How do you develop your pricing policies? Do you figure differently on the type of job (major construction/renovation vs smaller project, for example).
I know a guy who just charged $400 to run 1 electrical line and install a simple dryer vent, in a single story home (it took about an hour).
Any thoughts or comments would be appreciated.
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Replies
was a permit required?
that costs time(=$) and money.
bobl Volo Non Voleo Joe's BT Forum cheat sheet
no permit involved
Just a point of reference, cost me $1200(?1500) for upgrade to 200 amp service and two new circuits. New panel required new ground rods, gnd connection to water supply and new outside feed cable. required permit.bobl Volo Non Voleo Joe's BT Forum cheat sheet
Of course you charge differently. The lager jobs which include a PM and various sub trades have the ability to amertize costs over time and to assign costs to a greater number of trades. Smaller jobs don't have that feature.
Next, the job did not take an hour. Yes, your friend may have been at the site for an hour, however he probably made a site/ go see visit first, then went to purchase the materials, collected his/ her tools and after the job had to return his tools. The tool thing doesn't sound like much but for me it's a half hour for each visit to my tool storage place. You should also factor in the number of "go sees" which didn't turn into "jobs". That time cost ($/hr) needs to be amartized over EVERY job.
Next, for $400 the Client got an electrician and a duct person. What a bonus! Only one visit. All too often the layperson (and ourselves) lump all the trades of construction together, meaning if you know construction you should know painting, electrical, structure and plumbing. What a crock! How many types of lawyers, doctors, engineers are there? It's easier for Clients to treat/ perceive us this way. They're perceptions may then influence us to reduce our prices - because we are "one stop shopping". More people = more money so if you can reduce the # of people you reduce the cost. Last time I checked though, my cost savings support my premium wage, not a means for subsidizing the Client's project. Bottom line we get paid for our time AND our KNOWLEDGE.
Next, I don't beleive you have factored in the cost of purchasing and maintaining tools, vehicles, cell phone, computer, etc. We love what we do and we buy tools. It's our curse. This cost should however not come out of our personal savings or paycheck, but rather out of our Co.'s capital fund/ allowance. What? You don't have one? I did not either until I started treating my business as a Business. It's amazing how within a couple of months my attutude changed. I became more consistant in how I treated and continue to treat Customers, better organized and actually realized, and had the info to back it up, where the company (not mine, yet) money was going.
Last, you charge what the market will bear.
Oh So correct a reply you make about pro pricing.
The little comment I like to make in my head to remind me on occation that my head becomes fuzzy is I realy like working on your house mr/ms customer but I really don't enjoy Paying for it cause I'm not sleeping in it.
Clay
A story about charging by the hour:
Years ago, Picasso was having lunch at a swanky joint in Manhattan. A well-to-do society lady approached him and begged that he make her a sketch. Picasso reluctantly obliged and scribbled a quick drawing on a scrap of paper. The lady reached for the paper and Picasso pulled it back, saying "That will be $10,000 please."
The lady responded, "$10,000!!? That only took you 2 minutes!"
And Picasso replied smugly, "No Madam. It took me 50 years."
Customers don't buy hours, they buy a finished result, which requires experience, investment in equipment, etc.
I gotta remember that one! It's so true.
What Frankie said is absolutely true.
A customer was unhappy with her electrician."You charged me 150$ to come over here and turn one screw??!!"
The electrician replied,"Ma'am,you're not paying me to turn a screw,you're paying me to know which screw to turn."
The customer was paying for many things, as Frankie pointed out.
Electrical, ductwork, different tools, a way to manage them, all the supplies needed, whether carried on the truck or picked up. Experience, knowledge and skills.
I've seen hundreds of guys who would take 6 hours to do the same work and charge $400. Feel better?
So what exactly did this customer pay for?
Service.
The lesson for me is a customer will willing pay, what appears to you and me as "out the wazoo" for service. Skills, whether slow or fast, are common. What is uncommon is good service. Writer after trade writer has been banging on the service bell since the 70's imploring us, begging us tradepeople and owners to get off our take-it-or-leave-it attitude when it comes to how we think our customers think.
Customers want us to get in, attact the problem in a safe manner, keep our pants over our butt, clean up, and get hell outta there. Quit B.S.ing, show up, do it and bill them right there.
Service is a value that knows no clock.