# Pricing dilemma



## deltix (Jul 19, 2012)

I got job and already did some work. I have to invoice customer for the first phase and I would appreciate some input on pricing. Because of nature of the job I was not able to give flat rate pricing. It’s major remodel of hospitality facility, but no any definitive blue prints or plans, more “plan as you go” type of job. What I’m doing is little bit of everything. Low voltage wiring (CAT5E for network/phones, some audio), CCTV system complete “do over and rewiring”, CATV distribution and TV installations, new phone system, probably more things down the road. I did advise customer about material pricing, at least for more expensive items, but there is no way to estimate labor cost and time needed and accurate material cost when things are changing on weekly basis. So, the only way would be to charge for material cost + time. I do have markup on material, average around 25% which I find reasonable to compensate for my time and hassle figuring out what is needed, ordering it, waiting for delivery or picking it up, doing paperwork after (sales tax PITA) and taking risk that sometimes things don’t work even when new. So, I would charge for material plus time actually doing the job. Another thing is that job site is 120+ miles from where I live, so it takes me two hours to get there and two hours to go home. Usually I stay there for two days every 2-3 weeks, as needed, and customer takes care of overnight accommodation. But still, 4 hours on the road and truck expenses. 
So what would be reasonable to charge? I usually charge $100/hr for local jobs, additional $50 if more then 10 miles from where I live for the first hour, or $80/hr if I can make it full day or almost full day, no trip charge then. And flat rate pricing for certain projects/jobs anytime is possible, but this one would not fit in that. 
It is ongoing job, so I don’t want to shock the customer nor overcharge them, because it will be much more things to do, but also I don’t want to bite myself in the ass in any way. 

$80/hr sounds too cheap for all work that I’ve done there, but $100/hr might look too much to the customer. Also, what would be reasonable trip charge? It is 250 miles round trip.


Any input is appreciated. BTW it’s Southern California where I live and where the job site is.


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## Sparky J (May 17, 2011)

Why not lump the time into a "daily rate" and maybe spread travel into it then add materials. That way besides the materials the customer has a "set" daily rate. That is if your days are mostly the same hourly which I bet that they are or at least close.


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## wildleg (Apr 12, 2009)

charge them as much as you can. If they choke on it, at least you won't get forked out of phase 2 and phase 3


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## Zog (Apr 15, 2009)

All of these things should have been addressed in the contract before you started work.:blink:


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## deltix (Jul 19, 2012)

I know, contract... We didn't do any contract because it's somebody I know for a very long time and I already did few smaller jobs before for them. Regular customer, you know. There will not be any problems, but I'm just trying to be reasonable, to them and to myself. They trust me and my work, I trust them. Still, because it's bigger job now I think I should stick to $80/hour and ask to be reasonably compensated for my travel expenses. There is still plenty of money to make down the road. Maybe like $150 per trip? That would cover my truck/gas expenses for sure, I don't mind driving there, actually I like it. Should I show truck expenses as separate item? It sounds right to me. 

But when I see my $80/hr or $100/hr rate and I see some other trades charging as much as $300/hr, I feel stupid. And believe me, I'm much smarter, and probably most of the people here, then most of them. I've seen locksmith guy charging $100/hr and guy who tests for lead and asbestos $325/hr just to take samples and send it to the lab. And on top of that lab and equipment cost. Yes, he does own equipment for lead testing, but he still charges to the customer $175 rental fee. And my friend plumber... No need to go there.


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## MDShunk (Jan 7, 2007)

Well, all you can do at this point is figure up what your actual costs were along with all your profit and overhead stuff, and send the bill. You're sort of in a corner now. It cost you what it cost you. Tally it up and send it off. I'm not sure I'd feel especially compelled to even list the hourly rate, truck charge, etc. More like a letter-form of a bill. "Work from xx/xx/xx though xx/xx/xx (along with a description of the work completed *sizzle*), $xx,xxx.00"


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## hardworkingstiff (Jan 22, 2007)

deltix said:


> I
> 
> But when I see my $80/hr or $100/hr rate and I see some other trades *charging as much as $300/h*r, I feel stupid. And believe me, *I'm much smarter*, and probably most of the people here, then most of them. I've seen locksmith guy charging $100/hr and guy who tests for lead and asbestos $325/hr just to take samples and send it to the lab. And on top of that lab and equipment cost. Yes, he does own equipment for lead testing, but he still charges to the customer $175 rental fee. And my friend plumber... No need to go there.


"I'm much smarter"

Are you sure? :laughing:


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## deltix (Jul 19, 2012)

I can make money with $80/hr because my overhead is almost none. One man show, and helper as needed. But no helpers so far on this job. My biggest cost is truck expense. And my ex wife :laughing:. 

How much do you, LV guys, charge for hourly or daily based jobs? Do you ever scratch your head when you see somebody's else invoice?

BTW, I have over 20 years of experience in electronics and computers, telecom and networking (not only wiring, but setup and configuration also) and I'm C-10 licensed. I'm not "craigslist" type contractor.


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## MDShunk (Jan 7, 2007)

The first thing you need to do is figure out how much you really need to charge to remain profitable and in business. I think you're taking a shot in the dark now. 

The last thing you ever want to do is charge two different hourly rates, to the same customer, during the same job. 

Have you ever visited an accountant to discuss things like how much your hourly rate needs to be? This is a question that is answered with math, and not with a gut feel or a poll of other people doing similar work.


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## deltix (Jul 19, 2012)

hardworkingstiff said:


> "I'm much smarter"
> 
> Are you sure? :laughing:


You are right, I should ask that myself again. Probably not, because if I am I would be doing something else. If doing what I love makes me stupid :jester:, then so be it. Despite having very high IQ:smartass:.


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## deltix (Jul 19, 2012)

MDShunk said:


> The first thing you need to do is figure out how much you really need to charge to remain profitable and in business. I think you're taking a shot in the dark now.
> 
> The last thing you ever want to do is charge two different hourly rates, to the same customer, during the same job.
> 
> Have you ever visited an accountant to discuss things like how much your hourly rate needs to be? This is a question that is answered with math, and not with a gut feel or a poll of other people doing similar work.



That was done and it's $80. I can do just fine with that. But I'm not going to get rich. That is my goal, isn't yours?  
I would never charge two different rates for the same job. Never did, never will. Unless I raise price at some point for my services, which I did few times over last 9 years being in business (self-employed). 

I think I know how I will price this job, but I would still like to hear other opinions. It doesn't hurt.

Now, something not related to this job.

What hurts me sometimes is hearing from people that I'm to expensive and at the same time those very same people have no problems writing big checks to somebody else for lousy jobs or services performed. Sometimes people just don't appreciate what we do and value we provide. 
That guy, that charges $300+/hr for lead and asbestos testing has probably lower overhead then we have. Collect samples, drop it off at the lab and wait for results. Do some paperwork and collect money. Almost 100% profit. Customer pays for lab expenses and for gun "rental". He owns that lead gun! It's business expense! I know, he does it because he can, you will say probably.

And I should change profession or shut up !


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## MDShunk (Jan 7, 2007)

deltix said:


> What hurts me sometimes is hearing from people that I'm to expensive and at the same time those very same people have no problems writing big checks to somebody else for lousy jobs or services performed. Sometimes people just don't appreciate what we do and value we provide. ...


That's an easy one. Every time you hear, "you're too expensive", or "your price is too high", that's not the actual problem. The actual problem was your failure to build the value of what you do in the mind of your customer. You can see the value, but apparently they cannot. That's a failure on your part, and not some character flaw of your customer. You might be well served to read some Zig Ziglar and Brian Tracey books.


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## deltix (Jul 19, 2012)

MDShunk said:


> That's an easy one. Every time you hear, "you're too expensive", or "your price is too high", that's not the actual problem. The actual problem was your failure to build the value of what you do in the mind of your customer. You can see the value, but apparently they cannot. That's a failure on your part, and not some character flaw of your customer. You might be well served to read some Zig Ziglar and Brian Tracey books.



I think that all of my customers know value of my work and services once I do the job. But when I run into somebody new, then I can hear things like that. I refuse, and maybe that is bad thing, to significantly lower my price just to acquire new customer. But often, people compare oranges and apples. On example, when installing CCTV, I use only high quality components. And that doesn't come cheap. But value behind that is support and warranty. For years to come. And when somebody bids with cheap Chinese stuff on the same job for a fraction of price I loose it. I could do the same thing, but in the past I had nothing but problems after doing it. So no more. And how to show value to the customer when they look at the bottom line? Recently, I gave bid to replace "no brand no model no password no support made in china" CCTV system with brand name, supported (locally), 3 years warranty just to hear "we have somebody else, but we will let you know". And that somebody else probably advertises on Craigslist. And the whole purpose of replacing CCTV system is because it was useless (no brand no model no password no support). 
I did see few of those jobs that I lost in the past and they were done in what I call "Mickey mouse" style. On few occasions they had to be fixed or replaced after and that made me actually happy :devil2:. 

I know, it is part of the business, but still... I guess I'm to sensitive... 

I'm hijacking my own thread now.


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## MDShunk (Jan 7, 2007)

deltix said:


> ..But often, people compare oranges and apples...


You've got some unhealthy self-talk, as it relates to the sales process, if you're already giving YOURSELF the sales objection like that. Since you know people have a natural inclination to compare apples and oranges, it's up to you to head that objection off before it can be given.


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