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| Subject - SERVICE CALL CHARGE | |
| HOOSIER |
With the price of fuel, insurance and of course vehicle associated expenses... I would like to ask what is the going rate for your service/trip charge... we want to be fair to our customers.. but, of course fair to ourselves also... we currently charge $35.00 for a trip charge and then labor and materials. IS this fair? |
| JimmyDee | I'm told in this area there is a $50 - $60 min charge for the service call. That covers the first hour of labor. Material and mileage charges on top of that. With a truck today that could be around 50 cents a mile or maybe more for both ways. Larbor is from the time you leave the shop until returned. Other areas may be more and some may be a little less on these charges. Jim |
| RS377 | My old company starts time at the shop, which includes dispatch time and one way travel, and the day ends when you leave the job. I believe that they have a two hour min charge, and the area they work in is pretty small, so you are still making money just about anywhere even if you are only charging two hours. |
| lctrc789 | Hoosier, I have to agree with you on the rising costs, wow it is ridiculous anymore. I live in a small community and work in a large one in the city. I will tell you this the price in the city is different then in the country. I have a small residential company where two people work for me, and I charge less then the company that I work for. The company charges for the 1st hour and included is the trip charge about a 100.00 bucks for the 1st hour. By running a small service truck out in the burbs I charge the 1st hour and the trip charge is included as well but, only 75.00. Most of the folks out in the burbs are almost always residnetial, and I have to be competitive with the rest of the contrcators. I wish you well on this. |
| Mike Delaney | We charge from when we leave the shop...1 man 60/hr...two men 75/hr...markup material 30%. That's the going rate in Fort Collins CO. Some shops will charge each man at 60.00. But even with my rates you still make good money...my service jobs 20-40 % profit. I defenitely need to work on residential new construction prices, it always seems like every job is 6 trips, because of waiting on other trades, or back ordered lights. |
| Jim M | Pat, Why do you need to be competitive with other companies? What if they don't know their true cost of doing business and are losing money? Do you want to follow them into bankrupcy? Pick something that sets yourself apart from the others and charge more. You need capital to grow your business and to cover the slow times. Remember people equate quality with price. You will never please a price shopper regardless of the price. |
| John A. Peters | Delaney says "my service jobs 20-40 % profit" I wonder. The figure usually used it the taxable income you would pay as a sole owner, unless you have some special deals like Keyoh plan or some kind of Corporate tax thing. So is the 20 to 40% remainder after the whole list of expenses that you will find in a program like Quick Books, except for your time managing and indirect supervision? If you are running the service call then all bets are off till I know more JaP If you pay your man 20 and bill it at 60 you should be ok. |
| Mike Delaney | Jon, This is how I break it down for us... Job cost (raw labor, raw material) x %30 overhead add togther, and subtract from total job price. Take the remainder and multiply it by %30 for taxes, what you have left it net profit. Does this sound right?? |
| John A. Peters | Let's see First %30 is usually written 30% 1) I take materials + 8.5% tax +15% overhead and +15% profit 2) Number of hours multiply by the gross pay multiply by 3X Add the permit fees and that is your bid price. There are two types of expenses Direct and indirect. There are many types of indirect costs. There are two types of direct costs, labor and materials Find your total indirect expenses for a year and divide by 250 days to see your daily overhead. Subtract your direct costs from total job income. Subtract daily overhead (overhead-per-day ) multiplied by days worked on the job. Aw shucks this is getting to complicated to answer here. Since you say "we" I assume you have some employees. If so you need an account or at least an accounting student with Quick Books. You could work all year and loose money and not know it till you hire a tax man at the end of the year and then it is too late. Much better to start looking for some accounting help NOW. Or join Electricians Success International for 10K and get rich. Jap |
| zol_man | john, was that a joke about esi? did you join? we had talked about their system before and you were considering it. would be interested in what the deciding factor was based on the last few months of research. carl |
| John A. Peters | I wish ESI or Electricians Success International, had been available when I was starting out in business. I got my contractors license in 1972. I am mostly self taught. I think it might be a really great thing for someone who has the financial budget for it. Having watched and learned as much as I can over the last 33 years I feel that the benefit is not worth the cost for me now. I don't mind the signup fees and the fees for the two day training session as I equate that as being similar to college tuition fees, but I can't see my way clear to pay $10,000.00 a year or $200 per business day even if it is only equal to a consultant that is available 24 hours a day for minimum wages. That is a pretty hefty franchise fee for the rest of the life of the business. Those fees restrict it's usefulness to a large service call business, not a three man company. Let's try and help each other as much as they can, right here. When you ask your questions, please give as much detail as you can, it makes it easier help each other. |
| zol_man | John, I agree, there is some synergy on this board with all of its members helping each other out. There was a time when i was REALLY green in this trade and kind people (some unkind) helped me develop. I am still developing to this day even after 11 years in the trade. that is after 4 years in college for an electronics degree. Hopefully this site can continue to help all that contribute to its success. Carl |
| wilkie | I was wondering where all my business advisors ran off to. I haven't seen any activity on that other "big brother" site. I'm glad to see we can still help one another improve. |
| ecarbine | Dont make the mistake of charging what the other guy is charging. You have got to figure out what your overhead is, the cost of doing business, advertising, insurance, fuel, etc., your break even point. Then figure how much profit you want to make, I think a good margin is 20%, add it all up, divide by the total number of billable hours you expect to work and there you go your labor rate. |
| zol_man | what about the unknowns that creep up on jobs. do you add an hour into any job that isnt cut and dry? with flat rate i am sure that you win some and lose some, with the avarages hopefully working in your favor! |
| John A. Peters | This advice is good. It is the one thing that took the headache out of doing an estimate. One of the jobs of a contractor is to eliminate risks. I add in a contingency fund. If it is not needed it is not billed. It can only be used with verbal ok from the client. This includes change orders received over the telephone. It is scheduled at about 25% of the job, or $1,000.00 which ever is less. It saves having to get little change orders signed. The advantage to the client is that they can issue change orders verbally. Like "I got this dimmer, please put it in, or please hang this fixture for me". If they ask, I tell them "About half of the time about half of it gets used up." Chages are billed according to the standard prices in my data base, (in your flat rate book) JaP |
| John A. Peters | Why does the Forem Code not work and make the above in to [b]bold?[b/] |
| JimmyDee | You have the / on the wrong side of the b. /b like that not b/ Jim |
| John A. Peters | quote: Kevin asks - quote: Hi, Just back from a trip To many questions for one email but I will try. RISKS This means that the nature of business of contracting is risky business and we have to eliminate overbuilding, underbidding bad collections, over due receivables all that stuff. Its constant battle but educational updates and books are helpful. MORE BUSINESS? Try them all, but insist on getting at least ten times return on your money spent. Spend $100 a month on some publication means that you need to get at least $1,000 a month in business from that publications. You have to keep track You or your CSR have to ask every customer "Where did you see our phone number printed or published?" Architectural periodicals? Not me TIRE CICKERS - How did you avoid these time wasters? Tell them (on the phone) that you have a small fee to type up a formal contract. You will not ask for a check untill you go visit and take a look at the job, and then only if they like what you have to offer. If you think they are a tire kickers then tell them that you do not win your bids by price alone and you will not be the cheapest bid. TROUBLE SHOOTING - This kind of work is the most demanding and takes the most knowledge. If they do not ask your rate then, perhaps money is secondary (:oo-). When you get their hand then the invoice/rate sheet on a clipboard. Ask them to sign your work order so you can start work. Don't start if they don't sign before you start. A very good troubleshooter can afford to tell the client there will be no charge unless he finds the problem. However that gives you the ability to charge a higher rate than normal. If it turns out to be not something simple then you give them an estimate for what is required and charge for all of your time spent troubleshooting. You just have to be brave and proud. |
| blackrd | I agree that a good troubleshooter should tell the customer no charge if I cant find the problem. That is the approach that I take, because my conscience wouldnt allow a charge if I didnt find or find some way around the problem. Most trouble is found through good basic skills, detective work, circuit understanding, education, and an ability to use test equipment to its fullest potential. I believe a good understanding of meters(fluke, simpson 260, ampobe, etc) and their uses is lacking in the residential trade. I have no less than 5 meters(2 dmm, 1 analog, 2 telco specific) and most of my trouble is run with an old greenlee wiggy style tester Ive had for over 16 years, so Im as guilty as anyone in choosing easier routes. Sometimes good use of a meter is just a hassle, and solenoid testers just are easier. I started in the trade using an old crank megger,and I wonder how many people under the age of 40 have even seen one of those. |
| devo | I've got a $200 minimum, it will take you time to get there and time to get to the next job...never had a complaint |
| kiwisholland | Are all you guys Service/Flat Rate? Do you charge a "please insert your terminology here" fee, and then wave it if the client signs a contract? Seriously, what do you call your diagnosis fee during the initial call? |
| wilkie | Kiwi, As you know, we are a service company using flat rate pricing. Our service fee covers 30 minutes of time once we arrive at the home. We do not waive the travel fee once they sign. Could you explain you question about diagnosis fee? What kind of circumstances are driving your question? Are you asking if we walk in the door and say, "thanks for paying our dispatch fee, and now you will need to authorize this "diagnostic" charge?" I'm not saying that there isn't a time and a place where the diagnostic charge isn't necessary, but it doesn't come up for us that often (especially since were in residential only.) Think about it. How many times could you diagnose the problem over the phone? How many times can you find the problem without taking out your tools. Yes, every situation needs to be thoroughly examined, but how many times have you spent hours chasing down a problem in a residential application? Sure it happens, but how often? |