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How to bill T&M ?

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  • #31
    Re: How to bill T&M ?

    I still maintain that with t&m the customer pays for work performed and parts used. With flat rate the customer pays for what might be used and what could go wrong.

    Don't compare yourself with the big box stores. Why bring yourself down to that level.
    I figure my overhead for the year ( i.e.insurance, bonds, gas, truck maintenance etc. & these costs should be revisited regularly), I realistically determine how many actual billable hours I can expect in a day (5 or 6 generally). Decide how many days a year I can realistically expect to work (take out vacation, sick days, kids to the ball game days, etc.) Multiply that by the billable hours/day. Add in my labor, add in inflation, add profit (my profit margin varies depending on the type of work I'm doing) (For 25% profit divide by .75, don't multiply by .25)

    This way, all of my unbillable hours including travel time is figured into my hourly rate. I prorate the service call by the minute. No service call, no gas charge, no minimum charge, no travel time. The customer pays for what they get. They also won't go searching for something to fill up the hour like they do when they are paying for a minimum hour.

    All that being said, it is just a template and the best way to know my costs. Sure, sometimes I'll give a flat rate price but I will discount it if the job is much easier than I anticipated.
    "Man will do many things to get himself loved, he will do all things to get himself envied." Mark Twain

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    • #32
      Re: How to bill T&M ?

      Originally posted by PlumbingParamedics View Post
      Ok here is a example, customer calls they want there disposal that they bought installed. I install a GD in about 20 minutes so how can i charge by the hour i would go out of business. I could take my time and be there a hour and 1/2 but that takes my time away from other calls. And not fair to customer. So instead i charge flat $125 and me and the customer win. So i would say if you work fast that you should charge flat and if you work slow and not that busy every day you charge hour. I bet if we took a poll must of the guys over 40 charge hour and under 40 charge flat. I know when i get older ill do less work and probally switch to hourly.


      You forgot to mention if you run a k60 you should charge hourly I have also found out that many hourly guys have additional charges they refuse to talk about, sometimes making them more expensive then flat rate guys.

      I was at a repeat customers house on friday, the neighbor came over with a plumbing problem, I usually make them set up an appointment, but I had some time to kill while the sewage pit was getting pumped out, she had a few small tasks to complete, I told her what the service call was, and that I billed a task charge after that, explained to her that I was not an hourly company, she was very pleased. customers appreciate the fact that you won't be there very long drawing off the clock to make a larger ticket.

      in, out, on your way, they have things to do also
      Last edited by westcoastplumber; 06-01-2009, 12:21 AM.
      sigpic

      Robert

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      • #33
        Re: How to bill T&M ?

        Originally posted by PlumbingParamedics View Post
        Ok here is a example, customer calls they want there disposal that they bought installed. I install a GD in about 20 minutes so how can i charge by the hour i would go out of business. I could take my time and be there a hour and 1/2 but that takes my time away from other calls. And not fair to customer. So instead i charge flat $125 and me and the customer win. So i would say if you work fast that you should charge flat and if you work slow and not that busy every day you charge hour. I bet if we took a poll must of the guys over 40 charge hour and under 40 charge flat. I know when i get older ill do less work and probally switch to hourly.
        What I got from your example is that you would charge about $83.00 an our since you said you have to drag out the job to 1 ½ hours if you build T&M but you would flat rate it at $125.00 This tells me you need to raise your hourly rates. Same example If the job only took me 20 minutes I would be getting $140.00 that is a $60 service call and $80.00 per half hour. Not to different than your flat rate of $125, and I still did the job in 20 minutes.

        Lets take your example to the next step. You take apart the drain pipes to install the new piping for the the new waste disposal. The nipple in the wall is bad. Now do you stop and have to explain to your customer the price you quoted does not included this bad pipe? Or do you just go about your business to fix it and get the unit installed. As a T&M biller I just go out to my truck grab a new nipple out of my 2" nipple caddy replace the pipe install the unit and the job took an extra half hour so the bill is $220 plus parts.
        Ron Hasil Lic #058-160417
        Ron's Facebook
        A-Archer Sewer & Plumbing specializing in:
        Tankless Water Heaters | Drain and Sewer Cleaning
        Sump and Ejector Pumps | Backflow RPZ Testing

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        • #34
          Re: How to bill T&M ?

          these are the kind of posts i need to read comparsons how a t&m job would bill out v.s. Flat rate thanks for the post and keep them coming if you feel like it. Thanks alot I'am just a young plumber who's been brain washed in to Flat rate. But I listen to the old guys for tips and tricks I think you never can know it all.

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          • #35
            Re: How to bill T&M ?

            Originally posted by SlimTim View Post
            I still maintain that with t&m the customer pays for work performed and parts used. With flat rate the customer pays for what might be used and what could go wrong.
            That's been my stance on this subject as well.

            It's risk management. Who's problem is it to be fixed, and who is accepting the risk. If the customer wants me to accept all the pricing risk, they better be prepared to pay for it.


            One of the down sides to t&m is the "you run up time on my bill" arguement. This arguement makes no sense to me. It's not more profitable to do that. More jobs done, not more time spent on a job = more potential profit.

            No matter how you charge, you have to turn the work in a timely fashion.

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            • #36
              Re: How to bill T&M ?

              As a G.C. We do this a lot. It's good to do both fixed contract and T+m. I bid on the known
              Say new deck or window retros,When I find extensive rot ,It's all $80 per Hr. and Materials marked Up 20% Min. We worked over 2 Years on one gut out remodel ,strictly T+M.
              This included a complete Re-Pipe. Works great for Me. I am not a service plumber, but do some for old customers ,and It's T+M. All My customers have $$ in the area I live and work
              I'm lucky, and it helps BIG TIME!
              I can build anything You want , if you draw a picture of it , on the back of a big enough check .

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              • #37
                Re: How to bill T&M ?

                [QUOTE=SewerRatz;233286]What I got from your example is that you would charge about $83.00 an our since you said you have to drag out the job to 1 ½ hours if you build T&M but you would flat rate it at $125.00 This tells me you need to raise your hourly rates. Same example If the job only took me 20 minutes I would be getting $140.00 that is a $60 service call and $80.00 per half hour. Not to different than your flat rate of $125, and I still did the job in 20 minutes.


                So at what point do you tell the customer that you are charging them $160.00 per hour.

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                • #38
                  Re: How to bill T&M ?

                  Originally posted by Clipper City Plumber View Post
                  these are the kind of posts i need to read comparsons how a t&m job would bill out v.s. Flat rate thanks for the post and keep them coming if you feel like it. Thanks alot I'am just a young plumber who's been brain washed in to Flat rate. But I listen to the old guys for tips and tricks I think you never can know it all.

                  Dont listen to the old guys to much, they will put you under. times are different, what worked back in the day is already done and used up.

                  Only you know what your cost of doing business is.
                  sigpic

                  Robert

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                  • #39
                    Re: How to bill T&M ?

                    Originally posted by westcoastplumber View Post
                    Dont listen to the old guys to much, they will put you under. times are different, what worked back in the day is already done and used up.

                    Only you know what your cost of doing business is.
                    Gotta agree with you there. I had a call from an older gentleman wanting a repipe. Get there only to find out he wants it done in galvanized. He figured the old system lasted 50 years, might as well go with galvanized again. I really didn't want any part of that job.
                    Distractions are everywhere, don't lose sight of your dream.

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                    • #40
                      Re: How to bill T&M ?

                      I guess I can't figure out why you feel the need to compare T&M and Flat Rate in the first place. When you get down to brass tacks what you need to do is charge whatever it takes to cover your overhead and give you some folding money. don't make no never mind how you get there. Both systems have the potential to rip off the customer.
                      sigpic

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                      • #41
                        Re: How to bill T&M ?

                        I know times are diffrent but it sounds to me like alot of these guys on this forum can still live on T&M and have no problem being up front and honest with their customers about their rate. and Installing galvanized has nothing to do with billing types. But thanks every one for the post.

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                        • #42
                          Re: How to bill T&M ?

                          How does T&M rip people off?

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                          • #43
                            Re: How to bill T&M ?

                            Originally posted by NHMaster3015 View Post
                            I guess I can't figure out why you feel the need to compare T&M and Flat Rate in the first place. When you get down to brass tacks what you need to do is charge whatever it takes to cover your overhead and give you some folding money. don't make no never mind how you get there. Both systems have the potential to rip off the customer.
                            The difference is in the eye of the beholder. Knowing what it's going to cost upfront gives peace of mind to many people, who in most cases have no clue what the job they are asking to have done entails. Thus, whether or not they accept a proposal may hinge on pricing format. The irony is that neither flat rate or T & M is totally transparent nor guaranteed to be honest. Whether of not a customer is treated fairly hinges on integrity, not pricing technique.

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                            • #44
                              Re: How to bill T&M ?

                              Originally posted by Plumbus View Post
                              The difference is in the eye of the beholder. Knowing what it's going to cost upfront gives peace of mind to many people, who in most cases have no clue what the job they are asking to have done entails. Thus, whether or not they accept a proposal may hinge on pricing format. The irony is that neither flat rate or T & M is totally transparent nor guaranteed to be honest. Whether of not a customer is treated fairly hinges on integrity, not pricing technique.
                              well said.

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                              • #45
                                Re: How to bill T&M ?

                                Good point.

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