The 'Right' Way to Price Electrical Work in 2023: Time & Material vs Fixed Contract pricing~

oh my what is up you crazy electricians and electrical contractors that's right you are tuning in to the 360 electrician podcast I am your host if this is the first time meeting my name is Jeff the 360 electrician and I've been electrical contractor for over 16 years and in the trade for she's since 1991. you figure that out and tell me how old I am but I started this podcast and the YouTube channel the 360 electrician to help you electricians level up and become electrical contractors and for electrical contractors that are listening out there to start making real money and live the lifestyle that you want to live how am I going to do that well you can take me as a little bit of an example I am currently coming to you live from our YouTube studios here in Missoula Montana just south and I run a mid-sized brick and mortar electrical contracting company that is busier than heck and it is always busier in the heck I don't rely on the economy uh for the past 16 years and so I decided to take my blessings I've been blessed God's blessed me in many many ways that I can live here in Montana and still run a business in California 1200 miles away I don't know if I just mentioned that or not and so I figured if I can do that I can probably help you spend more time with family do those things in life that you want to do and still being the greatest trade of all yep plumbers HVAC I'm sorry if you're tuning in but electricians are the best hands down all right well what are we talking about today you guys I'm not wasting your time at all I'm going to talk about something that really just pissed me off this week and I don't get pissed off very often I'm a very calm guy I'm very calm cool Collective because I'm blessed as I said and I feel like life is too short to be pissed off about the little things but you know what I'm gonna kick myself in the rear and if you were here I'd K I'd have you kick me as well I'm building a house here in Montana I don't know if you've seen some of the videos but I've been on my build and we're almost done we're a few months out and I did the unthinkable I did not practice what I preach I'm going to be honest with you I've told you that before you've seen this a couple of videos where I'm not practicing what I preach guys I hired someone to work on my house for time and material and it's a disaster oh my gosh if you're a contractor right now in 2023 and you want to be a successful contractor and keep your clients and get referrals stop charging for time and material I can't believe I did it but I did it I'm stuck tomorrow's the last day I'm done hey great guy don't get me wrong love the guy to death hate the fact that I hired him time and material okay so that's what we're talking about here are you gonna hire for time are you going to work sorry for time and material because I know a lot of you guys out there that are listening right now don't lie to yourselves and don't lie to me you're working time and material because of a couple of reasons number one you're scared you're scared you don't know if you're bidding correctly you don't know if you're going to lose money you don't know how you're going to get into this job and if you're gonna make money so you're scared and you figure if I charge time and material I can't lose well you might not lose on the job but I promise you you're going to be losing clients you're going to be losing future business and we'll get into that secondly you're charging time and material because it's easy you don't have to do any work you put the hours in you charge for the hours you bought 100 in material put 20 on it and get charged for the material easy cheesy what do they say nothing that comes easy is actually easy eventually it's going to cost you more because as I said I believe you're going to lose clients okay so let's talk about it you ready to dive in if you are hey if you're tuning in on YouTube on the YouTube podcast Channel which is at you go to YouTube Type in the search bar at the 360 electrician podcast and you're going to get this podcast with some video if you're tuning in on Spotify Apple podcast or Google welcome I encourage you to subscribe I thank you for it and I'm going to be honest with you if you're gonna get anything out of this podcast either on YouTube or any of the podcast stations and you don't subscribe give me a thumbs up and like just click off right now I'm not making any money by giving you this information the only thing I can get from you is a like or a subscribe and I appreciate it the more likes and subscribes I get the more I'm gonna ramble and give you all this knowledge in my brain to God willing help you with my experiences I'm not telling you what to do I'm not preaching like I know at all I am not the walking code book I am not the business Guru but I've got years and years of experience if you know anything about me and you know I would love to share it with you all right so let's get into it some pros and cons and I do have a video on this that I did a long time ago but it's fresh in my brain so I want to talk about it let's talk about the cons of time and material okay first and foremost your client does not know what it's going to cost him cost him or her at the end of the job why do I use the word cost I'm a big word user okay I like to use the word investment investment right here's the scenario if I come into a job and I say hey Mr Mrs Smith uh I can go ahead and come in and do this project I charge you 125 per hour plus parts and material plus 20 percent well the customer first thing they usually will ask you is well how long do you think it's going to take so hold up everybody write that in there if you're going to have to answer that question it's going to tie you into a time frame okay so what happens you start the job and you go and you go and you go and you're a new business owner right and the phone rings or you get a text message and what do you do the guy happens to be home he's watching you outside the the living room window putting in his porch electrical on time and material and every 15 minutes 20 minutes three hours four hours you're getting another business call because you're fresh you got that Angie's List call coming right you got that Yelp call coming right you got to pick that sucker up or you're going to lose that call well every time you pick up the phone or do that the client because I know that's what I've been doing that's why I can't believe I hired someone right now I'm looking at this guy going this guy better hurry up he's taking a cigarette break oh he just take the phone call he's took another phone call where the hell is he from lunch how much is this guy charging me how much did he how much how many hours did he work today do you see what's happening your customers are going to freak out 90 of them okay you know it and I know it I've been there I've done that I'm in it right now so this is Con what's the con about it the con is you can't just do what you want to do you don't have the freedom to take up those business calls that you can't afford to lose you can't afford to go out to the truck get your clipboard or your notepad or your laptop and send out an email to either your other guys or your estimate for that job because the other client said if I don't get the estimate today you can't get the job so now you're taking a break from this guy's job that you're on time and material and you're doing other business it's not fair to the client what's going to end up happening is no matter how much he smiles or she smiles no matter how much they thank you they will never call you back if they don't have to they don't like you because they feel like they got ripped off now there's some ways to save that you could say at the end of the job hey Mr and Mrs Smith we did the job hey I'm in it for 27 hours but I'm going to go ahead and credit you for three hours because I was on the phone and I had some other things that I had to do and I don't think that's fair to build you for those three hours sure that'll make up for it but it's not going to be good as charging a fixed contract price and that is the way you should be pricing in 2023. if you're tuning in from California don't quote me because I keep saying I'm going to look it up but I'm pretty darn sure that is it is illegal now for you to charge time and material to residential customers you must give them a fixed contract price now that's California I know it's probably not anywhere else and again check me go to the contractor State License Board and check it but I'm pretty sure that's the way it is now I don't care because in my brick and mortar we only charged fixed contract pricing and that's it for everything okay the benefits of fixed contract pricing hey Mr and Mrs Smith I went ahead and listened to the words I'm using okay and a lot of you don't comment don't comment and say oh you're bsing you're full of this and you're you're just a Salesman today dude I am in business to make money okay and if I can make money listen that's not the only thing though I should be careful when I say money like it's the most important thing no my clients are the most important thing so making money probably comes secondary to keeping my client happy because you're not going to make any money eventually if you don't have happy clients so money is the important part meaning I want to be in the black okay I'm not talking about oh I better make that money and start ripping people off because we don't do that I'll charge you the same if you make a thousand dollar a year income or a hundred thousand dollar income you've seen my videos where I'm working in multi-multi-million dollar mansions and sometime I'm working at Joe blow's house in his trailer I started in a trailer right double wide baby if you're with me like hit that subscribe no I'm just kidding but listen I did starting a double win I don't charge differently when I see a Ferrari in the driveway or if I see a Hyundai in the driveway I'm in business my business is modeled almost like a McDonald's what do I mean by that when you go to get a Big Mac from this McDonald's it's 5.78 cents I don't know what it is but I'm just saying when you go to a McDonald another McDonald's it might vary by five or ten cents because it's the city and the state and tax but you're not getting a seven dollar Big Mac right and then you go out of state even to a different state and it's not like it's a 12 Big Mac I want to stay consistent okay consistency is super important and and therefore when I charge a fixed contract price it's based on my daily labor rates so then when I go into a client and say hey Mr Mrs Smith I can go ahead and do this kitchen remodel it'll it'll take a couple of days I don't tell them time and material I don't want to take him I don't want to tell them it takes one day I don't want to tell him it takes three days because then I'm putting myself again into that loophole right I'm putting myself in a corner where I have to perform in a certain time frame I said this is a multi-day project and your total investment is going to be 3980 guys I took my daily labor rate times two and a half days I'm taking my material not plus 20 but plus a dollar amount if it's 700 in material I'm rounding it up to a thousand dollars that's more than twenty percent that might be forty percent I don't know I'm not doing the math in my brain right now I'm giving a fixed contract price and now guess what I know that this is a two and a half day job because I have the experience to know that and the customer knows that at the end of the job it's going to be a three thousand eight hundred ninety dollar project done deal now I can call it an investment because it's a fixed amount and it sounds better than saying hey you're going to have to pay me or it's going to cost you or any of those bad words and I say it's a fixed contract price your total Investments can be 3 890 we're going to go ahead and do this and do that and that tell them everything that you're going to do I'm going to give you a one-year full Parts labor warranty if anything goes wrong I don't care if it's a manufacturer's fault I'm going to take care of it for you in the first year if you go ahead and okay my paperwork we can get started for you right away these are sales techniques the way you want to go is fixed contract pricing you know what you're getting paid at the end of the job they know what they're going to pay at the end of the job they're super happy and they're ready to refer you how are they going to refer you yeah here it is again you're going to do my marketing course at www.the360electrician.com and you're going to make three clients into nine you're gonna make nine into 27 and so on and so forth okay fix contract pricing is the way to go how do you get your fixed contract price how do you know your daily labor rate well there's five line items I teach you in coaching again you can sign up for coaching at the website too www.360electrician.com you're going to get your five basic costs and you're gonna repeat one every single thing to run your business is included in that five line items that I want to teach you okay that includes if you have payroll that includes your workman's comp that includes your insurance that includes your attrition do you know what attrition is in electrical contracting here's the biggest problem I found when people coach you know what Jeff I'm just not making money any money and I don't understand well how much do you charge an hour I charge 95 an hour I go great why do you think you're you're losing money I don't know he goes I just I just started as a contractor I've been doing it for five years but everybody else here charges 95 that's the going rate who cares what everybody else's rate is it's everybody else's overhead and expense is yours no they're not second thing well I don't know why I'm not making any money because I used to work for 35 an hour and I'm on charging 95 on my own and I can't make it hell yeah you can't make it because after I go over the five step line items we repeat the once or the sixth you find out that you should be charging 120 an hour and you realize this whole time you've been working for free because in my system of pricing my five line items right the only two suckers in there are your business and you as the owner everybody else has to get paid or you can't have a business the only people the only entities Pockets or the person's Pockets you can take money out of when you when you're losing 20 an hour is either you the owner or you your business okay I want to teach you all that so I encourage you if you're an electrical contractor and you're not making a ton of money and you need help or you're an electrician and you're going to get into trading and you don't know what to do get coaching I'm gonna teach you all of that stuff okay so listen I've wrapped it up I mean I told you my experience that's what this podcast was about I don't I I didn't get into too much detail I'm not going to go past the 15 minute mark on this one but listen in 2023 you need to start charging fixed contract pricing go to YouTube and type in fixed contract pricing versus hourly start educating yourself for it and when you want to tie it into the electrical contractor trade you know you might hear it from a plumber hvc but it's different from an electrician and and you want to know about the the two or three reasons there's actually four reasons why someone's gonna say no to you let's just say you give them a fixed contract price hey Mr and Mrs Smith uh your total is 3890 and they say no it's one of four reasons they're going to say no to you and I want to teach you those four reasons okay maybe we'll talk in another podcast that's it for now I hope you subscribe I hope you got something out of this podcast and we will see you on YouTube Tick Tock Instagram and we will see you here on the next one take care and God bless

Channel: The 360 Electrician

Views: 24,347

Keywords: electrician, electrical, electrical contractor, #electrician, electrical helper, electrical apprentice, starting an electrical company, contractor business help, how to become and electrician, electrician u, sparky, electrical fails, #electricalcontractor, ElectricianU, day in the life of an electrician, how to be an electrical contractor, should I be an electrician, electrical interview, electrical code, marketing, getting more sales, electrical podcast, electrician podcast

Id: 1L7_OwEItWc

Length: 14min 12sec (852 seconds)

Published: Mon May 22 2023