Flat Rate or Estimating Software - Electrician Talk - Professional Electrical Contractors Forum

Loose Neutral · 09-23-2010, 09:35 AM

Been reading some of the posts on Flat rate and I seem to like it better than TM. Isn't flat rate just the finished estimated cost? Is anyone going to the jobsite looking at the scope of work and then going into the van and using regular software like vision infosoft and then giving the customer a price on the spot.

Lighting Retro · 09-23-2010, 11:23 AM

I believe most do it by knowing their material costs, how long a job will take, their labor costs, and what they need to make on the job. Customers like knowing exactly what they will be spending up front, and great electricians can earn more if they are very efficient.

TheBrushMan007 · 09-23-2010, 11:29 AM

Hi LN, it’s not the same. I own both. Flat rate pricing is used for residential service work and light commercial service work. Billable hours are one of the biggest differences. The Estimating software out on the market is for new construction.
This will help clarify the differences of T&M, flat rate and electrical estimating. It will also give some insight why flat rate is good.
I must note: I cannot take full credit for all the writing here. The man who wrote most of this, is a brilliant guy who helped me on my journey. I just put a few notes in J. This will sum up some concerns.

Flatrate doesn't mean rip-off. It simply means that the field technicians have a guide with them to price the job correctly.
This guide is based off your company’s expenses.

If you are against flatrate for service work, here are a couple of things that you will need to conquer if you run any employees on T&M

1. Pricing in front of your customers. The idea is not to look at the job with your customer, and then say I’ll be right back and go to your truck and figure a price. The idea is, is to take out your customized pricing manual right in front of your customer so they can see that you are pricing from a standardized book. They will have a peace of mind knowing that you are giving them fair prices and you are not just making them up based off of, who they are, where they live and ect.

2- Billing, for all paid hours (if the tech is only on the jobsites for 4-5 hrs a day, how do you cover the other 3 hrs that he is getting paid?) Regular estimating software does not do this. T&M does not do this.

3- Getting Paid - how can you fully expect a customer to write you a check on the spot if they didn't know what the total would be? They figured the job would be $300. You quoted them $70/hr, but it took you 6 hrs +mat. You give them a bill for $600. They don't have the money right now. They'll send you the check. With flat rate, they know up front how much. If they don't have the money, they wait.

4- Employee motivation –As an employee, if I work for a T&M contractor, I know exactly how much money I’m going to make today, tomorrow, this week, next week, etc. I also know that everyone else is making the same rate. What's my motivation to work harder or faster? If I bust my hump and get jobs done quicker, who wins? The customer, because they get a lower price. I get punished by getting sent to another job.
But if I take my time and go slow, who wins? I do. I get the same pay, but for less work. Who loses? The customer, they pay more for the same job.

With flat rate, I give the customer a price. I get done faster and we both win. The customer gets back to their normal lives faster and I get better pay. I get to move to another job and make more money. The customer knew they were paying $X whether I was there 2 hrs or 2 days. The longer I was there, the more of a nuisance I became to the customer.

5- Quality of work - how can you really say that quality is you main goal when T&M is all about fast and cheap. Give a cheap hourly rate (that's what the customers have been taught by contractors) and get it done fast. The entire time the customer is watching the clock and seeing their bill rise higher and higher. They don't know the final outcome. The longer it takes, the more worried they get.
6. Your Expenses - Good Flat rate software will help determine your selling price based off of all your indirect and direct expenses to run your company. Electrical Estimating software does not.

Customers always undervalue what something will actually cost (wonder where they learned that?) How many times has someone called for a problem and you come to find out they figured it would cost about $50 to fix? (that is total charge for travel, repair, parts, etc)

How you expect them to really understand that the 4 recessed lights they wanted in the upstairs bedroom (that they thought would take you about 2 hrs to do -at your $70/hrly rate- and should cost about $250-$300 with the parts) actually took you about 5 hrs(because their attic was full of junk, floor boards were nailed down, there were cross braces in between the beams, etc) Now you give them a bill of $500 - after you busted you tail in their attic- and they think you ripped them off for $200.

And they say "I won't pay more than $300. You worked too slow" And to top it off, it's an employee of yours that was there (so you don't even know what actually happened) But you already invested your material and labor. What do you do? You don't have a signed contract for any total amount. You have no legal leg to stand on.

7. Employee’s now can price jobs correctly, LN, the idea is to send every tech out with the flat rate manual so that they can do the estimates. You personally can probably do 5 estimates on a good day. Now imagine have 5 techs in the field (each doing 2 estimates/day)

Flat rate books are a way for you to put your knowledge in a book form to send with them. If it's just you in the field, you should know your material costs well enough and be able to judge your install time well enough to give a total price for just about anything you do. Your techs will not. So the book is a way for you to give them your knowledge.

Flat rate manuals are based on your business and cost As a matter of fact, one of the things that needs to be done in order to create your flat rate manual is that you need to actually figure out your costs. Unlike T&M where most guys call around and get everyone else's rate and charge around the same price.

You will almost never get a customer to agree to $125/hr plus material. However, every day our customers agree to $400 for a job that takes us 2 hrs and had $50 in material. Simply because they know the total cost. I tell them $125/hr and they get scared. I tell them $400, no matter how long it takes, and they can either deal with it or not. But at least there is no fear.

one2question · 09-23-2010, 05:39 PM

I like the flat rate for residental. Small service calls can make and break a service company. Commerical service calls also if it is built right, that is the flat rate book. It also helps with new service truck guys or girls who can't take experince to help derive a price. I have no problem walking in and giving a price. My guys no. Plus it is harder for the customer to negotiate a lower price with it in writing amd with someone who doesn't have stronge selling skill. They don't know my overhead and I always hear people say I can do it cheaper. They probably can minus the overhead. I flat rate service call and extras on bid jobs. I still bid every thing else. Just know the difference betwwen a bid job and a job you should flat rate because the flat rate price will be higher. In my opion.

Tiger · 09-23-2010, 08:16 PM

Quote:

Originally Posted by Loose Neutral

Been reading some of the posts on Flat rate and I seem to like it better than TM. Isn't flat rate just the finished estimated cost? Is anyone going to the jobsite looking at the scope of work and then going into the van and using regular software like vision infosoft and then giving the customer a price on the spot.

Although it could be debated ad nausium here and on other forums, a large majority of people prefer knowing the cost in advance. Think how comfortable and relaxed you would be if you went to a restaurant with no prices on the menu. The food is good but are you enjoying a $25 meal or is it $30, $45, $60? This can be the experience for your client. They might be fine with the final bill and they might explode.

Now think about the price changing with your experience. Early in your career it takes you 2 hours to find a problem and an hour to fix it. Late in your career it takes you 15 minutes to find the same problem and 10 minutes to fix it. With T&M inexperienced techs aren't fair to the client and you could be cutting your own throat to work T&M with a lot of experience.

Try selling a residential client on "I charge twice as much as the other guy because I'll find the problem and fix it in half the time".

Loose Neutral · 09-24-2010, 11:00 AM

I agree about not wanting to use TM, but is anyone using regular estimating software instead of a flat rate book to come up with their number, then adjusting the labor units to obtain the hourly rate you desire. thanks for all the above responses

Tiger · 09-24-2010, 09:48 PM

Quote:

Originally Posted by Loose Neutral

I agree about not wanting to use TM, but is anyone using regular estimating software instead of a flat rate book to come up with their number, then adjusting the labor units to obtain the hourly rate you desire. thanks for all the above responses

TheBrushMan007 can set you up. The book comes from software. You can use the software and/or have books printed and bound anywhere like Office Depot or Kinkos.

Loose Neutral · 09-25-2010, 09:49 AM

Yes I have talked to brushman and like the system. I also have purchased vision info soft with the resi version . I'm still wondering if there are guys using regular estimating software and using that instead of a flat rate book. I have been in the business for 15 years and have zero estimating experience. With the flat rate book it seems you get a bigger hourly rate per job, but i would also think that i could come up with the same number by adjusting the labor units on the regular estimating software. I don't know, still trying to learn this aspect of the trade.

TheBrushMan007 · 09-25-2010, 10:05 AM

Vision is good software.
We use Accu Bid for our commercial estimating.
We use Turbo Bid for our residential estimating.

Most of the software is geared for new construction and not service work.
I suppose you could alter the numbers and rates with the software but this will take time and you will have to do this on every service call.
Some contractors will go to the job, look at the job and tell the customers they will call them or email them with a price, because they have to go and figure it out.
With flat rate, regardless of what system you decide to go with, you have prices already established, which you can give to your customer right on the spot. Which in turn, can give you a higher closing ratio.

Also, if you decide to grow your service department, how will you're technicians going to price the jobs?
The book is a guide, or "you" in book form, that's always with you're technicians making sure they price the jobs correctly.
I hope this helps.

Loose Neutral · 09-25-2010, 10:17 AM

I'm just getting started and will focus on commercial and industrial. I'm sure i will have to do some resi. If i was doing a lot of service and sending techs out, the flat rate book is a no brainer. Being that I don't think i will be doing a lot of resi service, i'm just trying to get some feedback from guys using estimating software. If it is determined that i need it, brushman i will be buying your system. I talked with you on the phone and was impressed with your system. I'm thinking with my situation I can still look at the job and go to the van and work up some numbers. But like i said i'm a rookie at this.

TheBrushMan007 · 09-25-2010, 10:31 AM

Sounds good, and Vision is a good choice for what you will be doing.

wrhammer · 09-25-2010, 10:14 PM

I used a flat rate with my HVAC contractors which worked out for the most part. I had a price list for each item such as adding a heat pump or a full cut-in. I also had extras listed like adding a maintenance outlet or if the circuit was over 100', Push-matic breakers etc...

There were times where I didn't do so hot but other times where I did good but on the average I did quite well with the flat rate.

John Peters · 09-27-2010, 12:51 AM

Yes, you can go do the bid in your truck but it's best if you have a printer in there.

If you have very good handwriting you can do it but you lose the "it's type set & bound in a book so it must be trustworthy" effect.

Another way is to take a portable computer into the clients house, however it feels awkward.

A FR book probably works better but they're pretty costly.

A FR book is prerequisite to run a fleet of service trucks.

An iPod might have enough "hi-tech magic" to it. Anyone using one in the customers home?

robnj772 · 09-27-2010, 06:19 AM

Quote:

Originally Posted by John Peters

Yes, you can go do the bid in your truck but it's best if you have a printer in there.

If you have very good handwriting you can do it but you lose the "it's type set & bound in a book so it must be trustworthy" effect.

Another way is to take a portable computer into the clients house, however it feels awkward.

A FR book probably works better but they're pretty costly.

A FR book is prerequisite to run a fleet of service trucks.

An iPod might have enough "hi-tech magic" to it. Anyone using one in the customers home?

Why would anyone use an iPod? Do you do a little dance routine for the customer?

Tiger · 09-27-2010, 08:00 PM

Quote:

Originally Posted by robnj772

Why would anyone use an iPod? Do you do a little dance routine for the customer?

I have an iPod but the only magic I do with it is plug it into my van stereo and have my client and vendor database in it.

Magnettica · 09-27-2010, 08:37 PM

Quote:

Originally Posted by Tiger

I have an iPod but the only magic I do with it is plug it into my van stereo and have my client and vendor database in it.

That's odd, all my iPod does is put out Aerosmith, Kiss, Ramones, and Van Halen tunes all day. Did you mean, iPad?

robnj772 · 09-27-2010, 08:41 PM

Quote:

Originally Posted by Tiger

I have an iPod but the only magic I do with it is plug it into my van stereo and have my client and vendor database in it.

Isn't an Ipod just for playing music?

I have an ipod,I have music on it and hook it up to my job site radio. It works great for jamming out to big hair 80's metal but as for using it as a mobile office seems unrealistic to me.

As for databases and all that office stuff I use my smart phone.

Can you run spreadsheets and make adjustments,order material,check on deliveries and all that with an ipod?

Tiger · 09-27-2010, 08:45 PM

Quote:

Originally Posted by Magnettica

That's odd, all my iPod does is put out Aerosmith, Kiss, Ramones, and Van Halen tunes all day. Did you mean, iPad?

iPod touch to be exact.

HackWork · 09-27-2010, 08:47 PM

Quote:

Originally Posted by Tiger

iPod touch to be exact.

Yup, the iPod touch is the same as an iPhone without network capabilities so you have to find a WiFi hotspot.

robnj772 · 09-27-2010, 09:44 PM

Quote:

Originally Posted by HackWork

Yup, the iPod touch is the same as an iPhone without network capabilities so you have to find a WiFi hotspot.

So then it is just a glorified mp-3 player!

Seems like a waste of money too me with all the technology out there these days.

Kinda like paying games on an Atari