T&M Question......Ethics....

[weressl]

Only if they actually know that you saved them money.
Unless you actually point it out to the customer they're not going to know that you saved them money.

Some people will actually recommend you to family and friends and provide an overall great reference to other clients because of the level of service you provided and quality of work you performed not just because you saved them a few dollars.

For some customers the level of service they receive and the quality of the work performed is far more important than whether or not you saved them a few bucks.


And I don't think the customer should be too worried about the difference either.

That's why I think it would be more than fair to just add the cost of the higher priced conduit to the cost of the lower priced conduit and base the markup on that. I don't think it's enough to really worry about.

I wouldn't be too concerned about calling Supplier A to get them to match supplier B's price for a T&M job.

However, I would try to use as much of the higher priced conduit on this job as possible and save the lower priced conduit for a fixed bid job.

I guess the last part of the OP - ethics - was lost on you.... Perhaps you can peruse a dictionary if you are unfamilar with the word.

 

[jaylectricity]

However, I would try to use as much of the higher priced conduit on this job as possible and save the lower priced conduit for a fixed bid job.

I'm assuming you're being facetious when you imply that it makes a difference which of the conduit you are using.

 

[Mr. Wizard]

As I said, it's not a 'right' it is a decision you have made.


Nothing personal but I can see no reason whatsoever to show them your prices. None, never, ever, not their darn business.

Does the grocery store you shop at show you the price they paid? Does the supply house show you what they paid? Does anyone you do business with show you what they paid for what they are selling you?

Why would you want to show them your costs? :-?

I agree. I'll tell them my T & M labor rate all day long, but material cost is my business. That's not saying I break it off in them, but my time to get the material, have it delivered to the job or shop, sort it out and store it is worth something. Any retail or wholesale store will tell you that. Ever see a store have a sale and boast of 75% off? Even at those "deep" discounts, the store is still making a profit.

 

[Mr. Wizard]

Just charge published contractor net from a pricing book. They can't argue that price.
If I bought 1/2" EMT for 13.75/C and Trade Service has it at 26.20/C, that's what I charge.

That's right. Here's a scenario: you finish a job and have 300' of conduit left over, and you keep it because you know you will use it on another job. Do you charge what you paid for it several months ago when you bought it, plus markup? What if the price has skyrocketed? Call supplier A, supplier B? What to do? Simple answer is charge a set rate for conduit, as cdslotz mentioned. If you can get it cheaper at times, good for you. But even if you have to pay a little more, the set rate should cover it, with room to spare. There is nothing unethical about that.

 

[Rewire]

Only if they actually know that you saved them money.
Unless you actually point it out to the customer they're not going to know that you saved them money.

If you buy one 10ft stick of 1/2 emt your going to pay around $3 at our supply hous ,if you buy 1000 ft the price drops to around $1.97 which is close to the shelf price at the blue box.As long as your customer never sets foot in lblue box he will never know you gouged him at $3 a stick.

 

[aline]

I guess the last part of the OP - ethics - was lost on you.... Perhaps you can peruse a dictionary if you are unfamilar with the word.

Some of you take what I post on this forum way too seriously. I'm not being serious about everthing I post so lighten up a little.

Believe me I treat my customers very well and I'm very honest with them regardless of what I post here.

I don't know how many times a customer insisted they had a bad ballast in their light fixture because they just replaced the lamps and it still doesn't work.

When I get there I see one of the pins sticking outside of the lamp holder. I could easily just agree with them and replace the ballast but I don't. Sometimes the new lamps they put in didn't work and all I had to do is replace them with lamps from my truck. I've missed out on many a ballast replacement because of my ethics.

One of my biggest problems has been that I would look at a price I'm about to give a customer and feel it was too much so I would lower it and it would end up biting me in the end.

If I didn't have any ethics I would have the boats, the ATV's, the hot tubs, the in ground pools, the dedicated home theater rooms, etc. that most of my customers have. I can't afford these things so my ethics must not be too bad.

I'm definately not getting wealthy from electrical contracting.

Some that post here have never owned and operated a contracting business and only see it from a customer point of view. Believe me my attitude towards contractors has changed drastically since I became one. I now realize just how difficult it is to operate a contracting business and be profitable at it and know that contactors are not making a killing off their customers.

When I hire a contractor I'm not too concerned that he's going to overcharge me and make a ton of money from me. I know in reallity he's not making much for all the hard work and risk he's taking.

 

[aline]

If you buy one 10ft stick of 1/2 emt your going to pay around $3 at our supply hous ,if you buy 1000 ft the price drops to around $1.97 which is close to the shelf price at the blue box.As long as your customer never sets foot in lblue box he will never know you gouged him at $3 a stick.

If I paid $3 a stick at the supply house and sold it to the customer for $3 a stick plus the specified 20% markup in the contract how is that gouging the customer?

If the customer only want's one stick of conduit what's wrong with charging him $3 for it?

Have you ever noticed the difference in price when you buy wire by the foot from the blue box instead of the 500ft roll?

500ft. roll #12THHN Stranded = $40.00
#12THHN Stranded per foot = $00.29 X 500ft = $145.00

Do you think the blue box store paid more for that 500ft. roll they put on the rack that they're selling for 29 cents a foot?

Talk about gouging.

I was doing a wire pull at a customer's home and came up short on wire. The nearest place to get wire was the big box store so I went their and loaded up a 500ft roll of black and a 500ft roll of red. At the check out the red roll rang up at the per foot price of $145.00. It took going through several employees to finally leave the place with both rolls priced at the $40 per roll price. Had to get a manager out to overide the price.

The whole reason I went there was so I wouldn't have to drive across town to the nearest supply house saving me some time. This quick wire pull was all I had left to finish this job. I think it would have been quicker to drive across town.

With the average net profit of contractors hovering at around 5% I don't think customer's need to be too woried about being gouged by contractors.
I don't think it's a big problem in the industry. We're too busy trying to cut each other's throat.

 

[Dnkldorf]

With the average net profit of contractors hovering at around 5%

Does this number come from a reliable source you can state for us to check out?

 

[charlietuna]

I have always maintained my own material price list which i used on my T&M invoice program which i added 27 percent markup. On specialty things like fixtures and gear it was cost plus 10 percent. When a customer questions any of these figures its due to trust --- and most customers do not know the cost of 1/2 inch steel flex nor what it is!! I have never had a problem justifying my billing because i can look my customer in the eye because i don't play with any figures and try to keep them as accurate as possible. I don't try to split hairs either way on material costs. They only get billed for the material installed each day - extra materials return to our stock--but on their time.

 

[aline]

Does this number come from a reliable source you can state for us to check out?

Here's one source.

http://www.bizstats.com/reports/cor...+contractors&profType=income&var=&coding=23.8

http://www.bizstats.com/index.asp?

 

[aline]

Looks like the chart is from the year 2005.

It might be less in today's economy.

http://www.bizstats.com/reports/cor...+contractors&profType=income&var=&coding=23.8

 

[Dnkldorf]

Thank You.

 

[petersonra]

Just charge published contractor net from a pricing book. They can't argue that price.
If I bought 1/2" EMT for 13.75/C and Trade Service has it at 26.20/C, that's what I charge.

It all depends on what you agree to upfront. Thats why you should have a paragraph somewhere in your T&C that defines how you handle T&M work.

Our T&M work is XX% markup on parts, and a fixed rate for labor (engineering and shop time). We don't charge for salesman or purchasing agent time. We do charge for all shop and engineering labor that is involved though. Some places have pretty elaborate schemes for T&M. I think it is best to have something simple that both sides of the contract can understand.

Its is very rare that we have a customer ask for invoices to prove what we paid for something, except for expense reports. For some reason, that is a big bugaboo with a lot of companies.

 

[satcom]

With the average net profit of contractors hovering at around 5% I don't think customer's need to be too woried about being gouged by contractors.
I don't think it's a big problem in the industry. We're too busy trying to cut each other's throat.

5 to 7% had been the average for years on recorded income, however you have to include the side money contractors net form inventments and asset grouth, it is not rare for smart contractors to earn real net returns in the 20 to 30% area.

On costing things like conduit, folllowing some published price, may loose you a bundle, the staging and other site conditions may make that conduit cost 3 times the cost easy, but what the heck do I know.

 

[aline]

5 to 7% had been the average for years on recorded income, however you have to include the side money contractors net form inventments and asset grouth, it is not rare for smart contractors to earn real net returns in the 20 to 30% area.

There doesn't seem to be too many smart contractors in my area. Most don't have any side money left to invest after paying the bills.

Their assest growth is buying another beat up old truck.

I'm not saying there isn't any out there, just that they are rare.

I believe many would be out of business if their spouse didn't have a good job.
I know this to be true with my friend the siding contractor. If it wasn't for his wife having a good job and being able to pay all the bills he would have been out of business long ago.

 

[brian john]

A particular relay we use, differs in price between suppliers from $275.00 to $1,175.00, the manufactures price is the highest. I have to sell at the $1,175.00 price (with markup) as I never know who may have the unit in stock.

 

[Teaspoon]

As I said, it's not a 'right' it is a decision you have made.


Nothing personal but I can see no reason whatsoever to show them your prices. None, never, ever, not their darn business.

Does the grocery store you shop at show you the price they paid? Does the supply house show you what they paid? Does anyone you do business with show you what they paid for what they are selling you?

Why would you want to show them your costs? :-?

I agree 100% None of their Business. No point in showing them the invoices,
That just opens up a can of worms, better off left closed

 

[Dnkldorf]

Instead of understanding why customers are choosing your competition over you, it is better to just call them cheapskates, be jealous of the other guy for having a spouse who works and wants her own career, or just call the the guy a trunkslamming low life.


That's not going to get you far in business.

Maybe that's what you want out of your business, who knows.

 

[aline]

Instead of understanding why customers are choosing your competition over you, it is better to just call them cheapskates, be jealous of the other guy for having a spouse who works and wants her own career, or just call the the guy a trunkslamming low life.


That's not going to get you far in business.

Maybe that's what you want out of your business, who knows.

I'm not sure if this is directed at me, but it sounds like it, so I will respond.

In my post I can clearly see where I stated that I just call them cheapskates, I'm jealous of the other guy for having a spouse who works and wants her own career and call the guy a trunkslamming low life.

You sure seem to read alot more into my post than I do and take it a lot more seriously than I do. Am I hitting close to home or something?

If customers are choosing someone else over me just because their price is lower then I've got problems with my selling abilities and I need to work on them.

There's nothing great about getting the job because your the lowest price. It's not that hard to do.

My spouse doesn't work right now because she is full time student getting a degree and I support her in this. I'm definetly not jealous of the other guy with the working spouse. It's just a statement that I feel to be true. Nothing more. If you want to read more into it than that feel free.

My friend, the siding contractor, told me he made $25,000 last year and readily admits that if his wife didn't have a good job with health insurance he would be in deep trouble. He says he really doesn't want to work too hard and he's fine with only making $25,000. He can definately bid jobs cheap without worrying about it. I'm not the least bit jealous of my friend. He drinks alot and lacks motivation in my opinion. Not something I'm real jealous about. But he's happy and that's all that really matters.

 

[bradleyelectric]

Instead of understanding why customers are choosing your competition over you, it is better to just call them cheapskates, be jealous of the other guy for having a spouse who works and wants her own career, or just call the the guy a trunkslamming low life.


That's not going to get you far in business.

Maybe that's what you want out of your business, who knows.

Great point. If someone doesn't actually have a business that pays normal business expesses and works for wages that is their choose. Calling a pot black doesn't change that fact.

Not sure why you keep acting like these poeple are making money. Guess that's not any of my business.