peter d said:
Here in an article about GEM from a few years ago...want to run your company like them? it costs money
(you may need to register to read the article...don't worry it's free- see they think about us electricians
)
My Nephew the Plumber
- Thread starter iwire
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Here in an article about GEM from a few years ago...want to run your company like them? it costs money
(you may need to register to read the article...don't worry it's free- see they think about us electricians
)
360Youth
Senior Member
- Location
- Newport, NC
Our salesman used to work for a company that had a flat rate charge for generator installs. He said that it worked well and balanced out in the end. I think they subbed out the electrical and their flat rate is what they got from the customer and then paid the electrician their price for install.
peter d
Senior Member
- Location
- New England
emahler said:
Of course it does. I'm not advocating that everyone run out and join Nexstar and become the next Hub or Gem. Not many people have that kind of money to invest, but it's obviously worth it in the long run.
But can you imagine if every time you called an electrician, any electrician, he showed up with a book, and said, "OK, new outlet? $400. Replace that smoke detector? $200. New Circuit? $800." Etc... (Instead of "Yeah, that will be $300 for the whole job.")
Wow.....
Ok, back to reality...
peter d said:
I don't understand why, this is thought of as something new, we have been using flat rate as far back as the 70's, only back then we called it contract price, and it was nothing more then prices from actuals records, of completed jobs. we had price sheets, not price books, we were able to quote a job at a fixed price and assure a profit on every transacton. Now we have all these sheets in a data file, and we can generate a price book with ease. In recent years we purchased scheduling software, and added out pricing data to the software.
This in not a difficult system to set up yourself, but it requires some work keeping track of completed jobs, and storing those records.
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peter d said:Of course it does. I'm not advocating that everyone run out and join Nexstar and become the next Hub or Gem. Not many people have that kind of money to invest, but it's obviously worth it in the long run.
But can you imagine if every time you called an electrician, any electrician, he showed up with a book, and said, "OK, new outlet? $400. Replace that smoke detector? $200. New Circuit? $800." Etc... (Instead of "Yeah, that will be $300 for the whole job.")
Wow.....
Ok, back to reality...
Peter, my point was that I think everyone on this board at one point had visions of running a company like GEM...maybe not as big...but we all imagined the office with all the equipment, the girl(s) answering the phones, the trucks on the road, providing training to our people, etc....then reality hits...most electricians don't feel comfortable charging the amount required to cover that overhead, and they never will get beyond their comfort level...
as for the pricing...the guys with the books have figured out their costs to operate...whatever the numbers are, they are based on real costs...
the $300 guy, he hasn't...
the book guy determines the life he wants, then figures out the cost to live it...
the $300 guy settles for whatever life his business allows him to live...
thats all...
- Location
- Massachusetts
satcom said:
I don't agree that flat rate is the same as contract pricing, they are similar but different enough to me to be separate.
To me 'contract pricing' involves estimates, biding, putting the materials out to bid to a few supply houses etc.
On the other hand when I think of flat rate all of that is put aside and the technician in the field can say....
Would you like 6 hi-hats installed in that family room while I am here, that will be $XXX.xx per fixture for a total of $XXXX.xx,
.....instantly, no estimating no pricing out the stock. etc.
peter d
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- New England
e,
I understand. I'm all for what you're advocating, not against it. I think we're just saying it in different ways. I agree that the flat rate system is a proven winner, and I also say that it can work for even small companies. Like you say, it just takes the initiative on the part of EC's to implement it.
I understand. I'm all for what you're advocating, not against it.
I think we're just saying it in different ways. I agree that the flat rate system is a proven winner, and I also say that it can work for even small companies. Like you say, it just takes the initiative on the part of EC's to implement it.
Energy-Miser
Senior Member
- Location
- Maryland
Hi,satcom said:
What scheduling software are you using? I am looking for one, could use your input. Thanks, e/m
iwire said:
they are close bob...your "contract" is based on your experience of commercial/industrial projects...larger items...
residential flat rate is the same thing...the difference is,.....
you know that the recessed light will be approx $20...you know that on average, you will require 20' romex, 1 box, 1 switch, and $5 of misc items...You also know, that on average, it will take 1 guy 2 hrs...
so, rather than send out RFQ's for the individual material, you have done it previously for all the material in your book.
so, the work done is the same...it's just a flat rate manual is based on average costs and times vs. a one off bid for a large project.
does that make sense?
peter d said:e,
I understand. I'm all for what you're advocating, not against it.
i understand...i wasn't disagreeing with you either...trust me, i see that you are in favor of a better industry.
my statements were more general, not directed anywhere in particular...
I will add this, currently, it's much easier to run this system in plumbing or hvac (or in a combo P/E or P/HVAC/E shop with electrical as an add on) than in a pure play electrical shop...
there are 3 main reasons for this...
1) Plumbing and HVAC shops are years ahead of us, as a whole, regarding this...more companies in those industries use these systems...
2) they are more emergency oriented...therefore, more service oriented...
3) we have too many $300 guys in our industry...
but, it does work...as evidenced by Mr. Sparky
- Location
- Massachusetts
emahler said:
I am not an idiot,:grin: I know you had to figure out the cost at some point and I am sure there is time that must be spent keeping the numbers current.
But the time invested figuring the price for each job is greatly reduced. Besides now the guy in the field has the ability to tell the customer what additional work will cost immediately, that is not something I am able to do under our typical contract job.
iwire said:
see now if I was Peter, i'd agree with you in hopes of getting brownie points
but yep, you're right...what some guys do is have specific prices for each part of a task...so rather than look in a book and say "install recessed light with switch....$250....the guy will on site, add up all the parts...
1) install recessed light housing
2) install white baffle trim
3) install 40' 14/2 romex in closed wall
etc., etc, etc...
each item has a unit price and then all is added up...this is also considered contract pricing, as it is more specific to the individual installation...
peter d
Senior Member
- Location
- New England
emahler said:see now if I was Peter, i'd agree with you in hopes of getting brownie points
Don't even try...you'll never come close to me. I have almost as many brownie points as Bob has posts.
iwire said:
When we estimate a contract job, we do all the same things for our flat rate,
I don't think you understand what goes into a flat rate price.
Every rate in an estimate, we don't shop prices, for every contract we have updated prices, now is we were contracting large lighting or swichgear, then we workd have to bid out for current pricing.
I think if you had a chance to see how the flat rate was established, you may get a better picture of the process.
But there are some that use an off the cuff, pricing system and call it flat rate, they are not anything like contract prices.
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peter d
Senior Member
- Location
- New England
satcom said:
yes, but does the service tech have to figure all that stuff out on the spot? He looks in the book, tells the customer the price, and they accept or decline, and signs the contract.
All the stuff you mentioned is done for the techs in the office.
I think that's the distinction that Bob was talking about.
peter d said:
Be it me an estimator, or someone in the field , it is a contract in the end.
Now what may have Bob think the way he is, could be the way some use the different flat rate systems, and I do agree with Bob that some systems can be abused and in no way are like contract pricing.
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growler
Senior Member
- Location
- Atlanta,GA
peter d said:
A good service tech. has very little in common with the average electrician, he is more like a sales rep., he may not even be a great electrician. He is trained in sales and most of the time works on commision. The only difference between being self employed and being a service tech. is the fact that you are using the name of the company, their van and their tools and equipment but the techs. that work for companies like Mr. Sparky are really out there trying to make as much money as they can for themselves and by doing that they make money for Mr. sparky.
I have talked to many of their ex-employees and many don't like to work this way but that doesn't matter because they find the one's that do.
growler said:
Brian a good discription of what we don't do, these are the flat rate operations that are not devloped from an estimated based contract, also we have always used J-men Electricians not Techs, and we still do. Commision pay is illegal in my state, however it is legal in many and is used as you say, this may be another reason Bob has his view of flat rate.
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ceb
Senior Member
- Location
- raeford,nc
I agree that IF the elect. has kept good records you could get by with flat rate pricing. However,have we not all looked at a job and in our mind from experience said it should take me x# hours only to run into something we could not see and it winding up taking xx# of hours? Now if you have flat priced the job you loose.Then on the other hand every thing falls into place you win. I think you would loose more often than win.But with the plumbers $1200.00+ to replace a toilet, pipe is already there, two bolts ( worst case need to cut with saw ) one water line, replace wax seal, two new closet bolts, reconnect water line not a lot of hidden obstacles. I would only want to replace two toilets a week for that.:grin: No I'm greedy four:grin:
first off...commission pay is perfectly legal in NJ...you simply have to meet the requirements.
2nd - i agree with satcom regarding the employees...the idea behind flat rate, at least for a reputable company, is not to screw the customer.. the idea is to give a qualified electrician the tools to service the customer properly.
is it abused? you bet ya...
does it catch up them? sometimes
but you can run a completely honest and reputable flat rate company...it takes just as much diligence as it does to run an honest and reputable company any other way.
the entire idea behind a business is to have the employees make more money than they take...agreed?
so if you pay a guy $100k a year, how much money do you need him to generate for you? I'd say in most cases about $300,000....this is for a resi service company (this covers his training, truck, advertising to get the calls, etc, etc, etc) so, if the guy works 2000 hrs a year, that equates to $150 gross for every hour he works.
so, you can go out and price a $300 quick job, then send this guy out to do it...(but your salary is added to this, so now he needs to make $175/hr he is on the clock...that's 4-5 of these calls a day...you do nothing but go look at jobs..)
or you can just do it T&M (good luck getting $150/hr including travel time)
or you can arm him with the tools he needs to go look at the job, use his experience and knowledge to determine what needs to be done, then utilize the tools you have given him (price book and training) to quote a fair and accurate price to the customer...then do the work on the spot.
again, it can be abused...but so can T&M and any other pricing schedule you choose to use...
2nd - i agree with satcom regarding the employees...the idea behind flat rate, at least for a reputable company, is not to screw the customer.. the idea is to give a qualified electrician the tools to service the customer properly.
is it abused? you bet ya...
does it catch up them? sometimes
but you can run a completely honest and reputable flat rate company...it takes just as much diligence as it does to run an honest and reputable company any other way.
the entire idea behind a business is to have the employees make more money than they take...agreed?
so if you pay a guy $100k a year, how much money do you need him to generate for you? I'd say in most cases about $300,000....this is for a resi service company (this covers his training, truck, advertising to get the calls, etc, etc, etc) so, if the guy works 2000 hrs a year, that equates to $150 gross for every hour he works.
so, you can go out and price a $300 quick job, then send this guy out to do it...(but your salary is added to this, so now he needs to make $175/hr he is on the clock...that's 4-5 of these calls a day...you do nothing but go look at jobs..)
or you can just do it T&M (good luck getting $150/hr including travel time)
or you can arm him with the tools he needs to go look at the job, use his experience and knowledge to determine what needs to be done, then utilize the tools you have given him (price book and training) to quote a fair and accurate price to the customer...then do the work on the spot.
again, it can be abused...but so can T&M and any other pricing schedule you choose to use...
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