Steve Payne
If you're in the residential service business, then StraightForward Pricing is the only way to go
Canadian Contractor Business Commercial Service"The last thing you want is some customer standing behind you, looking at their watch and complaining that you're too slow for their wallet."
Further to our discussion about StraightForward Pricing, here is a post from Bob2…
“If you’re in the residential service business then SFP is the only way to go, I work in the commercial sector and we charge by the hour (no problem) but sometimes I do a residential call which we also charge by the hour, it doesn’t take long before the resi customer complains about the bill because I was on the phone for a minute or I used the bathroom or I went out to my van, etc., etc.”
“SFP eliminates unnecessary complaining from customers. The last thing you want is some customer standing behind you, looking at their watch and complaining that you’re too slow for their wallet.”
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I agree, as hourly does not work. Problem with SFP is as an example.. What one company charges for a basic job, the other charges double and triple there is no consistency (plumbing anyways). Also SFP can turn into hourly. As an example: For a few companies I know in GTA who is SFP based and affiliated with an american membership SFP group, they charge a set fee for a drain snaking… But only allows them 2 hrs. If the snaking goes over the 2 hr frame, another large fee is tacked on. So really, SFP is not hourly free in a few cases. Also if have to go out and source parts that SFP does not carry in truck… Comes with a hourly fee to source those parts.
Getting parts is part of the business, in fact 9 out of 10 times I go to a supplier to get parts, this is why giving a customer a total price is a MUST, having to explain to a customer that I would need an 18 wheeler to carry all parts in the industry would get tiresome,
Price in the total job, I quote my own work and cant remember the last time I was short changed because I took longer then the amount I quoted, if the person knows his craft then pricing a job up front should not be an issue. I’m solely talking about residential service work here.
Well, majority of the time for me. My truck has the parts. Again, I have worked in the service insustry for a while, for a few SFP companies with stocked trucks, so I have it stocked at all times…warehouse on wheels (all I have is gmc extended savana) A residential home is pretty simple setup, the only thing I dont have in the truck is large fixtures and majority of import parts. As a plumber, doing 4-5 calls a day… Supplier runs are wasted time, for both me and the customer. 95% of my work is residential service and new install. All my jobs are set quotes, so if I am going to a home to repipe a kichen sink drain, it is one price and everyone pays the same. It is rare I have to hit up the supplier, majority of time I scroll my calls for day…. Stock up what I need for day especially if I know I am short. I always gather as much information as I can from the customer over the phone, this way I am prepared. I have been doing this for a while, I can say with confidence… That my calls go as planned without supplier runs 90% of the time.
I want to clarify my comment, when I said SFP I meant an up front total price, I know how SFP’s work and they are $ generators but for someone who questions it’s honesty there is another way to do it.
My comment was merely based off that working hourly in residential service is a big NO, home owners could be a massive headache and as a contractor you have to do it in a way that works with the least amount of resistance.
Not so sure I agree here. I’ve been working on a T&M basis for years, including charge for sourcing materials and have no complaints. Granted I’ll provide an estimated cost for clients that request it, but even then, when I invoice it is an hourly fee that is typically close. I think it is just a mater of educating your client to the process. Lord know they want to be paid fairly for their work – right?
Some client are surprised that my charge is less than they expected as well. Just be honest and in your invoicing practices
I’m a consumer (old retired bugger and been around), a former consulting professional engineer many years ago in my first career. Our fees were based on standard fee schedules published by the industry. Invoices showed hours and the rate applied to those hours (variable depending on the level of activity. Rates included mark-up.
So, my suggestion would be to have your professional industrial group decide fair rates to charge including mark-up and publish them for paying customer to see. Do your estimates showing time, hourly-rate, and materials and clean up. If there is something about the job that has potential to be of significant cost impact that you cannot commit to, then provide an estimate with room for adjustment on this portion. However it should be mutually understood, if the point arises where this issue is triggered, you as the contractor should have the obligation now to re-work the estimate for that portion and have customer sign off on the change before that portion of the work proceeds. This all gives the consumer the opportunity to have confidence in cost, plus pre-judge the contractors ability and quality of work given his plan for how the job will be done. Customers getting bids on reasonable sized jobs in this manner and contractors bidding accordingly is the most ethical manner for all concerned.
I realize, it isn’t quite so simple given unscrupuous contractors using lower labour rates but this is were your industry needs to work with government to allow this approach and not see it as anti-competitive, collusion. They need to be on side. It stops Labour from being squeezed on their rates too. I realize I may be being a bit naive but for me, this is good for everyone but the one uncertainty is how the rates get adjusted going forward. Again, isn’t it about the relationship between the construction industry, government and the public consumer in building a reasonable negotiating atmosphere and acceptance of the approach. Remember, “envision the end goal (a mutually good approach) before beginning”!