My Nephew the Plumber

[emahler]

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:

you rarely lose...like anything else, if and when you run into issues, you let the customer know and proceed from there. sometime you change the scope of work (and the price)...sometimes you simply do a completely different install...it's no different than giving a fixed price bid on a larger project...

or is it better to take a lower rate at T&M and let the customer take all the risk (and reap all the reward)?

 

[satcom]

first off...commission pay is perfectly legal in NJ...you simply have to meet the requirements.

Yes it can be done legal, but the state does not make it easy, stright commision only, never was legal here, for electrical contracting.

 

[emahler]

Yes it can be done legal, but the state does not make it easy.

it's not to bad...we use a PEO, so they handle all the paperwork...I just submit the hours and commission, they handle the rest...

but this state doesn't make it easy to run a business, period...

I don't know for sure about straight commission, we've always given a good base salary ($600+ week) and commission on top...but I know a few plumbers, who through experience are well versed on labor laws (not good experience either) who have been operating straight commission for years...gotta assume that there is a way to do it...since I know they are being scrutinized by the labor board...

 

[hardworkingstiff]

I haven't seen any mention that sometimes the 'plumber' using the fixed rate system has jobs that they don't get.

If you are not making enough money, it's not the systems fault, it's your fault. You are not providing a service to the community that will pay your rate, or, your rate is low and you are not willing to raise it.

 

[emahler]

I haven't seen any mention that sometimes the 'plumber' using the fixed rate system has jobs that they don't get.

If you are not making enough money, it's not the systems fault, it's your fault. You are not providing a service to the community that will pay your rate, or, your rate is low and you are not willing to raise it.

i'm not following, can you elaborate?

 

[JohnJ0906]

My nephew stopped by last Sunday, he and I talked about the company he works for.

It is a flat rate residential service company.

Your kitchen drain is stopped up Mame?

Yes we will be right out....$425.00 Master card, Visa no problem.

Your toilet needs replacing....$1,200 and up depending on what model.

What does he do for at least 1 hour per week at the office?

Sales training, every call he goes on he is expected to sell more service.

No 'free estimates' just a book of set prices for each thing they do.

It certainly gave me a lot to think about.

I have a good friend that works for an electrical company exactly like this, except for the sales training. (Not one of the big franchises)
Incentives for sales over $x per week.
I have heard rumors that they are in the red, but I can't say for sure. He has stopped asking me if I want to work there.

 

[emahler]

I have a good friend that works for an electrical company exactly like this, except for the sales training. (Not one of the big franchises)
Incentives for sales over $x per week.
I have heard rumors that they are in the red, but I can't say for sure. He has stopped asking me if I want to work there.

it's all required (including the sales training)...it's real easy to go into the red with the overhead required, if the guys aren't trained to sell...

 

[mdshunk]

FWIW, I carry a flat rate book with me every day for those that insist on a price on the spot for work that I sort of got "ambushed" with. I guess you could say that I'm using sort of a hybrid system. About 1/4 bid the old fashioned way, about 1/2 T&M, and about 1/4 out of the flat rate book.

 

[emahler]

and that system will work, unless you have multiple employees doing service work...then you need something that will keep you consistent..

 

[mdshunk]

and that system will work, unless you have multiple employees doing service work...then you need something that will keep you consistent..

Yes, it's already been an issue for me. Sally paid 100 bucks a recessed can, and in my house it worked out to almost 200, yadda, yadda... Joe's house is just like mine, and my service upgrade was almost 1,000 more.... These are issues I created due to the hybrid approach.

I think the flat rate systems are better for larger, more densely populated areas. A bit harder to implement in rural America. I say this due to the fact that they don't always lend themselves that easily to repeat customers, as has been demonstrated by commentaries from former flat rate contractors who operated in smaller communities.

 

[brantmacga]

Truth be told, as of the past month or so I've been giving serious thought to finding other ways to supplement my income. I love this trade and I can't see leaving it for good, but does anyone else feel that it's getting harder and harder to make money doing electrical work? I know there are plenty of successful EC's out there, but for every succesfull one there must be a bunch who are scraping by or failing.

i'm right there w/ you. i don't plan on closing my business, but i want other options. i already have one other business that i'm in as a partner, and am working on getting at least one more going within the next 12 months, hopefully about 8 mo. I'm going to let my wife devote most of her time to it and it'll be her baby. Maybe she'll get rich and take care of me.

 

[hardworkingstiff]

i'm not following, can you elaborate?

Sure, it seems like blame is being put on the system electricians use vs. the perceived system the plumbers use. I'm just saying it's not the system.

If you can't get any work, maybe your overhead is too high, or you are not buying right, or ??? and you are not providing a market perceived value.

If you are working your tail off and not making enough money, maybe you are afraid to charge (or don't know how) properly.

I find I cannot make the money I want doing residential work. I quit doing it almost 30-years ago. In fact, I often do other type of work (non electrical), like fuel distribution, lube lines, tank installations.

A friend of mine (build docks) said "I like Lou's motto, 'I work for money' ".

If the economy gets as snug as I think it might, a lot of the 'fixed rate system' guys may lower their prices, or not be working. You need to be flexible. The bottom line is the market sets the upper limit of prices, but will allow you to work as cheaply as you are willing to go. The only way to know how high you can charge is to lose work because of price. If you can't make ends meet on the market ceiling price, then you might need a different market.

 

[Brady Electric]

My Nephew the Plumber

I have often wondered why plumbers make more money than electricians do.
To me electrical in the home is more dangerous and needs to be put in properly.
Everyone knows poo flows down hill.
I agree with I-Wire it does give something to think about.
I have been in business for thirty years and I do make money. I keep up with the supply houses prices and charge according to price increases of materials and my labor rate increases with the time.
I treat everyone like I won't to be treated and am fair.
Someone once said to me. (I'm you friend so your not going to make money on me are you).
I repeated. ( Yes, because my enemies sure don't call me and if I didn't make money on my friends I wouldn't make money.)
Hope all of you have a prosperous New Year.
Thanks for all who respond to these threads because it always gives us something to think about.
Semper Fi

 

[satcom]

If the economy gets as snug as I think it might, a lot of the 'fixed rate system' guys may lower their prices, or not be working. You need to be flexible. The bottom line is the market sets the upper limit of prices, but will allow you to work as cheaply as you are willing to go. The only way to know how high you can charge is to lose work because of price. If you can't make ends meet on the market ceiling price, then you might need a different market.

We have been watching the local market and the 'flat rate system' guys have been raising their prices, not lowering them, and that is what other business do in weak markets. A common mistake, is to panic and lower prices in a weak market.

 

[BryanMD]

A common mistake, is to panic and lower prices in a weak market.

There was (still is) a very successful car dealer here who had the best marketing slogan I've come across:

"People like to do business where business is good"

The shiny new trucks and spiffy uniforms and glossy ads give the typical resi customer a nice warm and fuzzy feeling about choosing that guy but those things also reinforce the notion that they are a real operator in a business that MOST resi customers will have a need for VERY rarely.

Some independent EC's will offer themselves to be a different flavor of that sort of ice cream but most don't bother to even try.

A confident voice on the phone (closing) with a prompt appointment scheduled (closing) and a neat,clean tech knocks on the door (closing) who can promptly give them a firm price (closing) gets the job done reasonably well and collects before he leaves (closed!) is a company where the customer is consistently led to believe business is good.

 

[satcom]

There was (still is) a very successful car dealer here who had the best marketing slogan I've come across:

"People like to do business where business is good"

The shiny new trucks and spiffy uniforms and glossy ads give the typical resi customer a nice warm and fuzzy feeling about choosing that guy but those things also reinforce the notion that they are a real operator in a business that MOST resi customers will have a need for VERY rarely.

Some independent EC's will offer themselves to be a different flavor of that sort of ice cream but most don't bother to even try.

A confident voice on the phone (closing) with a prompt appointment scheduled (closing) and a neat,clean tech knocks on the door (closing) who can promptly give them a firm price (closing) gets the job done reasonably well and collects before he leaves (closed!) is a company where the customer is consistently led to believe business is good.

Anyone can Flat Rate price, it is not necessary to join a flat rate system company to make it work, just read the above, some very basic things you can do to.

"Some independent EC's will offer themselves to be a different flavor of that sort of ice cream but most don't bother to even try."

 

[tlaidman]

This is the same as Mr. Electric and Mr Rooter both Dwyer companies out of waco Texas. The cost is high because they pay as much as 8% inroyalties to the franchiser. Also they must buy all paper such as invoices, proposals, business cards, and uniforms from the main office. you must upsell calls to make any money.

 

[hardworkingstiff]

We have been watching the local market and the 'flat rate system' guys have been raising their prices, not lowering them, and that is what other business do in weak markets. A common mistake, is to panic and lower prices in a weak market.

Hummm, I think you should call Intel. They need your advice.

 

[satcom]

Hummm, I think you should call Intel. They need your advice.

Intel, is in the service, installation market?

I think they are in the commodities market, not the labor services market, there is a lot of information on different business strategies in down markets, we have been thru 4 down cycles, one lasting more then 2 years, and most of the EC's that tried to adjust downward, during these times, dropped out of the business.

 

[emahler]

This is the same as Mr. Electric and Mr Rooter both Dwyer companies out of waco Texas. The cost is high because they pay as much as 8% inroyalties to the franchiser. Also they must buy all paper such as invoices, proposals, business cards, and uniforms from the main office. you must upsell calls to make any money.

be intellectually honest here...of the upto 8% (which goes down with the volume you do) up to 4% of that would be spent whether you were a franchise or not...you would spend that money on graphic designs for advertising, legal fees for your invoices, etc...

in addition, you know that you aren't required to purchase anything from them. but that it's cheaper to use their vendors. sometime 50% cheaper. Their printer beat the heck out of any local vendor for business cards, invoices, etc.