profit on material

[dbuckley]

Why am I continually cutting my prices to beat my competition.

Because thats the way the system is supposed to work. Competition (many suppliers offering the same goods or services) is supposed to drive prices down. Businesses naturally want to be a monopoly supplier, to remove the competitive element, so they can charge higher prices.

The alternative is to agree with all your competitors to fix prices by forming a cartel. However, if you get caught being part of a cartel then ones wrists are in for a slapping.

The reality for almost all electricians (and plumbers, and auto mechanics, and most other businesses out there) is that they are all commodity suppliers, doing the same work, competing for the same work, and in large part competing on price. The customer requirements are always one of a fixed set, the method and material selection is pretty much fixed by the NEC, so for the commodity work you actually have only limited opportunities to adjust your price model.

 

[mdshunk]

... so for the commodity work you actually have only limited opportunities to adjust your price model.

Which is why I do darned little new residential construction.

 

[john_axelson]

The reality for almost all electricians (and plumbers, and auto mechanics, and most other businesses out there) is that they are all commodity suppliers, doing the same work, competing for the same work, and in large part competing on price. The customer requirements are always one of a fixed set, the method and material selection is pretty much fixed by the NEC, so for the commodity work you actually have only limited opportunities to adjust your price model.

Exactly why you will feel that you are in a commodity business and I sell that I am in a Service Business. My level of service, response time, educating, and quality are the difference between me and the "low" guy. I also don't do much residential work, new or remodel.

Hate to admit it, but most Plumbers already have this figured out. While you are trying to tell the customer how to reduce the cost of your installation, the plumber is convincing the owner that ADA height toilets will be much better for them, he is telling them that this faucet is better than that one, etc.

 

[dbuckley]

I am in a Service Business. My level of service, response time, educating, and quality are the difference between me and the "low" guy. I also don't do much residential work, new or remodel.

I think you've whacked the nail squarely on the head there; the average homeowner is not a sophisticated consumer and thus quality of service provided means nothing to him.

Come wire my data centre, and I'll be over your reference installations with a magnifying glass and a fine tooth comb; price is not the most important criteria by some distance.

 

[bakerbrotherselectric]

profit on material

I just wanted to thank everyone for the input in this thread. There is definitely some wisdom here.

We are going to re-evaluate our markup on materials after all the posts.

We really appreciate this forum's existence. There are many land mines discussed and it sure helps keep us aware.

Thanks again,

KB

 

[wamegojim]

A flat rate for the job, as emahler proposes, eliminates all these worries.

Flat rate is IMHO a great way to work smaller projects or service work. If it is a bid situation, then I would recommend, as someone else di only breaking out labor and Material. I would not do it item by item.

 

[emahler]

Flat rate is IMHO a great way to work smaller projects or service work. If it is a bid situation, then I would recommend, as someone else di only breaking out labor and Material. I would not do it item by item.

why break it down at all for any fixed price quote? only time you will ever get a breakdown from me in when it's T&M....

going back to the restaurant analogy, ever see a menu that says "steak...food $10, labor $15n O&P $10, total price $35"?

no? me niether....