# Service call rate



## shocksystems (Apr 25, 2009)

I have been charging an extra half hour for any jobs that take less than a full day (extra $77.50). I thought this would avoid the negative reaction people have to fees but it has caused some confusion about hours. I may abandon this for your method.


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## mike1 (Jul 12, 2014)

Thanks for the feedback!


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## SWDweller (Dec 9, 2020)

I always used 2 service rates for weekends, one for with in 20 miles and the other for outside the range. During the week I charged straight time portal to portal. I had a service truck that was well stocked. So I figured since only 30% of the time did I need to go to the store for parts. They should pay the freight.
The mileage verbiage was printed on the receipts I left.


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## tmessner (Apr 1, 2013)

We charge straight rate portal to portal. It is easier for the guys and the office.


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## blueheels2 (Apr 22, 2009)

One man shop and I charge 189$ for a service call.


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## Coppersmith (Aug 11, 2017)

It's interesting to read all the different methods people use to charge for jobs.



mike1 said:


> I'm wondering if I'm charging enough for a service call. I'm self-employed, in between Phila. and Allentown, PA, over 20 yrs experience but always looking to improve in some way. In addition to my hourly rate and any materials used I add $85 for service call. What are other guys charging for a service call, mostly residential?


If I am reading you correctly, the $85 is your trip charge (aka travel charge, dispatch fee, or service call fee). In order to know if this is the correct amount, we have to know what costs you are trying to cover. 

Is that just for vehicle expenses? If so, it's probably too high. In my case, my truck costs $1.00 per mile to operate (gas, oil, tires, and all maintenance and repairs, but not insurance or depreciation, that's in overhead). $85 would cover an average round trip of 85 miles if just for vehicle expenses and a dollar a mile expense. I limit my service area to 30 miles out.

Is that supposed to cover vehicle expenses and drive time labor? Is so, it might be about right depending upon your labor cost per hour. If your average round trip is 30 miles (which is about 45 minutes) @ 1.00/mile that leaves $55 for labor. If your labor cost is $73/hr or less, the $55 will cover the labor for 45 minutes.


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## dspiffy (Nov 25, 2013)

Service charge is the same as my hourly rate and includes the first hour, HOWEVER if you call me out for one thing, it takes 30 minutes, and you say "while you're here look at this other thing" the clock starts over with a new service charge.


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## Coppersmith (Aug 11, 2017)

dspiffy said:


> Service charge is the same as my hourly rate and includes the first hour, HOWEVER if you call me out for one thing, it takes 30 minutes, and you say "while you're here look at this other thing" the clock starts over with a new service charge.


It sounds like you are confusing "service charge" which usually means the same as "trip charge" and your hourly rate.

Why would you charge a service charge a second time? You are already there. There is no additional cost for travel to do a second task (unless you have to come back another day).

As far as the labor charge is concerned, if they already paid for the first hour, why would you charge them again if they haven't used up that hour?

I also charge an hour minimum, but if I finish early and they ask me to look at something else, I don't charge any extra until we are past that first hour. They already paid for it. I don't normally ask if they have something else to use up the time unless I finish in 15 minutes or less.


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## dspiffy (Nov 25, 2013)

Coppersmith said:


> It sounds like you are confusing "service charge" which usually means the same as "trip charge" and your hourly rate.
> 
> Why would you charge a service charge a second time? You are already there. There is no additional cost for travel to do a second task (unless you have to come back another day).
> 
> ...


Because they're getting a free hour for whatever they called me out for. 

The alternative is, let's say I change a couple switches and it takes 45 minutes. They've got 15 minutes left, and are like "come look at this outlet in my basement." That takes half an hour. Do you charge them for 2 full hours? 1.25? Some people will try to talk you down to 1 even.

Since I started doing it this way, no one has haggled, and the example above would still be 2 full hours.

Since this isnt my full time any more, I mostly do small jobs close to home, all word of mouth. Most still end up being over an hour unless it's a tripped GFCI I can find right away.


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## splatz (May 23, 2015)

shocksystems said:


> I have been charging an extra half hour for any jobs that take less than a full day (extra $77.50). I thought this would avoid the negative reaction people have to fees but it has caused some confusion about hours. I may abandon this for your method.


I think it's easier / less confusing for the customer to understand if you quote a base price. For example tell the customer your rates are xxx for the first hour then yyy per hour - say $177.50 base rate which includes labor for the first hour, then $100/hour after. 

You're also working in a one-hour minimum there. If you want, you could make the minimum more, for example for a two hour minimum, you could quote the customer a base price of $277.50 for up to two hours, then $100/hour labor rate after that. 

The other thing I think is important, some of the invoices I have seen are absolute gibberish, set up your billing so the descriptions are clear. They need to be just as clear as the price you quote. If they see gibberish on the invoice of course they are going to have questions. If the descriptions on the invoice match what you said when you quoted the work, far fewer problems. 


```
Description                            Price        Qty        Ext
================================================================================
Service Call - Base Price           $277.50         1        $277.50
Additional Labor (past two hours)                $100        1        $100
Materials - GFCI Receptacle            $22.50        1        $22.50
================================================================================

TOTAL                                                    $400.00
```


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## Easy (Oct 18, 2017)

Look at it from the customers perspective. $177 for a service call seems quite fair for a highly trained professional to come to your home and preform a service.
Compared to what other trades charge it's a bargain. It would cost you about $125 to clean your couch and that takes about 1/2 hr.
It might cost you about $500 to get a small roof repair that takes about 2 hours. 
Honestly we under value our selves at times.


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## Coppersmith (Aug 11, 2017)

dspiffy said:


> Because they're getting a free hour for whatever they called me out for.
> 
> The alternative is, let's say I change a couple switches and it takes 45 minutes. They've got 15 minutes left, and are like "come look at this outlet in my basement." That takes half an hour. Do you charge them for 2 full hours? 1.25? Some people will try to talk you down to 1 even.
> 
> Since I started doing it this way, no one has haggled, and the example above would still be 2 full hours.


I think every EC can and should do whatever they like. So I'm not arguing with you about how you do business. I'm just looking at the charges from the client's perspective. If the client is happy, you get better reviews and referrals. 

In my case, I charge flat rates with a one hour minimum for the job. If the task I'm doing takes 45 minutes and they ask me to look at something else, I'm happy to go look at it and evaluate the situation. If I can fix it before the hour is up, I don't charge any additional labor. In my opinion, they have already paid for it. If I think this second task is going to run over the hour, I will tell them how much additional it will cost for me to do this additional work. I will give them credit for the remaining time. They can accept or decline. And I charge in tenths of an hour increments, not whole hours.


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## paulengr (Oct 8, 2017)

We used to charge a daily rate, plus overtime. We had a half day rate but only charged that if it truly was a quick job.

Now we charge hourly just to match competitors. But it includes travel time in and out and our service area is large so a one hour service call might be 3 hours or more just to start.

We don’t tack on equipment, vehicles, etc. So there’s not much guessing.


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## Coppersmith (Aug 11, 2017)

splatz said:


> I think it's easier / less confusing for the customer to understand if you quote a base price. For example tell the customer your rates are xxx for the first hour then yyy per hour - say $177.50 base rate which includes labor for the first hour, then $100/hour after.


Time and material rates work well with industrial and heavy commercial clients who understand that you have to pay for what you need. They don't work very well with light commercial (e.g. Mom and Pop retail stores) and residential clients who don't understand how long jobs take, don't understand the high costs of running a service business, and don't have big budgets. That's why quoting fixed prices works better in these situations.

If I say "I charge $190 per hour* and I estimate the job will take three hours for an estimated total of $570" a residential client would freak out. They would focus on the labor rate and not the total. They can't understand why the rate is "so high". They say things like "That's more than my husband makes per hour" like that has anything to do with it. And they are concerned that it could take longer and cost more.

If instead I internally calculate the price of doing the job and say "I can do that for a fixed price of $570". There is no freak out. They don't know the hourly rate so they can't focus on it. The price is fixed so they worry less. All they can do is accept or decline the fixed price. Even though the price is exactly the same, you will get many more acceptances with the flat rate price.

There are times when the scope of the problem is unknown. In these cases I say "I'll have to diagnose the problem before I can quote a price to fix it. The diagnostic charge is $XXX. As soon as I figure out the problem, I'll give you the fixed price to fix it. You can then accept or decline. If you decline you only owe the diagnostic charge."


* Example only. This is not my rate.


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## funkking (May 27, 2020)

((Standard Hourly Labor Rate + Materials) x Markup) for most service calls. If it's an after hours, weekend or emergency service call, I increase my labor rate by 1.5.

Minimum 1 hour charge.


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## Matt Hermanson (Jul 18, 2009)

mike1 said:


> I'm wondering if I'm charging enough for a service call. I'm self-employed, in between Phila. and Allentown, PA, over 20 yrs experience but always looking to improve in some way. In addition to my hourly rate and any materials used I add $85 for service call. What are other guys charging for a service call, mostly residential?


Lots of approaches.
BUT whatever the approach used, the pricing must be high enough to hire employees to do everything.

Think about it this way, what would you have to charge to have the company run itself and you sit on a beach collecting a return on your investment. The reason is whenever you do the work, you are that employee and should be justly compensated for your efforts. Your own return on investment should be on top of all of that. If you did everything you do but did it for someone else, would your bank account be bigger as an employee or as the owner. Most of the time, the employee is paid better than the owner. I know, sad but true. That is the justification for what may seem like exorbitant pricing charged by your competitors. 

Options for getting there:
1. Flat dispatch fee with or with out mileage fees to get there. Then flat rate for whatever has to be done. Advantage is everything is priced up front. Disadvantage is everyone realizes just how expensive we are up front. At least you'd better be that expensive. Note that typically your billable hours in a flat-rate system is usually under 50%. That is why the flat rate seems so high. Residential is the easiest format to use flat rate. But I know of commercial HVAC companies that use flat rate all of the time.
2. Hourly. Still a dispatch fee or trip fee or whatever fee could be used. I have seen "truck fee" charged as well. Or you could charge a higher rate for the first hour. Or even a combination of these and/or others. There should be some sort of minimum like one or two or three or even four hours. The minimum number of hours might be higher for after hours service calls. Charging double the hourly rate for the first hour is also more than reasonable. Time should start when the phone rings for an emergency call or when you start loading up for other service calls. In an hourly format if you would have to pay an employee to do whatever, then the customer had better be getting the bill for that time. That would even include gassing up the van or loading materials. If they are on the clock, someone is getting billed for that time.

We use both flat rate and hourly. Some things are just plain tough to figure out what a flat rate charge would be. Circuit tracing in a home is fairly straight forward. But logic tracing in a factory control system might be 5 minutes or 5 days.

When flat rate, there is a dispatch fee plus mileage just to get there. Then we figure out what tasks must be completed and quote up front pricing. If possible we quote multiple options for the client to chose from. Everything is higher after hours. I know of some shops that after hours is only offered to existing clients who pay a monthly or yearly fee for the service.

When hourly the first hour is double, time is from when we start loading up to when we are finished unloading afterwards and we charge mileage on top of everything. Anything after eight hours or evenings are time and a half. Weekends and nights are double. All materials used a re marked up.

I do not plan on posting actual rates. You need to figure out what you need, not what I need.


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