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  • #16
    Re: Capitalism?

    I think you will not find a huge difference in overhead costs among the different companies of the same general size. But, I guess it boils down to-are you as a business owner content to make the wages of an apprentice or would you rather be paid what your level of education, training and experiece call for? Would you rather live in a trailer and end up at the end of things broke? Or would you rather live in a trailer (if that's your preference) and end up comfortably retired.

    It's the business owner's choice what he pays himself and your final price will reflect that accordingly.
    A LOT of my customers have 2nd and third homes in the mountains and on the beach or even in Italy or St Croix. And they're freaking lawyers and doctors. No where near as important as we are.

    So, back to your question, if the $500/hr plumber has the bona fides, then people are happy and willing to pay it. If you show up in a datsun B210, smoking out the back, and screw up the plumbing to boot, then you are screwing the customer as well.
    "Man will do many things to get himself loved, he will do all things to get himself envied." Mark Twain

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    • #17
      Re: Capitalism?

      Originally posted by Service Guy View Post
      Capitalism is simply the balancing act of supply and demand. Charge as much as you can, but not so much that nobody wants to do business with you!!!

      If I could get $10,000/hour and people paid it with a smile I would start charging it immediately. A business though, can only charge so much before they price themselves out of existence in this competitive economy of ours.
      http://en.wikipedia.org/wiki/Capitalism
      Capitalism is an economic system in which property is owned by private persons and operated for profit.[1] In a capitalist economy, investments, distribution, income, production and pricing of goods and services are determined through the operation of a market economy. Capitalism is usually considered to involve the right of individuals and corporations to trade, using money, in goods, services (including finance), labor and land.

      pricing is only part of Capitalism,
      I believe there there has been a philosophy change on the way to charge, and there is a overlap in this in some areas,

      one is to figure your costs, add a little for profit, and that equals price,

      the other is what the market will bear, and that is the price charged. and any thing above costs is profit.

      and if there is a third model is where the price is dictated and the "contractor" has no choice to but to control prices to meet the cost vs profit or loss area, (this is in areas where commodities are traded and the prices are set by the trading not the producer).

      ~~~~~~~~

      I am under the impression that the first was followed for many years but it seems to me that it was basically abandoned by big business and the second was adopted some time after WW2,

      the second seems more and more the model that it appears to be being followed, at least to me, (part of the system is what the competition is charging and how to do it for a lower cost to put more in ones pocket), take a tool makers who at one time built and used American workers and factors and manufacturing to make there products, the cost rose to the point where they were losing market share, (what the market will bear), and found lower cost labor and manufacturing, for there cost lowering program, now they have some one out of country, (not the same living standards or laws or regulations), to build there products, and then sending them here to sell for what the old American made units sold for with in the range of price for that item, in the process they pocket more money per item.
      (yet you pay the same for the most part).

      I do think at one time there was a time where the manufacture made the item, and figured the cost and that was basically the price,
      ~~~~~~~~~~~~~~~~

      the next factor is the supply and the demand,

      and for the most part as long as the demand matches or slightly out paces the supply most any price goes in a broad range. (take cars for example, you have cheap used cars and ever expensive new cars).

      and if they get out of balance you will either see general price lowering or rising for the product effected.



      coming down to pricing, If things are equal and prices are know in the beginning the majority will opt out for the lower priced product,

      and if the supply shifts more than likely the lower priced units will continue to sell for longer than the more expensive,

      now the expensive product (if equal) will get sells if the buyer is not informed, highly advertised, people are at the mercy of some one, (such as emergency),
      or ignorance,
      (and my guess is this type of business will continue until you use all your customers up in a given location),
      ~~~~~~~~~~

      now even if you are in the (range of the market) is it really what the market will bear,
      when people determine it is cheaper to buy tools and do the job them selfs, (depending on the percentage) the market is no longer bearing the or willing to support the product being sold. or Hire the "hack".
      two reasons for this (one price, and one quality), if they have got "burnt" on either they why not, take a chance, with a Hack or a DIY project. (and if they got burnt on quality they got it on the price as well).

      so with my ramblings, a shop charging $300+ and hr, will have jobs, (in my opinion mostly out trickery or ignorance), the shop charging the average will get the bulk of the work, but if even the average is above the bearing of the market, then the DIY and the so called "Hacks" come in.

      so regardless if you charge by your costs or by what one thinks the market will bear, whether it be high or low by some ones else standard, the customer is the one who decides in the end if your working. (so a lot depends on the climate of the area your in, and what will go in one community or area may not in another) as to what can be charged and still keep busy.

      ~~~~~~~~~~~~~~~~`

      (also when you talk free enterprise)
      laws and regulation come in to play here,
      a while back there was discussion on some one getting a lift station put in and trenching 150 feet,
      Plumbers crack said it would cost him $6000+ for the trench, and went on to explain that where was rules and laws that made it a 4 man crew that would require extra equipment and methods to achieve the goal for that trench, thus the cost,
      in my neck of the woods my guess is a $500 to $700 bill would have got me the same trench as there are no cumbersome rules or regulations to meet, one guy working part time would have showed up and had it dug in a matter of Min's for me,
      so costs do vary do to government interference and regulations,

      so location is also importain,
      Push sticks/blocks Save Fingers
      ~~~~~~~~~~~~~~~~~~~
      "The true measure of a man is how he treats someone who can do him absolutely no good."
      attributed to Samuel Johnson
      ~~~~~~~~~~~~~~~~~~~
      PUBLIC NOTICE: Due to recent budget cuts, the rising cost of electricity, gas, and oil...plus the current state of the economy............the light at the end of the tunnel, has been turned off.

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      • #18
        Re: Capitalism?

        Everything BHD said was true as far as it concerns certain types of businesses and trades. All the more reason to develop relationships. That is alot of what the people are paying for. If one is just depending on advertising to bring in work then I believe you will mostly get price shoppers. Nothing wrong with that and I think larger companies must do it.

        Another thought, since Rick mentioned his prices in a thread I don't even like to think about with Leonard.... I don't know Rick's situation and I'm not referring to him (and as NHMASTER always correctly says, you can't compare your prices with others) but, if your wife works, you don't have children, you live frugally or not, etc. etc. your prices can be a whole lot different than someone who supports a wife, 2 or 3 kids, maybe with special needs. You have no choice but to charge much more.
        "Man will do many things to get himself loved, he will do all things to get himself envied." Mark Twain

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        • #19
          Re: Capitalism?

          Originally posted by SlimTim View Post
          if your wife works, you don't have children, you live frugally or not, etc. etc. your prices can be a whole lot different than someone who supports a wife, 2 or 3 kids, maybe with special needs. You have no choice but to charge much more.
          "You have no choice but to charge much more."

          ~~~~~~~~~~~~~~~~~~~~~~~~
          MY opinion on this area of discussion

          The truth is you may want to charge more, and if you can charge more great. but you have a choice and it is possible you do not have a choice.

          But there are many many people out there that have to adjust to the income they have, they do not have a choice to get more, by jsut charging more.

          At one time employers adjusted pricing on your family status many times, that is a thing of the past, now you are worth XXX amount and that is it, makes no difference if you single married or a dozen kid and you give 1/2 of your income to Mother Teresa,

          IF as a business owner you can siphon off XX more dollars or use some tax loop holds to benefit your self, then great, but having to charge more because of personal choices normally not in the game plan,

          IF your business can "afford" to pay the "CEO" of the company a good salary or even a huge unreasonable salary then great, but regardless of it, the business still has to be able to afford it, or you need to make adjustments to your life style, (If for some reason one gets put out of business tomorrow for what ever the reason and the only job available is one at the Golden Arches, are you going to sell off a few kids to adjust to the income reduction),

          How do you expect the "plumber or helper" working for you with a wife three kids, do you pay him more because he has three kids and one has needs, what if he has 8 kids?

          It still comes down to if the business can afford to pay, the boss or the workers,
          If the business can bring in the business and work lean enough to make the payments,
          It still comes down to what the market will bear, and if your with in that line.

          (If you notice GM took that thinking for many many years and now it is biting them in the Butt, and there no longer able to handle the bloated top and mid management sector of the company, and in the process there dumping the low end employees in a last ditch effort to save the company), instead of trimming where the costs are.

          My son worked for a manufacturing company building a special truck for picking up bales, and they had a good business, but they got the idea that they the family that owned the company wanted bigger houses, and vacations, so they took them and in time when the drought hit for about 8 years there was a down turn in the number of units being built, the moneys dried up, they stopped paying employees and suppliers and finally took off in the night just a few steps ahead of the back and the law, they have not been seen since. they left many suppliers holding the bag, and customers with empty promises, and a few trucks that had material down payments left setting in the shop in pieces).
          two things happen they upped there prices, and lost market share and had a down turn in the economy where there product was based, and they got greedy. I believe them getting greedy was what really got them tho,
          Last edited by BHD; 07-09-2008, 12:21 PM.
          Push sticks/blocks Save Fingers
          ~~~~~~~~~~~~~~~~~~~
          "The true measure of a man is how he treats someone who can do him absolutely no good."
          attributed to Samuel Johnson
          ~~~~~~~~~~~~~~~~~~~
          PUBLIC NOTICE: Due to recent budget cuts, the rising cost of electricity, gas, and oil...plus the current state of the economy............the light at the end of the tunnel, has been turned off.

          Comment


          • #20
            Re: Capitalism?

            ~~~~~~~~~~~~~~~~~~~~~~~~
            (If for some reason one gets put out of business tomorrow for what ever the reason and the only job available is one at the Golden Arches, are you going to sell off a few kids to adjust to the income reduction),
            quote]

            Yup, sometimes I've considered it. Those kids can be real expensive sometimes

            All of my thoughts on this subject, by the way, are directed at the one man shop. I have the upmost respect and concern for those who are stuck on a fixed income.

            I'm no economist (but I do live in the town where Holiday Inn started),so these are just plumber's thoughts.
            Of course you have to play to the market. If I planned on jetting to the Riviera every weekend I would become a politician.

            I suppose I should have said if you have big needs and desires you had better produce the goods (quality work, honesty, integrity,professionalism)
            Their is a huge market for that and those people will pay more for it.

            My ridgid pipe wrench costs at least twice what the cheapest ones do (need I say more about that?)

            If my friend makes $40,000/yr and I want to make $41,000/yr and raise my rates by $1.00 - Is that greedy?
            What if I want to make 45,000, or 50 or 75. When does greedy start?
            Upon consideration, I think greedy starts where irresponsibility begins (as in your example, those people not setting enough aside for suppliers, employees and future downturns.

            All of your points are well taken. I think it boils down to , Live within your means wherever you are but work towards a better future.

            Oh, and of course, the market will make a fool out of every prognosticator and pontificator. I am guilty as charged.
            Last edited by SlimTim; 07-09-2008, 06:25 PM.
            "Man will do many things to get himself loved, he will do all things to get himself envied." Mark Twain

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            • #21
              Re: Capitalism?

              If you ask me I would be more around the $125 an hour as we try to watch our expenses. Maybe the $500 an hour company needs to generate that kinda money to cover their overhead. But it seems like in my area the people who do overcharge like that are hacks that send out untrained individuals to do the work and thier biggest overhead is usually thier marketing. They dont seem to care about the longevity of their company but more about how can I make the most money in the shortest period of time. Like was stated earlier these company tend to weed themselves out as word of mouth gets around about them. Funny thing though they just start up under a new company name, advertise like hell , and are back in business taking advantage of people again. Sounds lucritive to me but I like to sleep at night.
              Ohhh there was also a mention about families with special needs haveing to charge more because of their personal cicumstances. To that I would just like to say my wife has been ill since we got married at 24 and is now on a feeding tube , injecting pain medicine, and is unable to work but I still can make a good living charging actually less to customers than than the 125 an hour mentioned as the low figure.
              I treat people fair have plenty of work and still make around 75,000 a year which is good in my area

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              • #22
                Re: Capitalism?

                I'm not in business to loose money.
                I'm not in business to create a tax write off.
                I'm not in business to employ people.
                I'm not in business to pax taxes.
                I'm not in business to spend my time.
                I'm not in business to provide competition.
                I'm not in business to spend money.

                I am in business to make money, and hopefully lot's of it and hopefully so are you.

                I want to retire comfortably - very comfortably
                I want my house and my camp on the lake.
                I want my cars, and boat and all the toys.
                I want to put my kids through college.
                I want to have money to help my kids buy their first home.
                I want to help local charities and be a part of the community.
                sigpic

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                • #23
                  Re: Capitalism?

                  Originally posted by NHMaster3015 View Post
                  I'm not in business to loose money.
                  I'm not in business to create a tax write off.
                  I'm not in business to employ people.
                  I'm not in business to pax taxes.
                  I'm not in business to spend my time.
                  I'm not in business to provide competition.
                  I'm not in business to spend money.

                  I am in business to make money, and hopefully lot's of it and hopefully so are you.

                  I want to retire comfortably - very comfortably
                  I want my house and my camp on the lake.
                  I want my cars, and boat and all the toys.
                  I want to put my kids through college.
                  I want to have money to help my kids buy their first home.
                  I want to help local charities and be a part of the community.
                  You greedy, evil, selfish, capitalist pig!

                  Just kidding, I am ambitious too, I think you're awesome for being honest about it!
                  Water Heater Reviews & Water Heater Information

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                  • #24
                    Re: Capitalism?

                    It has always bothered me that there are legions of people out there that seem to think I am business for the sole purpose of employing them, paying for thier health insurance, doling out benefits like candy. I don't owe anyone a freekin job. I hate minimum wage. Imagine a government telling me, telling you what you have to pay some schmuck. Employees should get paid what they are worth and if they aren't making me money than I shouldn't have to pay them jack. If your business can support charity and it's in your heart than by all means give all you can. But to suppose that every business man owes the public anything is just plain liberal clap trap. This is a capitolist nation, not some socialist or communist society.
                    sigpic

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