Upfront pricing/ Flat rate pricing. Need help getting started

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Isn’t material mark up and hourly rate all determined by how much your overhead and profit and what type of work you do?

If you charge a high amount for labor but only mark up let’s say 50% material. Then small service works should make quite a bit
Then you could go the other way and charge a lower hourly rate and charge 110% on material.
If you using a lot of items this might be better.

seems like if you meet your goals for profit it does not matter. Of course I don’t know much, I still give breaks to people if I feel for them, which is bad business practice, though helps with having a good name around town.
 
There is a member that mentioned a flat rate pricing books they have and if I remember it’s based on.
Easy-normal-difficult each with a brief description on how the job would fall into that category.

like maybe a ceiling fan would be
Easy
Existing fan box $xxxx
Normal
Installing a fan box with stud next to existing lighting outlet. $xxxxx
Hard
Empty cavity to fan box, bracing for fan box
$xxxxx
could add more brief description.

the idea seems nice once it’s all done. Carry a nice book around and when a costumer ask flip to page and show them. I would think it would make the costumer feel good that what your doing for them is the same rate you would charge someone else’s for the same job.
Though you would need this all in an editable spread sheet and what a time consuming process.

I have been debating on trying this though I feel it would help me to not short change me on costumers I feel sorry for. I’ll just blame the book. When they complain.
 
AC\DC said:
Isn’t material mark up and hourly rate all determined by how much your overhead and profit and what type of work you do?

If you charge a high amount for labor but only mark up let’s say 50% material. Then small service works should make quite a bit
Then you could go the other way and charge a lower hourly rate and charge 110% on material.
If you using a lot of items this might be better. seems like if you meet your goals for profit it does not matter.
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I have seen many ways to calculate the various component costs in pricing. I prefer to keep them sharply focused on what they are related to. I markup material 100% which covers sales tax, labor to research which material is best, labor to go get the material, labor to return excess material, transportation costs, shop wear, breakage and theft. This markup just reimburses me for supplying material. I don't treat material as a profit center. I charge profit as a separate hourly item when calculating a price. By not mixing material with profit, overhead or anything else, should a client supply material, It does not effect the jobs profitability.

When I rent equipment, I mark it up to cover the labor to research which equipment is best for the job, labor to go get it, labor to return it, and transportation costs. When a permit is required, I markup the permit to cover the labor to go get it, labor to handle inspections, and transportation costs. There is no profit in these items either, just a reimbursement.
 
AC\DC said:
Carry a nice book around and when a costumer ask flip to page and show them. I would think it would make the costumer feel good that what your doing for them is the same rate you would charge someone else’s for the same job.
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Bad idea. Don't show them the book. They will focus on the cheaper prices and wonder why you want to charge them more. Look at (or listen to them describe) the job. Retreat to your truck and look up the price(s). Return and tell them the price.

AC\DC said:
I’ll just blame the book. When they complain.
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Don't blame the book. Blame your wife. "Sorry, my wife doesn't allow me to lose money on the jobs I do." Seriously, if they complain about the price, just say thank you and move on. Try not to negotiate unless you think a small concession will cause them to buy the job. (Giving a big concession makes them think you were trying to screw them to start with.) But be careful. People who complain about prices will continue to complain throughout the job and possibly stiff you on payment.
 
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Profit Rhino has a flat rate book that is 70 to 80$ a month. Material prices are updated and I believe they have good,better, best options. No subscription either. Gonna give that a try eventually.
 
Coppersmith said:
Bad idea. Don't show them the book. They will focus on the cheaper prices and wonder why you want to charge them more. Look at (or listen to them describe) the job. Retreat to your truck and look up the price(s). Return and tell them the price.


Don't blame the book. Blame your wife. "Sorry, my wife doesn't allow me to lose money on the jobs I do." Seriously, if they complain about the price, just say thank you and move on. Try not to negotiate unless you think a small concession will cause them to buy the job. (Giving a big concession makes them think you were trying to screw them to start with.) But be careful. People who complain about prices will continue to complain throughout the job and possibly stiff you on payment.
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No, you want to show them the book. What you don’t do is have tiered pricing for the tech to choose from. I’ll let the customer look at the book with me while I write the quote. They know I didn’t just make up a number off the top of my head.

Also, you do want to blame the book. That’s one of the best deflections to price aversion. The book is the bad guy when a customer is upset about what it costs. It takes pressure off the tech. Customers come up with the wildest responses to argue price, and my answer was always to point at the book. They either accept it or we part ways.

I did this for years, and I can tell you these are very successful techniques.


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The book feels inefficient b. ut it’s what I’m doing now.. This is why I like the idea of an iPad with the book on it that they can see options choose sign and I can bill them right then if doing the work that day. But maybe that’s an unrealistic dream.
 
blueheels2 said:
The book feels inefficient b. ut it’s what I’m doing now.. This is why I like the idea of an iPad with the book on it that they can see options choose sign and I can bill them right then if doing the work that day. But maybe that’s an unrealistic dream.
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It's not a bad idea but it's probably not something you can do on your own probably would have to sign up with one of the franchise companies.
 
blueheels2 said:
The book feels inefficient b. ut it’s what I’m doing now.. This is why I like the idea of an iPad with the book on it that they can see options choose sign and I can bill them right then if doing the work that day. But maybe that’s an unrealistic dream.
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I have our book in PDF format on my iPad; that is much easier to use than the actual book. It’s indexed and searchable which makes it much faster than using the printed book when writing quotes/invoices.

I still use paper triplicate invoices, but to be honest having a way to create invoices and bill electronically would be nice to have.


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Here in San Francisco I've seen "very friendly" GC pricing for an T+M quote for a repeat client, in which electricians were billed as low as $95/hr... but that's uncommon. Typically, we're looking at hourly rates billed by a GC of more like $125 for larger projects. I'm just transitioning into my own solo business, and noticed that those hours add up. The excel sheet above is very helpful, thank you, blueheels.
 
I charge a dispatch fee to go to a customers home it’s $79 plus tax I don’t do free estimates. If they can’t pay me a dispatch fee their not my customer it helps to qualify them. It will weed out a lot of the tire kickers. My base rate is $372 per hour, but my day rate is $1488.00. So how I normally set my pricing is I take my 372 divid it by 60 minutes which is $6.20 per minute. So for example I know it takes 15 minutes to change a AFCI breaker on average. So I have Afci breaker at $60 plus mark up of 30% =85.71
15 minutes times $6.20 per minute = 93
So the total cost for changing a Afci breaker 178.71
 
Rdcowart said:
I charge a dispatch fee to go to a customers home it’s $79 plus tax I don’t do free estimates. If they can’t pay me a dispatch fee their not my customer it helps to qualify them. It will weed out a lot of the tire kickers. My base rate is $372 per hour, but my day rate is $1488.00. So how I normally set my pricing is I take my 372 divid it by 60 minutes which is $6.20 per minute. So for example I know it takes 15 minutes to change a AFCI breaker on average. So I have Afci breaker at $60 plus mark up of 30% =85.71
15 minutes times $6.20 per minute = 93
So the total cost for changing a Afci breaker 178.71
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$178.71 + the dispatch fee of 79 so the total really is 257.71 + tax. Right?
 
Your rate is much higher than mine. I'm curious what percentage of potential clients say "no thanks" when they hear the price. (I assume you give them the price upfront.) I'm also curious what percentage decline your services when they hear there is a dispatch fee. Also do you have a minimum service call amount or time?
 
Coppersmith said:
Your rate is much higher than mine. I'm curious what percentage of potential clients say "no thanks" when they hear the price. (I assume you give them the price upfront.) I'm also curious what percentage decline your services when they hear there is a dispatch fee. Also do you have a minimum service call amount or time?
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When I call the local plumbing company I use, they have what amounts to a dispatch fee. It does not deter me from using their services. I think the fee just to come out is now over $100. I think most people understand that if you want someone to spend an hour or so of their time coming out to their house, that hour has to be paid for somehow.

I can understand how service rates for any tradesman could be > $300 for a home visit. There is a lot of dead time that has to be covered along with sales time, and office staff time that a lot of small contractors try to hide, even from themselves.

Look at it this way. Say the service guy costs you $75 an hour (counting benefits and other costs). That is $600 a day. How many one hour service calls can you shoehorn in one day? Two, maybe three? Possibly four if everything works out just right? The guy still needs his 8 hours of pay and there are a crapload of other expenses that have to be accounted for out of whatever you are charging for his time no matter how many billable hours there are.
 
petersonra said:
When I call the local plumbing company I use, they have what amounts to a dispatch fee. It does not deter me from using their services. I think the fee just to come out is now over $100. I think most people understand that if you want someone to spend an hour or so of their time coming out to their house, that hour has to be paid for somehow.
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I agree. I charge a fee to cover travel to the location (which I call a travel fee), but I only charge this if I'm doing a job for the client. If I'm doing a "free estimate", there is no charge. My labor rates are set high enough to cover drive time, but again, I'm only getting paid if there is a real job. So my company's strategy is to allow free estimates and make money on the jobs I get. The OP uses a different strategy, so I'm curious how it's working.

Rdcowart said:
I charge a dispatch fee to go to a customers home it’s $79 plus tax I don’t do free estimates. If they can’t pay me a dispatch fee their not my customer it helps to qualify them. It will weed out a lot of the tire kickers.
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The OP says he does not do "free estimates" and charges $79+ just to come over and estimate a job. This is the part I'm curious about because I have seen many angry on-line comments about this practice. I have also had many people ask me if I give free estimates. Those people will decline me coming over to look at a job if I said I charged a fee.

Now I agree with the OP that it's important to weed out tire kickers. People who's first question is "do you give free estimates?" are throwing up a red flag. They are indicating they are price sensitive or are scared of being ripped off and likely would not buy a job from me because I'm not inexpensive. I deal with these people differently than the OP does. I spend a few minutes asking questions about the job (and the HO) and I only consent to go look at it if I feel there is a real chance that I can get this job. I may even give them a price range while on the phone to check their temperature. I'd rather do this than lose a potential job because the HO is being cautious. Many times I can quote a firm price over the phone which makes the dispatch fee issue moot. My phone time is covered by overhead.
 
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I see nothing wrong with charging a fee for an estimate. We sometimes do that when a customer wants a quote and it is going to take some serious work to get it done.

If the customer does not like paying for an estimate he can go elsewhere.

I don't know that spending your valuable time trying to weed out the tire kickers is a good strategy or not. I would just as soon the tire kickers paid for it.
 
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