as the consumer.

As a consumer I see no difference in Walmart providing a loss leader and contractor giving free estimates. I have gotten free estimates from asphalt, roofing and masonry contractors. The ones I called that wanted money to come out where out of the running for the work, simple as that.

bob...1) we are beyond free estimates...now we are actually talking about charging for service calls and taking a loss..at least with free estimates, we have a hope to get the job within a short time frame....with service calls as loss leaders, we are hoping that we'll get more work sometime before we go out of business...2) your wife goes to 6 different stores and spends her time and your money for gas...she doesn't spend wal-marts time and wal-marts money for gas...

have the HO bring their problems to my shop, on their dime...no problem...

add into the equation that it costs pennies per person to get them into the store...we spend 10's if not 100's of dollars to get into a customers house...

 

[iwire]

bob...1) we are beyond free estimates...now we are actually talking about charging for service calls and taking a loss

True enough.

2) your wife goes to 6 different stores and spends her time and your money for gas...she doesn't spend wal-marts time and wal-marts money for gas...

The stores are within 1.5 miles, the gas is insignificant and and of course she spends Walmarts time, they pay all the employees that stock the shelves with the products she buys and the person that rings the order.

 

[emahler]

True enough.




The stores are within 1.5 miles, the gas is insignificant and and of course she spends Walmarts time, they pay all the employees that stock the shelves with the products she buys and the person that rings the order.

yes they do...and they would whether your wife walked in that store or not...just like the secretary in your office will be in that office tomorrow whether your largest customer calls or not....

additionally, there is one employee for what? 5-10-15 customers at any given time?

now, for us, we wouldn't send the employee to that particular customers house if they did not call and request it...it's an expense that is directly related to that specific customer...

unlike wal-mart that is open from 9-9pm regardless of whether you personally go there or not....

bob, you are either playing devils advocate or .....

 

[480sparky]

Of course that is what they want but is not always how it works, my wife goes to 1/2 dozen stores buying the loss leaders at each store each week. That means other customers are subsidizing my groceries, great, I don't set the rules. ........

Who's subsidizing your gasoline and other vehicle expenses?

 

[emahler]

Who's subsidizing your gasoline and other vehicle expenses?

read his next response...the stores are close, so he has no overhead