- Location
- Massachusetts
emahler said:
Well obviously all 60,000 something ECs knows about that offer and takes it seriously.
I guess your right it must be a fact. :wink:
List price or T+M
- Thread starter Jerseydaze
- Start date
- Status
Well obviously all 60,000 something ECs knows about that offer and takes it seriously.
I guess your right it must be a fact. :wink:
- Location
- Massachusetts
emahler said:
Don't get all upset someone does not agree with every point you make.
Have I ever pretended to have actually run a business?
Have I ever said I have the ability to run a business?
I have said you have a lot of great information. I have even gone to you for advice and you gave it to me.
I just don't see that offer as proof of anything, I do see it as a great 'talking point' for a presenter.
No more, no less, lighten up. :smile:
iwire said:
you took that wrong...you are correct that most EC's have never heard of Frank Blau, let alone his challenge. You would think that every contractor who focuses on the resi/lt commercial service sector would at least know his name. It's not a secret. But the fact that so few EC's know his name is the reality. It's not a good reality, but it's the reality. If you were in this market segment, you realize how right you are about the lack of information in our industry.
- Location
- Massachusetts
emahler said:
Well then I apologize, I assumed you were busting my chops.
You certainly got me to change my view on the flat rate deal at least as far as homes.
Some honest questions, and not ones to discredit the flat rate method.
How many times do job costs exceed the quote?
What do you do, do you raise the rate for that task or do you sometimes just eat it for the one particularly hard install?
Are you providing all quotes (or any) site unseen?
iwire said:Well then I apologize, I assumed you were busting my chops.
You certainly got me to change my view on the flat rate deal at least as far as homes.
Some honest questions, and not ones to discredit the flat rate method.
How many times do job costs exceed the quote?
What do you do, do you raise the rate for that task or do you sometimes just eat it for the one particularly hard install?
Are you providing all quotes (or any) site unseen?
exceed quote? - occasionally this happens. majority of time, it's for unforseen issues (which is covered in the contract)
raise the rate? - you don't raise the rate, however, when you run into an unforseen issue, you show the homeowner, go over your options, and decide on a course of action. Many times that does mean additional costs. Where this differs from T&M is that you don't just trudge along and then give the homeowner a bigger invoice. Sometimes you do just suck it up. Especially if you are honest, and you realize you missed something that you shouldn't have missed.
quotes sight unseen?- never. that would be silly and useless. flat rate contracting is not just about pricing. it's an entire way to operate the business. but you will never find a successful flat rate company that gives prices over the phone.
- Location
- Massachusetts
emahler said:
Well then I have been misunderstanding you for a while.
I thought that was part of the deal for simple jobs.
- Location
- Massachusetts
emahler said:
There is a lot in that sentence.
- Location
- Massachusetts
I have to be honest, I don't think I would be a good flat rate tech, now or when I was younger. I am just not a salesman / people person.
How hard is it finding a good electrician that can sell?
We have a hard time just finding good electricians.
How hard is it finding a good electrician that can sell?
We have a hard time just finding good electricians.
iwire said:
it's hard...one of the reasons we decided to get out of it...not impossible though. it does take the right temperment. one of the main reasons is that as an industry, we shy away from it. Plumbers and HVAC are all over it. Our industry looks down on it.
but the truth is, you really don't have to sell...the better you are at selling, the better you'll do...but having the knowledge to make the right suggestions is more important. Give the customers the power to make the informed decision.
you can make a real good living just being honest with the customers and not screwing them.
- Location
- Massachusetts
emahler said:
It seems that to some any up selling is wrong, I think some can really be a benefit to both the EC and the HO.
As a customer I hate a pressured up sell, but I will listen to a suggestion, if I am interested I will ask for more info.
I have never felt flat rate and up selling has to screw anyone. :smile:
sparky 134
Senior Member
- Location
- Joliet, IL
I've been in the industry since November 1996. Worked for my brother for about 9 years until his business folded. He went from a 4 man non union shop not including himself to a 50+ union shop. I thought he had the world by the *alls.
At this time the market was exploding. Blueprints were arriving daily with instructions to just do the work, we can't find anyone else. This lasted a while and then the market slowed, he scaled back.
During this time he moved into a bigger rental space. The rent was 7k/month. Along the way he had some bad employees, less than efficient superintendants, bad customers.
The business started having cash flow problems. He personally guaranteed loans to the bank to try and keep the business going. When his largest debtor declated Chapter 11 the bank shut down the business, auctioned off the assets and my brother was left owing the bank over 100K.
I knew none of this until the end. I was there watching people dismantle the shelving, buying all of the equipment, etc. Heartbreaking. He had worked so long and so hard to build his business.
Since he had been with the same bank since the beginning the bank worked with him regarding the loan paybacks. The bank could have taken the house, cars, etc. but because my brother was up front the whole time they didn't.
After he closed I went to work for someone else for about 8 months and decided to go out on my own. My wife and I just had our first child. I didn't know anything about running a business, let alone any customers. Sounds like the perfect way to start a business !
It's been over four years now. I've learned a lot along the way. I've worked some LONG hours, made mistakes, etc. but I try and learn from the mistakes.
I hired my first employee about 7 months ago. I'm tired of trying to do everything myself. I'd like to find another employee but the responses I've gotten have been mostly comical. My wife has started working in the office part time to help with the paperwork. The business has gotten to a point that I can't cover everything. I've dropped the ball too much lately because I have too much to do.
I'd like to build the business iand become one of the largest EC's in the area. This will not happen unless I go union. That's just the way the market is around here. Not saying anything negative about unions so no need to lock the tread or delete this post. One day I hope to be big enough to tackle the large electrical projects.
In the beginning I though working T&M was the only safe way to operate. No way I could lose money. Took me a little while to realize flat rate was the better way IMO to operate. No surprises for the customer or myself. Yes, I blew the number on many jobs but I learned. I had customers say, "How much do you charge per hour ?" Unless you are in the construction industry telling someone, "I charge $85/hr.) did not sit well with the customer. I just say, "We charge by the project. This way you know up front how much you will be paying."
I've had customers say, "I will only pay by the hour." I say, "Ok, if you can't find anyone please do not hesitate to call me back."
I've ignored my retirement investments for the past 4 years. The company profits I've left in the company to keep the company running. I do make a profit each year and I could take the money but I invest the money in the company. Soon I will start contributing to my retirement again. I'm 37 and sometimes I feel that I am aging like a dog does. I'm taking on bigger projects. Never got into track homes in subdivisions (thank God) because that market collapsed leaving many EC's looking for work. I'm pursuing more industrial/commercial customers.
Anyway, if you are still reading to this point you really should get a hobby ! j/k. I've learned a lot from reading the posts on this website. I realize people have different ideas as to how a business should operate. Some will succed, some fail.
It's Saturday and I'm on my way to the office to estimate some prints from a perspective new customer. Wish me well.
At this time the market was exploding. Blueprints were arriving daily with instructions to just do the work, we can't find anyone else. This lasted a while and then the market slowed, he scaled back.
During this time he moved into a bigger rental space. The rent was 7k/month. Along the way he had some bad employees, less than efficient superintendants, bad customers.
The business started having cash flow problems. He personally guaranteed loans to the bank to try and keep the business going. When his largest debtor declated Chapter 11 the bank shut down the business, auctioned off the assets and my brother was left owing the bank over 100K.
I knew none of this until the end. I was there watching people dismantle the shelving, buying all of the equipment, etc. Heartbreaking. He had worked so long and so hard to build his business.
Since he had been with the same bank since the beginning the bank worked with him regarding the loan paybacks. The bank could have taken the house, cars, etc. but because my brother was up front the whole time they didn't.
After he closed I went to work for someone else for about 8 months and decided to go out on my own. My wife and I just had our first child. I didn't know anything about running a business, let alone any customers. Sounds like the perfect way to start a business !
It's been over four years now. I've learned a lot along the way. I've worked some LONG hours, made mistakes, etc. but I try and learn from the mistakes.
I hired my first employee about 7 months ago. I'm tired of trying to do everything myself. I'd like to find another employee but the responses I've gotten have been mostly comical. My wife has started working in the office part time to help with the paperwork. The business has gotten to a point that I can't cover everything. I've dropped the ball too much lately because I have too much to do.
I'd like to build the business iand become one of the largest EC's in the area. This will not happen unless I go union. That's just the way the market is around here. Not saying anything negative about unions so no need to lock the tread or delete this post. One day I hope to be big enough to tackle the large electrical projects.
In the beginning I though working T&M was the only safe way to operate. No way I could lose money. Took me a little while to realize flat rate was the better way IMO to operate. No surprises for the customer or myself. Yes, I blew the number on many jobs but I learned. I had customers say, "How much do you charge per hour ?" Unless you are in the construction industry telling someone, "I charge $85/hr.) did not sit well with the customer. I just say, "We charge by the project. This way you know up front how much you will be paying."
I've had customers say, "I will only pay by the hour." I say, "Ok, if you can't find anyone please do not hesitate to call me back."
I've ignored my retirement investments for the past 4 years. The company profits I've left in the company to keep the company running. I do make a profit each year and I could take the money but I invest the money in the company. Soon I will start contributing to my retirement again. I'm 37 and sometimes I feel that I am aging like a dog does. I'm taking on bigger projects. Never got into track homes in subdivisions (thank God) because that market collapsed leaving many EC's looking for work. I'm pursuing more industrial/commercial customers.
Anyway, if you are still reading to this point you really should get a hobby ! j/k. I've learned a lot from reading the posts on this website. I realize people have different ideas as to how a business should operate. Some will succed, some fail.
It's Saturday and I'm on my way to the office to estimate some prints from a perspective new customer. Wish me well.
MagnoliaElec
Member
Gentleman I can't help but wonder if a combination of the two, flat rate and T&M can't be integrated into a single resilt commercial service company. I wonder because in my neck of the woods there has been some serious growth in the last 10-15 years with some major backwoods stagnation prior to that. I border on the metro area of Charlotte NC and the DIY rural/mill town areas. Anything built in the last 10 years roughly I can count on to be relatively code compliant. However anything prior to that just couldn't have been inspected. Two weeks ago I had a family send me an home buyer inspection report on an early 80s. There were some of the usual things no grounding open J boxes that sort of thing. The HOs also wanted some cans and fans, some three ways. During the course of doing their work we came across a myriad of Handy man buried splices(8), several switches without boxes just notched stud and some drywall screws, and my favorite a two gang box that had been half covered with drywall and had a 1G plate installed. Repair work, handy man homes, anything rural, homes from the 90's outside of tract homes,old mill houses T&M. Most everything else I'm trying to bring under flat rate.
I'm not the brightest bulb in the box when it comes to numbers, but I'll throw some out anyway to illustrate the problem with T&M in residential service. Just my opinion.
A 1 man residential service needs $200k/year in gross sales minimum.
It can invoice 1500 hours/year maximum.
Breakeven is $133/hour minimum.
With 20% profit it's at $166/hour minimum.
T&M can't be quoted at $166/hour.
The numbers change with larger shops, but the reduction in OH/hour is offset by the need for more advertising.
Dave
A 1 man residential service needs $200k/year in gross sales minimum.
It can invoice 1500 hours/year maximum.
Breakeven is $133/hour minimum.
With 20% profit it's at $166/hour minimum.
T&M can't be quoted at $166/hour.
The numbers change with larger shops, but the reduction in OH/hour is offset by the need for more advertising.
Dave
Here's a link to an article about high pressure sales tactics.iwire said:
http://www.contractingbusiness.com/25/GlobalSearch/Article/False/13623/
If the above link doesn't work you can scroll down and find the article here along with some other good articles.
http://www.hvacprofitboosters.com/Tips/tips.html
bradleyelectric
Senior Member
- Location
- forest hill, md
480sparky said:
He's refering to the fact he doesn't charge by the hour, therefore how long the job takes has no bearing on the price. He just makes sure the GFI's operate properly and they have some, the pool outlet is a twistlock and on a GFI, pump is bonded, bulbs in the basement and attic work and they may want outside outlets while he is hanging the new foyer fixture. The prices are out of a book, not T&M.
bradleyelectric
Senior Member
- Location
- forest hill, md
480sparky said:
i'm going to be using that 1 !!
bradleyelectric
Senior Member
- Location
- forest hill, md
ike5547 said:
As opposed to him calling me a simpleton.
- Status