rates, winter, and the economy

[electricmanscott]

We were in a similar situation in 1989-1991. We wew also here in 1973-1975. And you may remember a little thing called the great depression. So, we've been here before.

The big problem with doing a service for $1800 right now is this: it took you 2 months of hard times to drop $700 off your price, but it will take you 2 years to add it back. Happens every cycle.

I don't care what happened when I was a kid or when I wasn't even born. I care about now and what I am facing.

If it takes me two years to get back to prices I want to be at so be it. At least I'll still be around in two years. :grin:

 

[~Shado~]

if you are making 0% profit, and just paying bills, go work for someone and not have the headaches of running a business....take you existing work to a contractor who runs a business, and take a job running the work in exchange for a paycheck....you will be better off...

I have to disagree here. For example:
- Small shop running 2 licenses, billing at $70/hr.
- Labor & burden $35/hr per man
- Owner pays themselves $50/hr
- Leaves $25/hr for overhead, perhaps a little savings
- average 8% profit
So far, all is good, everyone working, making $$

Now...drop profit.....still everyone working and paying bills

I'm not sure how it is in your neck of the woods, but, are you hiring everyone applying for a job these days?

What you are suggesting would for sure putt 2 more folks on the unemployment scene, perhaps the owner too....let alone owner taking a substantial income loss. Not a good thing in my eyes.

Thats why things are the way they are right now. No jobs, no $$$....if they happen to have a few bucks to spend, they are looking for the best deal, most bang for the buck....period

 

[aline]

Unfortunately in these times you are in the minority. People want deals or to feel like they are getting a deal. As mentioned, do you pay full sticker for a car? If you do it does not mean you have more integrity it means you are a fool. Also do you look to see if an item is on sale when you are buying it?

If I'm selling gourmet burgers for $5.00 each, but a customer want's me to match the price of a McDonalds burger, then that customer is going to get a McDonalds burger from me, not my gourmet burger.

If a customer wants me to match the electrician's prices who's selling the McDonalds electrical service than the customer is going to get the McDonalds electrical service from me instead of the my gourmet electrical services.

I can also not answer the phone, not return the customer's phone calls, not show up on time, not show up at all, track mud into the customer's home, not put down drop clothes so the insulation and dirt rain down on the carpenting when doing the work and do a poor installation just as well as the guy providing the McDonalds electrical service if that's what they want.

The job I did yesterday the homeowner told me he contacted other contractors to give him a price for the job. One didn't answer his phone so he left a message. They called back a day later and setup an appoinment to come out but then never showed up and didn't bother to call to say they couldn't make it.

He said he decided to go with me because he felt I provided better customer service. I arrived when I said I would, wore booties in his home and put down drop clothes while looking into the attic access opening.

If the customer want's the best price they can get, they can go buy a receptacle at home depot and install it themselves. I don't sell receptacles and switches. I sell service.

 

[jmsbrush]

wouldn't we be better off doing 90% as much work at 100% of our pricing, rather than 100% of the work at 90% of our pricing?




and how does the market set the price?


they base it on the prices they receive from contractors...so we do set the price...

customer wants a project done...contractors 1-15 all price that project at $5000....if the customer wants to do the work, it will cost them $5000...the market price...

then contractor 16 comes along and prices it at $2500....suddenly, the market price is 1/2 of what it should be...

the customer didn't set the price, the contractor did...

All this is true and I would like to add That int the where did the money go, The author explains this very well

 

[jmsbrush]

If I'm selling gourmet burgers for $5.00 each, but a customer want's me to match the price of a McDonalds burger, then that customer is going to get a McDonalds burger from me, not my gourmet burger.

If a customer wants me to match the electrician's prices who's selling the McDonalds electrical service than the customer is going to get the McDonalds electrical service from me instead of the my gourmet electrical services.

I can also not answer the phone, not return the customer's phone calls, not show up on time, not show up at all, track mud into the customer's home, not put down drop clothes so the insulation and dirt rain down on the carpenting when doing the work and do a poor installation just as well as the guy providing the McDonalds electrical service if that's what they want.

The job I did yesterday the homeowner told me he contacted other contractors to give him a price for the job. One didn't answer his phone so he left a message. They called back a day later and setup an appoinment to come out but then never showed up and didn't bother to call to say they couldn't make it.

He said he decided to go with me because he felt I provided better customer service. I arrived when I said I would, wore booties in his home and put down drop clothes while looking into the attic access opening.

If the customer want's the best price they can get, they can go buy a receptacle at home depot and install it themselves. I don't sell receptacles and switches. I sell service.

That's a very good analogy.
Things are very slow here but I have not lowered my rates.
Like Emaler said, If all 15 ECS bidded the work at the normal price of lets say $5000.00 we as EC's would be okay.
Everybody is scared to death. We need to bid work like normal, To make a profit. Not just to keep ourselves busy. Especially ,not paying to do the job.
The jobs that i have been bidding lately are going for prices $4000. below my break even point. More power to them. IF they keep doing that they will not be my competition for long, unless the have a big bank account.

 

[Rewire]

I don't care what happened when I was a kid or when I wasn't even born. I care about now and what I am facing.

If it takes me two years to get back to prices I want to be at so be it. At least I'll still be around in two years. :grin:

You may still be around in two years but will your business.

 

[electricmanscott]

You may still be around in two years but will your business.

Ah yeah, that was my point.

Im not pricing to lose money, why would I bother, but making something is better than nothing.

The bills have to be paid, period.

All of the arguments against me are made on the assumption that there is plenty of work to go around. There isn't.

 

[electricmanscott]

If I'm selling gourmet burgers for $5.00 each, but a customer want's me to match the price of a McDonalds burger, then that customer is going to get a McDonalds burger from me, not my gourmet burger.

If a customer wants me to match the electrician's prices who's selling the McDonalds electrical service than the customer is going to get the McDonalds electrical service from me instead of the my gourmet electrical services.

I can also not answer the phone, not return the customer's phone calls, not show up on time, not show up at all, track mud into the customer's home, not put down drop clothes so the insulation and dirt rain down on the carpenting when doing the work and do a poor installation just as well as the guy providing the McDonalds electrical service if that's what they want.

The job I did yesterday the homeowner told me he contacted other contractors to give him a price for the job. One didn't answer his phone so he left a message. They called back a day later and setup an appoinment to come out but then never showed up and didn't bother to call to say they couldn't make it.

He said he decided to go with me because he felt I provided better customer service. I arrived when I said I would, wore booties in his home and put down drop clothes while looking into the attic access opening.

If the customer want's the best price they can get, they can go buy a receptacle at home depot and install it themselves. I don't sell receptacles and switches. I sell service.

All of this is fine and well but it isn't what I am discussing at all.

 

[Rewire]

Ah yeah, that was my point.

Im not pricing to lose money, why would I bother, but making something is better than nothing.

The bills have to be paid, period.

All of the arguments against me are made on the assumption that there is plenty of work to go around. There isn't.

This were you learn the difference between peofit and profit margin.

 

[aline]

Originally Posted by electricmanscott
Unfortunately in these times you are in the minority. People want deals or to feel like they are getting a deal. As mentioned, do you pay full sticker for a car? If you do it does not mean you have more integrity it means you are a fool. Also do you look to see if an item is on sale when you are buying it?

Awhile back I ordered some z-wave switches off of the internet. They had a great deal and were on sale. I could get two of these switches for the price of one.

I ordered them and my credit card was charged as soon as I placed the order. I waited for them to arrive and after a few weeks when I didn't get them I called only to get a voice mail. I leave a message and decide to send them an e-mail as well. They didn't call back or respond to my e-mail. I call again this time I get a recording saying their voice mail is full. I e-mail them a couple of more times and still don't get any response.

Finally I go to a website that has a link to the website that I purchased the switches from. I e-mail the guy in charge of that website and get a reply that they were shipped to the wrong address and they will get them shipped out again right away. A few more weeks go by and still I recieve nothing. I e-mail them again and they say they'll ship them right away again. This time I actually receive a tracking number in my e-mail.

A couple of weeks later I receive a package. In it are some switches but they're the wrong ones. I just gave up and never did receive the switches I ordered. Some great deal that turned out to be. There are contractors out there that operate the same way. I have since ordered a lot more of these switches but not from them. I'll pay more for better service so I can get what I want when I want it.

What I'm saying is getting a great deal isn't necessarly getting the lowest price. Sometimes the greatest deal is the highest price.

My service isn't the same as everyone elses and neither is my price.

 

[bradleyelectric]

Do people call you for a service call to ask price and than call other people to find out their price and call you back to let you know whether you got the job or not and why or why not?

 

[Rewire]

Do people call you for a service call to ask price and than call other people to find out their price and call you back to let you know whether you got the job or not and why or why not?

Actually they call me back when the guy who was cheaper doesn't show up

 

[bradleyelectric]

Actually they call me back when the guy who was cheaper doesn't show up

exactly. Most of my calls are from people looking to have work done and I set an appointment to do it. Understand this is for the service work not commercial construction. I don't tell them I'll come give them a price and they can see if I'm the cheapest. I set an appointment to do the job, not to give a price. There are those that are price shopping. For the most part they are not my customer.

I had someone once tell me they had someone that was going to do it for $25/ hr. I asked them why they didn't have them do it and she said they didn't show up. I told her I could not show up for less than him. It cost more to actually show up and do the job.

 

[electricmanscott]

What I'm saying is getting a great deal isn't necessarly getting the lowest price. Sometimes the greatest deal is the highest price.

My service isn't the same as everyone elses and neither is my price.

Why are you telling me this? I am not the one paying the bill. I fully understand price is not everything. Most people don't understand or even if they do could not care any less.

By the way, how are things in perfectionville?

 

[Rewire]

Many things can be done in a down market to improve profitability. I went around looking at foreclosure property and I noticed many had notices posted by the management company with a number to call in case of emergencies I called the number and got on their list of vendors.a limb had fallen on the service and the POCO called the management company and they called me to repair the service.I contacted the realtors who have listings foir these properties and am on their list also as many of these homes will need work when gthe sell.

 

[macmikeman]

Good tip rewire. I agree there is a mountian of ways out there. Some will sink while they are on the couch remembering how easy it was before, and some will stand at the lumber dept. at H.D. handing out cards, or put them under windshield wipers out in the lot. Me, I'm driving down to Tampa soon cause I heard about a house with a dangling service drop conduit under the house and the owner waiting inside for somebody to drive up and talk to him about it......... Kidding aside, I always hustle like crazy, and I am pretty much always busy like crazy.

 

[aline]

Why are you telling me this? I am not the one paying the bill. I fully understand price is not everything. Most people don't understand or even if they do could not care any less.

By the way, how are things in perfectionville?

My appologies if I upset you. That was not my intent. I'm not telling you or anyone on this forum anything. I'm simply voicing my opinion for people to read, think about and come to there own conclusions about them. I'm not out to offend or upset anyone but just bring things up to think about.

I wish I lived in perfectionville. It's far from it around here. I'm getting calls from customer's that want a free estimate to repair one outlet that's not working. When I tell them there will be a charge to come out they tell me the've allready got someone scheduled to come out who isn't charging them anything to come out and give them an estimate for the repair.

The problem I see is that a lot of contractors don't charge enough during the good times. They're happy just making enough money to get by. Many have more work than they can handle and their customer service is lacking. Even though they have more work than they can handle they still bid low and undercut everyone elses price. Some even advertise they'll beat anyones price. They'll talk about how they don't make a killing but make enough to get by and it beats working for someone else. These comments are made during the good times on these forums.

They have this theory that they'll make up their low price with volume. When the economy takes a dump, like now, they don't have the volume any more, they weren't charging enough to build up enough capital to carry them through the tough times, they only know how to sell their services by being the lowest price. So what do they do? They lower their prices that were probably too low to begin with in an attempt to get more work.

I say we all double or triple our prices and then have a 50% off sale.