We just got our new Yellow Pages today (the phone companies - not the YellowBook)
1st thing I do...open to electrical.
Now, remember, we have decided to get out of resi service, so I'm not in the mix here. We dropped from a fullpage ad in this book to less than 1/2 page.
So, I open it up.
1st Ad - Double Truck - this company had a double truck last year - no surprise here. They are a Nexstar company. they also have a double truck for Plumbing, a full page for AC and a full page for Heating. They also have a sticker on the front of the book. All told, I guesstimate about $7,000/month in this book alone. I believe they are in about 12-15 books.
2nd Ad - Double Truck - this company has had a full page ad for years. They recently joined Nexstar as well. 2 Nexstar companies going head to head...gotta love it. Now, here is what surprises me. They know that they will not get the number 1 spot (other company already had it) so why go double truck? Seems like a waste of ad dollars...but what do I know? This company is purely electrical...$2500/month for 1 book....they are also in 12-15 books.
3rd Ad - Double Truck - this was a surprise. This company is not local to this area, and they have never advertised in this book before. But here is the kicker - in their ad, real big "Phone Quotes Available"....So they immediately put themselves in direct competition with the guys who only have business card sized ads and quote over the phone. Now you are only a number, lowest number wins.
So, 3 double truck ads - each ad is about $2500/month....let's do some math. (I'm going to round off some numbers just for ease of math, but I think that they are representative of reality)
This phone book reaches a population of about 300,000 people (that's all people) so for the sake of arguement, let's say it goes to 200,000 individual homes/businesses.
These ads are geared towards residential service, so we'll run those numbers under the assumption that all 200,000 places are private houses.
There have been studies that on average residential customers use electrical contractors approx. every 30-36 months. We'll use 30 for these calculations.
So, 200,000 / 30 months = 6700 calls per month for the area.
we will not even be taking into account people who's friend/brother/uncle/cousin/neighbor/etc is an electrician who will work on the side for them.
So, let's throw out the 20% who would never call an electrician with a large ad, have someone who is not in business to do what they need, etc.
leaves 5,360 calls per month.
lets remove the conservative 10% who have a regular electrician.
that leaves 4824 calls/month.
Oh yeah, there are about 200 electrical contractors listed in this book.
Let's say the 3 of them get 50% of the remaining calls/month, or a total of 2,412 calls/month.
that's an average of 800 calls per month/each.
looks pretty good so far doesn't it?
Now, the 1st and 2nd ads charge a trip charge. Ad #1 is I think $49 or $59. Ad #2 is $30. Don't know anything about ad #3
They will typically lose 50% of their calls once they ask for a trip charge.
So, say they each generate 400 calls/month that they actually go to look at.
These guys do work 7 days/week (even for estimates) so, we'll figure everything on 7 days.
400/30 = 13 calls/day
Ok, so before looking at any other costs, let's do this.
$2500/month in advertising, and 400 calls/month = $6.25 per estimate just to be allowed to go look at the job.
Now, let's say they close 90% of their calls (with a trip charge, this is a good closing rate- maybe a little high, but close enough)
400 * 0.9 = 360 calls closed
let's say the average ticket is $600, that is a gross sales of approx $216,000 month. Looks good doesn't it?)
But quite frankly, i think that gross sales number is incredibly high. My experience in this geographic area tells me my numbers are high, and the reality is more like 10 calls/day, 80% closing, $400 average call, and $96,000 in gross sales...but I'm sticking with the higher numbers.
Now, you all know your numbers...right? (lets use the higher numbers)
Labor is going to take 35% of this gross - 216000 * 35% = $75,600
Advertising = $2500
Insurance = 25,000 (auto and business - no labor)
trucks = 8 trucks * $700/month = $5600 (includes cellphone, gps)
office staff/overhead - (at 40%) = $86,400 (salaries, rent, utilities, supplies, etc)
there is more, you guys know it - but with just the expenses above we are down to $21,000
you know as well as me, without being in the field yourself, you are going to be at around 10% Net profit, if you are running well.
now, take into account - finding, hiring and retaining the technicians qualified to do this work.
Some of you wondered why we got out of resi service, this is why. The profit margins are shrinking due to the increase in guys going after the work. The profits really did not justify the headaches for me.
I wish them the best of luck, but I'd put a wager against anyone that next year there are not 3 double truck ads.
Oh yeah...none of this takes into account the fact that there is a 2nd book in the exact same area (Yellow Book) that you need to advertise in, just in case someone picks up the wrong book. A full page ad in that is about $800 and a double truck is about $1400 a month.
My personal guess is that companies 1 & 2 can generate about $200,000/month in electrical work in all their areas.
They spend approx $20,000 - $25,000 for all advertising (so 10-12%)
the rest of the numbers (overhead, trucks, labor, is pretty well on)
The area covered in this book, no matter what size ad, is only going to support 2-3 techs max per company (I lean towards 2, just due to the amount of contractors in total in the area) At $25,000/month/truck ($300,000/yr) that's $50,000 month from this book.
the math just doesn't work.
1st thing I do...open to electrical.
Now, remember, we have decided to get out of resi service, so I'm not in the mix here. We dropped from a fullpage ad in this book to less than 1/2 page.
So, I open it up.
1st Ad - Double Truck - this company had a double truck last year - no surprise here. They are a Nexstar company. they also have a double truck for Plumbing, a full page for AC and a full page for Heating. They also have a sticker on the front of the book. All told, I guesstimate about $7,000/month in this book alone. I believe they are in about 12-15 books.
2nd Ad - Double Truck - this company has had a full page ad for years. They recently joined Nexstar as well. 2 Nexstar companies going head to head...gotta love it. Now, here is what surprises me. They know that they will not get the number 1 spot (other company already had it) so why go double truck? Seems like a waste of ad dollars...but what do I know? This company is purely electrical...$2500/month for 1 book....they are also in 12-15 books.
3rd Ad - Double Truck - this was a surprise. This company is not local to this area, and they have never advertised in this book before. But here is the kicker - in their ad, real big "Phone Quotes Available"....So they immediately put themselves in direct competition with the guys who only have business card sized ads and quote over the phone. Now you are only a number, lowest number wins.
So, 3 double truck ads - each ad is about $2500/month....let's do some math. (I'm going to round off some numbers just for ease of math, but I think that they are representative of reality)
This phone book reaches a population of about 300,000 people (that's all people) so for the sake of arguement, let's say it goes to 200,000 individual homes/businesses.
These ads are geared towards residential service, so we'll run those numbers under the assumption that all 200,000 places are private houses.
There have been studies that on average residential customers use electrical contractors approx. every 30-36 months. We'll use 30 for these calculations.
So, 200,000 / 30 months = 6700 calls per month for the area.
we will not even be taking into account people who's friend/brother/uncle/cousin/neighbor/etc is an electrician who will work on the side for them.
So, let's throw out the 20% who would never call an electrician with a large ad, have someone who is not in business to do what they need, etc.
leaves 5,360 calls per month.
lets remove the conservative 10% who have a regular electrician.
that leaves 4824 calls/month.
Oh yeah, there are about 200 electrical contractors listed in this book.
Let's say the 3 of them get 50% of the remaining calls/month, or a total of 2,412 calls/month.
that's an average of 800 calls per month/each.
looks pretty good so far doesn't it?
Now, the 1st and 2nd ads charge a trip charge. Ad #1 is I think $49 or $59. Ad #2 is $30. Don't know anything about ad #3
They will typically lose 50% of their calls once they ask for a trip charge.
So, say they each generate 400 calls/month that they actually go to look at.
These guys do work 7 days/week (even for estimates) so, we'll figure everything on 7 days.
400/30 = 13 calls/day
Ok, so before looking at any other costs, let's do this.
$2500/month in advertising, and 400 calls/month = $6.25 per estimate just to be allowed to go look at the job.
Now, let's say they close 90% of their calls (with a trip charge, this is a good closing rate- maybe a little high, but close enough)
400 * 0.9 = 360 calls closed
let's say the average ticket is $600, that is a gross sales of approx $216,000 month. Looks good doesn't it?)
But quite frankly, i think that gross sales number is incredibly high. My experience in this geographic area tells me my numbers are high, and the reality is more like 10 calls/day, 80% closing, $400 average call, and $96,000 in gross sales...but I'm sticking with the higher numbers.
Now, you all know your numbers...right? (lets use the higher numbers)
Labor is going to take 35% of this gross - 216000 * 35% = $75,600
Advertising = $2500
Insurance = 25,000 (auto and business - no labor)
trucks = 8 trucks * $700/month = $5600 (includes cellphone, gps)
office staff/overhead - (at 40%) = $86,400 (salaries, rent, utilities, supplies, etc)
there is more, you guys know it - but with just the expenses above we are down to $21,000
you know as well as me, without being in the field yourself, you are going to be at around 10% Net profit, if you are running well.
now, take into account - finding, hiring and retaining the technicians qualified to do this work.
Some of you wondered why we got out of resi service, this is why. The profit margins are shrinking due to the increase in guys going after the work. The profits really did not justify the headaches for me.
I wish them the best of luck, but I'd put a wager against anyone that next year there are not 3 double truck ads.
Oh yeah...none of this takes into account the fact that there is a 2nd book in the exact same area (Yellow Book) that you need to advertise in, just in case someone picks up the wrong book. A full page ad in that is about $800 and a double truck is about $1400 a month.
My personal guess is that companies 1 & 2 can generate about $200,000/month in electrical work in all their areas.
They spend approx $20,000 - $25,000 for all advertising (so 10-12%)
the rest of the numbers (overhead, trucks, labor, is pretty well on)
The area covered in this book, no matter what size ad, is only going to support 2-3 techs max per company (I lean towards 2, just due to the amount of contractors in total in the area) At $25,000/month/truck ($300,000/yr) that's $50,000 month from this book.
the math just doesn't work.
