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Discussion Starter · #1 ·
When we do a service call we charge a minimum of 1 hour plus travel time one way.
On the calls that take under a half hour we have had a few people complain that the travel time should be included, meaning if it is a half hour travel and it only takes a half hour they should be billed 1 hour total.

Wondering if others do a minimum charge plus travel or just the minimum charge?

Thanks in advance.
 

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Donuts > Fried Eggs
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What profit margin are you aiming for, and gets you closest to that margin?

We do a minimum of two-man-hours plus milage because we it doesn't make financial sense for us to dispatch for less than that.

Tell customers up front, the ones that have that much of a problem are free to go elsewhere.
 

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It sounds like you might be doing residential service and I think Big John does industrial. If it is residential service I would suggest you quote a service charge equivalent to the one-way trip, then quote your one-hour minimum or diagnostic quote or repair quote from there. See the threads on flat rate and T&M for a very interesting read.
 

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Discussion Starter · #4 ·
We started out adding 35.00 to our normal hourly rate for the first hour and did not charge for travel but there was enough jobs where the travel time was greater and it didn't pan out which led us charging for travel one way. That is how several of the companies in this area work it.
 

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Another way to do it is something like $150 for the first hour, then $100/hour. The $50 is for your one-way travel. Sometimes when I break down projects I have an item that includes travel, setup and cleanup. The other items are actual installations.
 

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Discussion Starter · #6 ·
Another way to do it is something like $150 for the first hour, then $100/hour. The $50 is for your one-way travel. Sometimes when I break down projects I have an item that includes travel, setup and cleanup. The other items are actual installations.
That's what we were doing, but it seemed like when people asked what my hourly rate was and I explained the it was $115.00 for the 1st hour and then $80.00 each additional hour that I got a lot more of the statements
" I will get back to you and let you know".

It seems now we just get the occasional complaint about the travel time when I am able to finish quickly, but I always do explain all the terms and make sure they understand before going there.
 

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Bottom line to be profitable is to charge 2 hours or more. Wether you have to explain it as 2 hour min labor or 1 hour labor + 1 hour travel, 1 hour labor + material + gas + liability insurance + workers comp + marketing expenses + I want to make a decent living + blah blah blah . If you didn't charge this 2 hours or MORE then ofcoures these service calls would not be worth the hassle.

Disclose the charges upfront, they will either hangup or say ok come on over.

I charge $75/hr, 2 hr minimum and I am thinking of raising my rates. Out of the last 35 invoices charged for this "service call" only one customer complained. She was a long term client and always paid right away so I only charged her for 1 hour though it only took 5 mins to swap the dimmer.
 

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That's what we were doing, but it seemed like when people asked what my hourly rate was and I explained the it was $115.00 for the 1st hour and then $80.00 each additional hour that I got a lot more of the statements
" I will get back to you and let you know".

It seems now we just get the occasional complaint about the travel time when I am able to finish quickly, but I always do explain all the terms and make sure they understand before going there.
Here's where you're screwing yourself.

Client; my hourly rate at work is $30 an hour.


Client calls an electrician because she needs work, she asks the electrician what his hourly rate is, the electrician says it's $115 the first hour then it's $80 an hour after that.

Client; I work really really hard at work, but I only make $30 an hour, Why does the electrician deserve anymore than I make?

So they call around until they find the $30 an hour electrician.
 

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Here's where you're screwing yourself.

Client; my hourly rate at work is $30 an hour.


Client calls an electrician because she needs work, she asks the electrician what his hourly rate is, the electrician says it's $115 the first hour then it's $80 an hour after that.

Client; I work really really hard at work, but I only make $30 an hour, Why does the electrician deserve anymore than I make?

So they call around until they find the $30 an hour electrician.
I would think that $30/hour electricians won't stay in business long but there is one in this area who has been around for years. Now it is $65 for two men. I suspect his wife is providing the benefits.

As far as "screwing yourself"...that's what the $30/hour guy is doing. $30/hour X 2000 hours (more like 1000) = $60,000 (or $30,000 at 1k hours) less vehicle, fuel, office, phone, tools, etc.

From my experience he's keeping $15-40k per year and earning $7.50-$20/hour. OK for a base laborer maybe but not skilled labor.

Very true that some people are looking for the $30/hour guy but not worth the time chasing that type of customer IMO.
 

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Donuts > Fried Eggs
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It sounds like you might be doing residential service and I think Big John does industrial...
Help me out, though: Is there really a difference? That's why I said look at the margins, regardless of the market you're in, it's still gotta put enough money in your pocket to sustain the business.

I'll grant that an industrial customer is probably a lot less likely to balk when they hear a several-hundred dollar minimum, so maybe that's the issue, but I don't really see a way around that unless it's just a salesmanship issue like Harry suggested: Call it a "dispatch and travel fee" instead of "120 for the first hour" or whatever.
 

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I would think that $30/hour electricians won't stay in business long but there is one in this area who has been around for years. Now it is $65 for two men. I suspect his wife is providing the benefits.

As far as "screwing yourself"...that's what the $30/hour guy is doing. $30/hour X 2000 hours (more like 1000) = $60,000 (or $30,000 at 1k hours) less vehicle, fuel, office, phone, tools, etc.

From my experience he's keeping $15-40k per year and earning $7.50-$20/hour. OK for a base laborer maybe but not skilled labor.

Very true that some people are looking for the $30/hour guy but not worth the time chasing that type of customer IMO.
That's correct , but mt point is people who are employees think that their boss is charging $30 on their behalf, because they really do not know that their boss is charging a whole lot more just to be able to provide them with that job
 

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I had an HVAC company come to the house with an hour minimum the guy fixed the problem in 15 minutes . He sat at the dinning room table filling out the invoice. when he handed it to me I set it to the side pulled out a deck of cards and started dealing. He gave a surprised look and ask what I was doing I told him pick your hand I got you for another 45 minutes.
 

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That's correct , but mt point is people who are employees think that their boss is charging $30 on their behalf, because they really do not know that their boss is charging a whole lot more just to be able to provide them with that job
Harry....said person is free to use a phone book or computer, and educated themselves in zero time :thumbsup:

~CS~
 

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I had an HVAC company come to the house with an hour minimum the guy fixed the problem in 15 minutes . He sat at the dinning room table filling out the invoice. when he handed it to me I set it to the side pulled out a deck of cards and started dealing. He gave a surprised look and ask what I was doing I told him pick your hand I got you for another 45 minutes.
Good work..:thumbsup:
 

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I had an HVAC company come to the house with an hour minimum the guy fixed the problem in 15 minutes . He sat at the dinning room table filling out the invoice. when he handed it to me I set it to the side pulled out a deck of cards and started dealing. He gave a surprised look and ask what I was doing I told him pick your hand I got you for another 45 minutes.

I don't believe that for a second. The point is never say 2hr minimum, you're going to stay for 2 hours if that's the case. Which is why it's a dispatch fee or service call. Never ever ever say, "service call is up to two hours."
 

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Help me out, though: Is there really a difference? That's why I said look at the margins, regardless of the market you're in, it's still gotta put enough money in your pocket to sustain the business.

I'll grant that an industrial customer is probably a lot less likely to balk when they hear a several-hundred dollar minimum, so maybe that's the issue, but I don't really see a way around that unless it's just a salesmanship issue like Harry suggested: Call it a "dispatch and travel fee" instead of "120 for the first hour" or whatever.
The issue is the minimum. While the expenses are similar between residential service and industrial, a company with a production interruption will approve 3-4 hour minimums...but a homeowner that needs a light installed? A large percentage of residential service calls are small, which is why upselling becomes key.
 
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