Selling lights as electrician

[Amps]

But with the logic that you should always be supplying lighting fixtures, shouldn't that logic apply to all the electrically operated appliances as well? Or on some commercial industrial you should be supplying specialty electrical appliances, conveyors, lathes, CNC machines, processing and packaging machines......? If you do that, when there is problems or they don't do what customer wanted them to do or as well as they hoped, now it is at least partially your problem. If all you did was supply power to it you don't need to be an expert on everything else about it or provide any kind of warranty on it.

That is why I don't even install whole house generators. I don't want to get that call in the middle of the night during a snow storm.

 

[kwired]

That is why I don't even install whole house generators. I don't want to get that call in the middle of the night during a snow storm.

And find the fuel valve was off or tank was empty

BTW I don't necessarily have to be the one that sold something to get a call at the most inconvenient hours. Out here in the sticks, either me or one my competing installers/electrical service troubleshooters are the closest available and probably not going to cost minimum of $500 or more just to dispatch someone that still will not be there for several hours.

 

[oldsparky52]

Very informative. Thank you for sharing this.

You are welcome. The company I worked for implemented this in the 90's.

The problem I see with this is if you get jobs outside the mix of labor and materials your yearly budget is set to, you will lose money. If you aren't paying close attention, you will wind up getting jobs that have a mix that won't cover your overhead.

The company I worked for has grown tremendously, so they are much smarter than I ever was.

 

[Strathead]

This cracks me up. You have your cost and you have what you charge. The difference is what you make. It doesn't matter how you come up with your figures, especially when you are giving the customer a fixed price up front. When you are working for time and material that is a different matter. I mark up fixtures regardless of whether they are supplied by me or by others. It is just part of my estimating. It is the process that I come up with a competitive bid that wins jobs and makes my company money. THAT is the ONLY thing important in an estimate. Otherwise it would be called an exactimate.

 

[oldsparky52]

This cracks me up. You have your cost and you have what you charge. The difference is what you make. It doesn't matter how you come up with your figures, especially when you are giving the customer a fixed price up front. When you are working for time and material that is a different matter. I mark up fixtures regardless of whether they are supplied by me or by others. It is just part of my estimating. It is the process that I come up with a competitive bid that wins jobs and makes my company money. THAT is the ONLY thing important in an estimate. Otherwise it would be called an exactimate.

How do you determine what % to add to your bid for overhead?

Or, do you do it a different way?

 

[kwired]

How do you determine what % to add to your bid for overhead?

Or, do you do it a different way?

I'd guess he typically just has a standard percentage on markup of items sold. Problem is every job has a different amount of items sold so you can't actually count on any fixed number for your overhead.

But at same time if you are not supplying certain items that does reduce some of your overhead. You don't have to spend the time selecting, ordering, no shipping or handling costs. Hopefully you have already factored installation labor or certain other specialty equipment (maybe a lift) or supplies that might be necessary in whether you are supplying the fixtures or not.

 

[petersonra]

I'd guess he typically just has a standard percentage on markup of items sold. Problem is every job has a different amount of items sold so you can't actually count on any fixed number for your overhead.

But at same time if you are not supplying certain items that does reduce some of your overhead. You don't have to spend the time selecting, ordering, no shipping or handling costs. Hopefully you have already factored installation labor or certain other specialty equipment (maybe a lift) or supplies that might be necessary in whether you are supplying the fixtures or not.

I think a fair number of people think 20 or 25% overhead on parts is a big number. It is if it is all margin and the costs associated with the parts are covered elsewhere but if you are absorbing warranty costs, misc. parts (boxes, fasteners, etc.). shipping and handling, etc., into the overhead, you can find out pretty quick that the overhead is spent. If you let the customer supply the parts without accounting for those costs, you will lose money.

And you will still have to inventory the parts the customer supplied to make sure they supplied all the parts, and read the instructions for stuff you may never have seen before. I have had cases (more than I care to recount) where a customer has supplied parts but did not supply all of them and I had to go back and figure out what they forgot and get them to order those parts.

 

[Amps]

How do you determine what % to add to your bid for overhead?

Or, do you do it a different way?

Calling everything overhead is getting confusing. I have always considered fixed expenses, like the necessary costs to operate the business "overhead". This overhead is there and needs to be paid out whether you have work or not and is a $ number that is created by adding up all the business overhead and dividing that by the estimated annual hours billed. Then an hourly labor charge is added to that number. For each job that has materials being supplied by the contractor, a % markup is applied to those materials because business money is being used to purchase them, etc. This is different depending on each job. If there are no materials being supplied by the contractor, then the labor rate has overhead built in. Maybe this is a dumb thing to do but it has been working for me. How can you markup or charge overhead for fixtures that an owner is supplying?

 

[oldsparky52]

Calling everything overhead is getting confusing.

Amen.

 

[jmellc]

My markup has always been my go to for overhead. Wherever you add it it needs to be there. So, instead of charging $200 I charge $1200 to cover the markup on materials. What's the difference, either way the markup is paying for something.

Remember who they call when there is a problem... you charge them and then you get a bad reputation.... It worked fine and I was clear to them about it.

If I can’t manage without the markup, I wouldn’t agree to do the job.

 

[LarryFine]

When making up a proposal, I give a certain price for my labor if I'm also supplying materials (in addition to mark-up), and I give a certain price for my labor if I'm not supplying materials.

The two may or may not be equal.

 

[Dennis Alwon]

When making up a proposal, I give a certain price for my labor if I'm also supplying materials (in addition to mark-up), and I give a certain price for my labor if I'm not supplying materials.

The two may or may not be equal.

I get it but you can supply materials but not lights..... Do a new home and the materials used for 2 days of wiring lights is nothing. Unless you cover that time in your bid you not making enough unless you charge a different rate for those days.

There are people who charge higher rates and don't mark up materials. I have always given, what I think, is a fair labor price but I mark up materials. Some do 10% others, 20%, 30% and more.... Everyone has their system and what works for me may not work for you but I have been successful doing it my way.

 

[Amps]

I attended a Leviton seminar on their smart switches and USB receptacles and the guy running it said to charge 100% markup. If a customer says they can buy it cheaper tell them you will install it but not warranty it.

 

[kwired]

I get it but you can supply materials but not lights..... Do a new home and the materials used for 2 days of wiring lights is nothing. Unless you cover that time in your bid you not making enough unless you charge a different rate for those days.

There are people who charge higher rates and don't mark up materials. I have always given, what I think, is a fair labor price but I mark up materials. Some do 10% others, 20%, 30% and more.... Everyone has their system and what works for me may not work for you but I have been successful doing it my way.

Materials needed for two days of installing the low grade devices isn't usually a big chunk of the total project either.

 

[Dennis Alwon]

Materials needed for two days of installing the low grade devices isn't usually a big chunk of the total project either.

If there are $10,000 in lights and you get 20% then I will be happy to have the $2,000

 

[oldsparky52]

.. but I have been successful doing it my way.

Okay Frank.

 

[oldsparky52]

Are we discussing a non event?

You get the job if

1) You have a customer that wants YOUR services and the price is just to keep you honest.

2) You have the low bid for the job.

Either way, does it matter how you recover your overhead?

I think it's way more important to understand your overhead and what drives it, cover it there.

 

[kwired]

If there are $10,000 in lights and you get 20% then I will be happy to have the $2,000

I get $2000 whenever you have $10,000 in lights, sounds good to me as well

I'll send you payment info.

 

[LarryFine]

If there are $10,000 in lights and you get 20% then I will be happy to have the $2,000

Why wouldn't that $2K be built into your labor charges for installing customer-supplied lights?

Is it a separate line item? What do you call that charge in your proposals?

 

[Dennis Alwon]

Why wouldn't that $2K be built into your labor charges for installing customer-supplied lights?

Is it a separate line item? What do you call that charge in your proposals?

Larry, I do put it in my bid but I have only given a formal bid once or twice in over 40 years. Everything I did was pretty much Time and material with a guesstimate. When I itemize the bill I usually just say lighting ---$XXXX. The markup is there.

My point is it doesn't matter where it is as you can hide it anywhere but I don't want to install all the lights for my standard labor charge.