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Starting to have doubts about T&M

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  • Starting to have doubts about T&M

    I am starting to feel a little uncertain if T&M is going to work . I am charging $80 per hour and a $45 service call fee and prorating all time. Charging no time to get material this has become a drag since I am scarred to stock too much stuff and not make any money and just end up paying out high supply house bills at the start of the next month. I have lost a descent amount of work just because I am hourly as the people want a price before work starts and get scared away Then some act as I am charging them an arm and a leg at $80 an hour like they think they can save money with a flat rate company wtf . Or they act as I personally am taking home $80 an hour and compare it to what they make. Then with T&M by design I am separating labor and material and as soon as that happens guess what they want to go find it on ebay and save the money and the company losses out on 45% and its like I am just doing another dam lowes job There is also almost no incentive to buy out there but I guess that is every where and extremely hard and expensive to generate any new calls . Not whining just thinking you guys have had to deal with these problems and may have some ideas I could try out or change some stuff around. Just feel like I am digging in sand here.

  • #2
    Re: Starting to have doubts about T&M

    I can't get get my head wrapped around flat rate.
    I put stickers on the van I bought for this recessions service plumbing co. 2 years ago. Things are finally starting to happen on a regular basis.I'm ready for the winter slowdown(Thank-You Lord).

    When someone asks I make sure I tell them a job typically takes "X" time and let them figure it out that it ain't that much.Let them beat 1 hour to set a kitchen sink,toilet,or 3 for a heater.

    There have been more flat rate shops round here that have closed up than hourly.

    problem I got is the broken english speaking,self proclaimed general contractors on bicycles ruining the communities perception of the price of a professional.

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    • #3
      Re: Starting to have doubts about T&M

      You should be in a position to make a quick estimate of a job and give a price by now. The hourly fees necessary to be successful aren't understandable to many people with 9 to 5 jobs. So what I'm getting at is $80.00/hr. may sound high to a customer, but if you know that the job entails 1 hour of labor and $20.00-$30.00 of materials, telling the customer around $120.00 for the job sounds better to them. Even though the the end result is the same.

      The amount charged by a service person is more of an uninformed & uneducated thing to many customers. When they've only worked somewhere making $10.00-$20.00/hr.-they cannot fathom someone charging $100.00/hr.

      As you said, they think that you are the same as them. You clock in, do your 8 hours, and someone pays you $640.00. We both know it does not work like that. Window time, down time, the work at home that pays NOTHING, your own insurance, retirement, truck, materials, licenses, etc. etc.

      And the hardest thing for someone with normal employment to accept is:

      IF YOU ARE TAKING THE RISK TO BE THE BUSINESS OWNER/ENTREPRENEUR THEN YOU DESERVE TO MAKE A HIGHER INCOME THAN THE AVERAGE EMPLOYEE WAGE.


      Otherwise, just get a job, right?

      I've told many that think a service person makes too much to just "jump right in! There is no limit placed on people doing this work." (Should be maybe)

      They never take up the opportunity.


      J.C.
      Last edited by BobsPlumbing; 10-28-2010, 10:13 PM.

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      • #4
        Re: Starting to have doubts about T&M

        Clipper:

        Could you be flexible and offer someone a quote and/or a time material? I will give either to a customer, whatever they feel more comfortable with.

        How do you primarily get new customers advertising or word of mouth?
        Time flies like an arrow.

        Fruit flies like a banana.

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        • #5
          Re: Starting to have doubts about T&M

          I'm not your typical "flat rater" though I always quote a flat rate fee for every job I look at and quote no matter if it's fixing a toilet or a re-pipe, water heater, etc.. People don't want to hear an hourly rate, they want to know what the job will cost up front.
          I have never bought into the books or the flat rate pricing manuals, I've always believed it to be a scam on us hard working plumbers. We are smarter than that.
          I look at the job, I quote them a flat rate for the job and I do the job, it's just that simple.

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          • #6
            Re: Starting to have doubts about T&M

            Im flat rate and make good money............ but not all the time, sometimes I say to myself I would have made more if I was hourly on that job.... can't have it both ways, if i was hourly I would be struggling, I work to fast, have to much material on the van, would get the job done to fast. I parts chase max 12-15 times a month, out of a 80 call average month. 8 mpg's, I want to make sure I arrive ready to complete the project.

            To make what I want to make in a day, I would have to make 2 hours in 1 hour, this way I quote it, finish it and move on, I don't bore the customer with parts chasing, long stories, etc.

            They have things to do and so do I

            sigpic

            Robert

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            • #7
              Re: Starting to have doubts about T&M

              I have been working on a list of common jobs because when I do get a shot at going on a service call I usually get asked how much for this or for that and all I have been doing is giving them the rate and a guess at material cost and it seems to die off after that . As for advertising the phone book has only paid for half what it cost and have discontinued it for next year and told the sales guy that if I had gotten more calls even if they were under $100 and be able to leave card and gained customers I may have kept it however it could not even do that . Most of my work has come from lead generator companies like service magic but even then I am competing with a bunch of cut rate hacks. And a lot of tire kickers who are "just researching " I am going to try this new thing next month were I will be advertised in the sponsored section in google and they are making me a web page and am putting the lead generators on hold to see how it works out. I also have 3 ads going out in two more books in two counties that I think really use the phone book so maybe that will work. Its just that there are some many flat rate companies out here and it s like people expect it. They are scared to take the risk and have to pay for it hourly . I don't like the idea of being boxed in to a flat rate though. Nor do I like loosing material sales to the big box stores.

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              • #8
                Re: Starting to have doubts about T&M

                what do you do to get the 80 calls ?

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                • #9
                  Re: Starting to have doubts about T&M

                  if you do the flat rate thing, then your prices are actually going to be higher than they are now. so basically the customer might know the price, but they ended up paying more than they did when you were t&m.

                  if someone wants a price/ contract price, they end up paying more than if i just billed them hourly.

                  tons of shops out here are flat rate. there is not 1 shop that has more new equipment and toys. i didn't get them from charging flat rate. and i'm too busy to take on more work.

                  give the flat rate a try, but chances are you'll price yourself out of their range. 1 task might work, but multiple task will blow them away.

                  flat rate might make you more per task, but what happens when you're sitting home all day for the phone to ring

                  rick.
                  phoebe it is

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                  • #10
                    Re: Starting to have doubts about T&M

                    Flat rate at $80 per hour . The other shops out here are charging $130 to $250 per hour at a flat rate. And charging more time than necessary and taking on 110% for material . I am thinking what I need is a minimum hour block . instead of driving for an hour waiting 15 min. for a customer to get home change out a pilot assembly for P.V. in 40 min and only get $99.40 is going to really work. I guess the bigger problem may be getting the work if I did six of these I d be ok with it.

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                    • #11
                      Re: Starting to have doubts about T&M

                      Originally posted by Clipper City Plumber View Post
                      what do you do to get the 80 calls ?
                      I put on a Sombrero and a Thong on Saturdays & hand out cards at grocery stores.


                      J.C.

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                      • #12
                        Re: Starting to have doubts about T&M

                        Rick This is only true if you increase your rates.

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                        • #13
                          Re: Starting to have doubts about T&M

                          We are Flat Rate, as customers in my area do not want to hear about hourly wages as they want the price up front before works starts.

                          If we were hourly wage plus material, it would not cover our profit or overhead..only wages for the day.

                          For example..A water heater is what..a 2 hour job start to finish? If I charged $75.00 an hour, I'd rather sit at home then install a water heater for $150.00, plus stand behind it for a year on labor, and beat my truck and back up in the process.

                          Now If I was on the same job everyday, with 8 non stop billable hours...then I would consider Time and Material.

                          Nothing but flat rate in my area.
                          Last edited by Flux; 10-28-2010, 11:20 PM.

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                          • #14
                            Re: Starting to have doubts about T&M

                            And if you give them a estimate and they want that for free by the way . Then they just take it to HD or Lowes and see how much they can save and you might as well just work for Lowes or HD

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                            • #15
                              Re: Starting to have doubts about T&M

                              what you need are customers that call you from a referral and not an ad. it takes time to get established and have enough repeat customers to keep you busy. then they refer you to their friends and the process keeps on going.

                              i do less than 5% estimates. usually only for large expensive hoa jobs.

                              when people call. they want me to come and do the job. not come and estimate the job.

                              rick.
                              phoebe it is

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