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  • #46
    Re: flat rate price example

    Originally posted by ToUtahNow View Post
    Read my signature line! You generally lose money when you cut your price just to get a job.

    Mark
    I'd be using yer line if you hadn't had it first...words to LIVE by.
    You lose money on many levels and often it's too late by the time you figure it out.

    Comment


    • #47
      Re: flat rate price example

      Originally posted by DuckButter View Post
      My first impulse was anger.
      Thats not your doing, it's because I have been played by budget hunting customers who will almost always go straight to the lowest bid...usually the newer guy who has little overhead.

      Over a month ago I had a fella with a foreign accent asking me a plethora of questions regarding the type water heater I install & how much it would cost to install the one he wanted.
      I spent 20 minutes on the phone with him explaining why he couldn't use a less expensive draft type heater to replace a powervent, and went over warranties, specs and efficiency ratings.
      After I got off the phone I spent another 1/2 hour shopping around for the name he wanted, finally called him back 45 minutes later with a price and he said he'd call right back.

      Next day I call him back to ask what was going on....he delightfully tells me another plumber is doing the heater I'd priced for $15 less than my bid, he'd waited an extra day without hot water to save $15, on my time.

      I know who did the install, young fella just started up a few months back.

      Situations like this have given me pause to consider quoting rediculously low prices, then explaining to the customer once I'm there that new piping isn't included, new vacuum breaker, new valve, expansion tank...etc.

      But I won't...here's why:

      There are shady practices on both sides of the fence, people that seek cheapo deals almost like predators, and vise versa...plumbers that scam more money after the fact...regardless of T&M or F/R.

      They deserve eachother, as I see it.

      It took a very short time on my own to realize something...you choose who your customer base will be for the long-run...the guy you offered to install the water heater for $100 less than half a dozen other quotes will be calling you in 6 months, maybe a year to play the same game all over again with his boiler/leak/clogged drain...over time you're spending more time waiting for these people to check your price over the other half dozen guys they have bidding against you until someone finally gives them the price they want.
      I have had these types even schedule the work, all to tell me they went with someone else as I call them on the way there the next day.
      The guy that does the heater at that price is left with no choice but to cut corners.

      In short..DON'T sell yourself short...certain people will ALWAYS complain about prices, whether you charge $600 or $1100.
      Don't just settle to make "a little more" than you made working for a shop..the shop you worked for had overhead, and now you do too, insurance, health, tools, vehicle, gas, storage/shop, marketing/advertizing ...and be absolutely sure you make a decent profit, a cash reserve is NOT a luxury.
      When the engine goes, you'll realize that, when the threading machine dies, when your snap cutter dies, right angle, rotary hammer, sawzall, or when work dies to a crawl and you have no money to spend to advertize....list goes on and on.

      I know a guy in a different trade that was told the IRS allows you to have a loss for the first three years and this has become his rationale for cutting prices to get customers and influence the way he runs his business...I like the guy but it doesn't look like he'll make it.
      I hope I'm wrong.
      I agree with everything you said with one exception. Why give a price over the phone for a job you can not see?

      Comment


      • #48
        Re: flat rate price example

        Originally posted by DuckButter View Post
        It took a very short time on my own to realize something...you choose who your customer base will be for the long-run...the guy you offered to install the water heater for $100 less than half a dozen other quotes will be calling you in 6 months, maybe a year to play the same game all over again with his boiler/leak/clogged drain...over time you're spending more time waiting for these people to check your price over the other half dozen guys they have bidding against you until someone finally gives them the price they want.
        [
        AMEN! I have the exact same experience, I have walked away from quite a few customers this first year simply because they were looking for the low-baller in town....and thats not me. I don't deserve that type of business, and they don't deserve top-quality service. They just want cheap, and thats available out there. I just tell them to call someone else.
        On the other hand, I have built a decent list of clients who are repeat customers and have given me repeat referrals.

        No matter what your company does, it has to have a NICHE. NO COMPANY CAN BE ALL THINGS TO ALL PEOPLE! There's no way I could compete with a quality contruction plumbing company when it comes to construction speed, efficiency and price. And they don't have a chance competing with my repair knowledge, speed and 24 hour, courteous customer service.

        I am slowly establishing my reputation as a reliable 24 hour service/repair specialist. That way poeple can distinguish the difference between Bob's Plumbing or whatever who does new contruction at $60/hour and me who comes to their house 24 hours/day with a truck loaded with parts/tools and tons of experience fixing all kinds of problems, wearing shoe covers, using drop clothes, giving upfront prices and guarantees etc.

        The point is no matter how you run your company or how you charge, you have to pick a niche of customers and build your company around THEIR needs. While ignoring people outside that niche. (for me that means hanging up on builders and people looking for low bids, that don't care about quick, quality service and focusing all my attention on my existing customers and people who call me needing reliable service NOW!)
        lumbdog:
        Last edited by Service Guy; 04-01-2008, 03:53 PM.
        Water Heater Reviews & Water Heater Information

        Comment


        • #49
          Re: flat rate price example

          Originally posted by ToUtahNow View Post
          Just as an observation it seems like your customer is paying for your guys to sit at a supply house due to poor planning on your part. Our trucks always had a 40 and 50 gallon gas water heater on the truck and the 30s were in the shop. The supply house doesn't charge anything for delivery so we would keep enough stock in the shop to restock the trucks each morning.

          Even leaving your installed price the same, as a business owner you would put the time and money your wasting on your guys sitting at the supply house and turn it into your profit.

          Mark
          Maybe so, however, that is your/my choice as business owners. We should get paid the same for the job as the guy that runs service in his ford ranger that would have to spend the time to go get it, if not more. How much time would you block off of one of your guys schedule for a water heater install? I don't feel that three hours is excessive.

          30 min travel time
          1 hour for install (I know its possible to do it faster, but i don't want my guys getting in a hurry and tripping over themselves and screwing something up. For all realistic purposes I think an hour is justified.)
          15 min to collect, load truck, go over operation or lighting instruction with HO, and check water pressure.

          Might as well call that 2 hours billable to that job. Now should we consider the time that is not billable i.e. your guy in the shop that orders and stocks your shop. Time spent every morning re-stocking. You have to re-coupe that somewhere.

          Bottom line. even if you cut the previously stated labor in half. Instead of 150 its 75.00. That would increase GROSS profit to 150.00. Is that really much better?

          Break it down for me. Show me that 600. is adequate. Seems like charity work to me.

          Comment


          • #50
            Re: flat rate price example

            Originally posted by All Clear Sewer View Post
            the last W/H I did cost me around 350.00
            Parts to do the install were 20.00
            Time from shop to get the heater
            and do the install was right about
            an hour That's like $230 an hour for me and my 10.00 an hour helper.

            We don't warranty the install when a W/H fails only the heater.
            You shouldn't have to eat your labor unless you didn't install it right.

            I let em pick what W/H they want and give them the warranty card when I`m done.
            You are exactly right. Install the heater correctly and you should not have any trouble for years to come. So trust that and market it as a labor warranty to you customer. They will appreciate the peace of mind knowing they have spent all they will have to on a water heater for a while.

            What would you say that your NET profit was on that job? This goes back to what so many people say "Do you know what it costs per man hour for your business to operate?"

            I don't want you to take me the wrong way, i'm just trying to make a point. Did you consider mark-up on the heater or materials? What about that 10/hr helper. What is his actual labor burden? I know that the labor burden on my 12.50 an hour helper will almost hit twenty bucks.

            What ill's me about water heaters is that a couple of years ago i could change out a condensing unit, Just a condenser, Lets say 3 tons Cost of unit 350.00 (cheap brand), in about 3 hours total. Includes travel, wiring, soldering, vacuum all that. I was charging 1750.00, and was still in the lower end of the spectrum with other bids. Plumbers could never get that for a water heater, and the labor is almost the same, materials the same. Why?

            Comment


            • #51
              Re: flat rate price example

              I had a post all typed up and deleted it.

              To answer your question directly,

              140.00 to snake a drain with a machine in two hours or less. Any more than two hours and it goes to hourly.

              We are not a flat rate company but I guess you could say we use flat rate for some things.
              Anyone can tear a man down, few can build one up.

              Comment


              • #52
                Re: flat rate price example

                Originally posted by MPMGinAL View Post
                Maybe so, however, that is your/my choice as business owners. We should get paid the same for the job as the guy that runs service in his ford ranger that would have to spend the time to go get it, if not more. How much time would you block off of one of your guys schedule for a water heater install? I don't feel that three hours is excessive.

                30 min travel time
                1 hour for install (I know its possible to do it faster, but i don't want my guys getting in a hurry and tripping over themselves and screwing something up. For all realistic purposes I think an hour is justified.)
                15 min to collect, load truck, go over operation or lighting instruction with HO, and check water pressure.

                Might as well call that 2 hours billable to that job. Now should we consider the time that is not billable i.e. your guy in the shop that orders and stocks your shop. Time spent every morning re-stocking. You have to re-coupe that somewhere.

                Bottom line. even if you cut the previously stated labor in half. Instead of 150 its 75.00. That would increase GROSS profit to 150.00. Is that really much better?

                Break it down for me. Show me that 600. is adequate. Seems like charity work to me.
                I'm not telling you what you should be charging I am simply telling you you are wasting money which you should be keeping as profit. When you and your helper are driving around buying parts you are spending time which you could be using to do other calls.

                On a standard change-out I use to budget 2-hours for a 1-man truck and 1.5-hour for a 2-man truck. As far as $75.00 profit over $150.00 profit, it may not seem like much but it doubles your profit. At the end of the year if you make (profit) twice as much money just because you let the supply house deliver materials I would say your doing okay. Now consider at the same time because you have cut your time in half you can schedule twice as much work which in turn doubles your profit again.

                Please don't consider my comment as being disrespectful to you as the are not meant to be. I am only trying to offer you some constructive criticism. That is what this forum is about and after 27-years as a contractor I have learned a few tricks which helped me keep more of the money which I've earned.

                Mark
                "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

                I never lost a cent on the jobs I didn't get!

                Comment


                • #53
                  Re: flat rate price example

                  Originally posted by MPMGinAL View Post
                  What ill's me about water heaters is that a couple of years ago i could change out a condensing unit, Just a condenser, Lets say 3 tons Cost of unit 350.00 (cheap brand), in about 3 hours total. Includes travel, wiring, soldering, vacuum all that. I was charging 1750.00, and was still in the lower end of the spectrum with other bids. Plumbers could never get that for a water heater, and the labor is almost the same, materials the same. Why?
                  AC
                  Condenser-450.
                  Evaporator-450
                  misc installation stuff 200
                  manifold-300
                  vacuum pump-400(don't forget about the oil)
                  recovery machine-700
                  micron gauge-300
                  Nitrogen setup-200
                  oxy acetylene-450
                  tubing cutter-20
                  reamer 5
                  sil phoss-60

                  Grand total-3535 and I think I'm missing some stuff
                  also; only those holding an EPA card can handle refrigerant

                  Water Heater
                  W/H-250
                  Misc installation stuff-200
                  mapp bottle with torch head-50
                  tubing cutters-20
                  reamer-5
                  solder and flux-20
                  wire brush and sandpaper-10
                  copper pipe and fitting-50

                  Grand total-605. No plumber only card required
                  Buy cheap, buy twice.

                  Comment


                  • #54
                    Re: flat rate price example

                    Excellent point Benny

                    Comment


                    • #55
                      Re: flat rate price example

                      I'm starting to switch to flat rate as customers prefer it. They know that the job will cost XXX. I did lose money on a drain job on Sunday but that's the first time that's happened. In every and any profession out there, those who can do the job fastest with quality get paid the most. I can't think of one example where this doesn't hold true.

                      T&M doesn't support this. It's an honest pricing system no doubt, but why should a 5 year plumber get paid more for 30 year plumber doing the same job?

                      Flat rate allows for protection for the homeowner because they aren't paying more to compensate for the plumber's shortcoming. FR protects the plumber(usually) because it pays the plumber who is the most experienced the same if he got the job done in 30 min or 2 hours.
                      Buy cheap, buy twice.

                      Comment


                      • #56
                        Re: flat rate price example

                        Originally posted by ToUtahNow View Post

                        On a standard change-out I use to budget 2-hours for a 1-man truck and 1.5-hour for a 2-man truck.
                        Interesting, why didn't you allot 1 hour for 2 man truck(2 guys should work twice as fast).
                        Buy cheap, buy twice.

                        Comment


                        • #57
                          Re: flat rate price example

                          Originally posted by Masterplumb View Post
                          I agree with everything you said with one exception. Why give a price over the phone for a job you can not see?
                          Scouts honor, somehow I knew you were going to say that...I think you'd commented about it on another thread.
                          I'll admit, I like what you had to say...BUT...one thing I see is a way to filter out price shoppers, dump 'em before I get into bidding wars.
                          I imagine the same folks that never call back are the same folks that refuse to pay a flat service or trip fee anyway, in fact I'm just about positive.
                          The guy that went for the $15 cheaper w/h is better off not having my biz card...he'd have hung up if I told him I'd be right over and theres an upfront fee to show.
                          Once in awhile I get lured into answering 20 questions, but usually it's cut & dried, here's the price, have a good night.

                          I am seriously considering your technique...charge a service fee regardless and then give an estimate on site...BUT it seems like the same people that won't pay a fee are also the ones who seek cheap deals like predators from any fool that will abide.

                          It boils down to one simple question for you...Do you often get a homeowner that refuses the price, but pays the service fee?

                          Comment


                          • #58
                            Re: flat rate price example

                            Originally posted by gear junkie View Post
                            Interesting, why didn't you allot 1 hour for 2 man truck(2 guys should work twice as fast).
                            Fifteen minutes travel time on both guys.

                            Mark
                            "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

                            I never lost a cent on the jobs I didn't get!

                            Comment


                            • #59
                              Re: flat rate price example

                              I don't plan to sell myself short because i know the first time someone gets a deal they always want it. In initial start up i will be providing any and every plumbing service untill the customer base builds.

                              I actually hope i can continue will a little of every type of work. I have been very well trained in the 3 big ones ( service, construction, drain work ) and really like the variety.

                              Comment


                              • #60
                                Re: flat rate price example

                                Originally posted by gear junkie View Post
                                AC
                                Condenser-450.
                                Evaporator-450
                                misc installation stuff 200
                                manifold-300
                                vacuum pump-400(don't forget about the oil)
                                recovery machine-700
                                micron gauge-300
                                Nitrogen setup-200
                                oxy acetylene-450
                                tubing cutter-20
                                reamer 5
                                sil phoss-60

                                Grand total-3535 and I think I'm missing some stuff
                                also; only those holding an EPA card can handle refrigerant

                                Water Heater
                                W/H-250
                                Misc installation stuff-200
                                mapp bottle with torch head-50
                                tubing cutters-20
                                reamer-5
                                solder and flux-20
                                wire brush and sandpaper-10
                                copper pipe and fitting-50

                                Grand total-605. No plumber only card required

                                Thats like saying that the plumber that uses a pump to drain the water heater, or a press to pipe up new one should charge more?? I agree that it is a little more technical, but not much. Remember we are refering to changing a 10 SEER condenser only. My point is we hae gripped back and forth about what to charge for wh's for two days. The industry has let its guard down and allowed so much competition in to the market with homecenters, diy's, moonlighters, etc. Instead of a EPA card why not have a gas card that is req'd to buy gas appliances. If someone buys a gas appliance that they foul up installing they could do serious property damage or death, foul up with some refrigerant and you burn alittle hole in atmosphere? I just wish that the were stronger restrictions on these things that would pahse out some competition. Then we could make the money we deserve. I think its obsurd that you can feasibly make the same amount of money R.R a water closet as installing a new water heater. What good sense does that make?????????????????????????????????????????????? ???????

                                Comment

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