Is there really such thing as charging to much

[AC\DC]

Hello, so I posted a while ago regarding hourly rates and estimating. Recommend some books to read and approached bidding jobs differently, so I'll get to my point.
If you bid lets say a Service and Panel change and are awarded the job, then you latter find out you are charging a lot more than the other electricians. Should you rethink how you are approaching it, or not worry since either they liked you or don't shop around.
I am currently in the boat for being the expensive man in town
I like being in that boat, though my worries are I will get known for overcharging in town, and ruin my reputation I am building. I have a set price I want to get per hour. when I bid, 9/10 I will be above my rate by double, some times triple.
Then I tell my self not to worry they agreed on the price. If I am over charging and not getting work I'll just slowly adjust my price.

I did great in my mind my first full year. I want to double that this year.
Thank you for the Help, this part of the job is the hardest yet most rewarding in my eyes.

 

[__dan]

Typically the market sets the market price for any commodity, and there's always another bidder, who is at the market price. If that commodity is in surplus, surplus by definition means some output of productive capacity will go unsold (or go at the liquidating price). If you're getting the sale, I would assume you're at the market price or better than it. I don't see how you could assume you're the only bidder, that's monopoly pricing power.

The customer that pay above market price for anything are very rare. That's the value difference (they make their share of the difference). If you legitmately feel that you are charging more than you should and are still getting the sale, you could ask the customer what it is about your (offer, capacity for work, your footprint) that they like and are willing to pay for. The answer could be surprising, what they have in mind. I would guess they will all say different things. Maybe they like hiring the most expensive guy.

 

[Fred B]

Hello, so I posted a while ago regarding hourly rates and estimating. Recommend some books to read and approached bidding jobs differently, so I'll get to my point.
If you bid lets say a Service and Panel change and are awarded the job, then you latter find out you are charging a lot more than the other electricians. Should you rethink how you are approaching it, or not worry since either they liked you or don't shop around.
I am currently in the boat for being the expensive man in town
I like being in that boat, though my worries are I will get known for overcharging in town, and ruin my reputation I am building. I have a set price I want to get per hour. when I bid, 9/10 I will be above my rate by double, some times triple.
Then I tell my self not to worry they agreed on the price. If I am over charging and not getting work I'll just slowly adjust my price.

I did great in my mind my first full year. I want to double that this year.
Thank you for the Help, this part of the job is the hardest yet most rewarding in my eyes.

If your quality and workmanship is of a standard that warrants it, you can build a clientele that will be willing to pay more. But if your quality is no different than the other guy, then you may be forced to recalculate your fee structure as the amount of your work level declines rather than increase.
We have a couple of GC here that have built a reputation such that they can charge a much higher price but have no shortage of work. They also get the jobs at the multimillion dollar houses.

 

[Rdcowart]

I agree with Fred B. But u also have to make sure you are charging enough to run your company and have the extra coming in to grow it as well. Don’t worry about the other companies some of those guys are under cutting so bad that they are barely getting by and wandering why they can’t get ahead. When you do quality work and have great customer service you will have an abundance of work. I have come to learn not every customer is right for my company and my company is not right for every customer.

 

[James L]

If your quality and workmanship is of a standard that warrants it, you can build a clientele that will be willing to pay more. But if your quality is no different than the other guy....

There's nothing worse than a guy who sells himself as a super standout, then everything about his work says "Average Electric"

I have a set price I want to get per hour. when I bid, 9/10 I will be above my rate by double, some times triple.
Then I tell my self not to worry they agreed on the price.

My thoughts are a mixed bag, maybe convoluted and contradictory.

On one hand, I have a business motto -
Extract as many funds as possible.

On the other hand, I also think enough is enough.
Although this one is more for me personally than others.

Here's one thing I learned from remodeling, and I've seen it over and over with other guys in other trades...

Most everybody tries to cross all their t's and dots all their i's when they first start. Trying to make sure they account for all their time, double-checking materials, the whole shebang.

But in time, most guys get too comfortable with their own ability to size up a job. They start slacking on calculating, and start guessing more. Then they start finding they're making less and less.

What happened? It's simple. They lost their fear of losing money. Don't ever lose your fear of losing money. If you are consistently beating your estimated I'm so, that means you are actually taking into account all the things that could possibly go wrong. You're just on the winning side. Things are working out more smoothly then you are anticipating. That's a good thing.

I know guys who don't charge for materials they use out of their garage. Or at least they don't charge full price. I just had a talk with a buddy of mine about this yesterday. He told me a price he gave for a job, and I told him I thought the materials would cost almost the same price as he charged no.

He told me the materials won't cost anything because he already has them in his garage

I told him if he already has the materials on hand, that means he already spent money on them. And he needs to charge for those materials just the same as if he had to go buy them again.

Here's another thing I have learned. Anytime you give somebody a price, they always have the option of telling you no thanks. If they are consistently saying yes, they see something in you.

Celebrate it. Tell other people what you're doing right. Spread that throughout our trade. Don't apologize for it. Help others start charging what you're charging.

 

[WasGSOHM]

I want to double that this year.

Inflation is at 3%/year and some companies increase at 14% per year. 100%/yr sounds like a bad idea.

There is the value you deliver for the price you charge. And there is the impression you make. If the second one swamps out the first, the value/$ ratio is less important.

 

[hbiss]

If you bid lets say a Service and Panel change and are awarded the job, then you latter find out you are charging a lot more than the other electricians. Should you rethink how you are approaching it, or not worry since either they liked you or don't shop around.

Let me get this straight. You have ample customers willing to pay your price and you feel guilty about it? You on drugs or something??

There is a plumbing company here that has the reputation for being the most expensive. Third generation and multi-millionaires. They own properties all over town.

-Hal

 

[AC\DC]

Let me get this straight. You have ample customers willing to pay your price and you feel guilty about it? You on drugs or something??

There is a plumbing company here that has the reputation for being the most expensive. Third generation and multi-millionaires. They own properties all over town.

-Hal

I like your attitude on your post when there directed at other people .
It’s not the fact that I am charging that, I feel I might end up in a year or two getting known for being expensive and then a lack of work.
I don’t think I said I don’t like the money.

Then at the same time I am worried about the recession that will come from this “pandemic”
I will be the first one cut I think if people start penny pinching

 

[AC\DC]

Thanks for your opinion helps me alot

 

[blueheels2]

I like your attitude on your post when there directed at other people .
It’s not the fact that I am charging that, I feel I might end up in a year or two getting known for being expensive and then a lack of work.
I don’t think I said I don’t like the money.

Then at the same time I am worried about the recession that will come from this “pandemic”
I will be the first one cut I think if people start penny pinching

I worry about this all the time. I service a couple of different areas some metro and some urban. I charge the same in both places. The urban area is a vacation destination so people there have the money to spend on second homes. But I know that my price is close to double what they are charging. Im the only EC in the area using flat rate if I'm not mistaken. Anyway I had my first complaint this am from a customer wondering why the bill was so high. Don't have an answer but I'd love it if someone had a canned response.

 

[hbiss]

It’s not the fact that I am charging that, I feel I might end up in a year or two getting known for being expensive and then a lack of work.

Read what I said about the plumbing company. How about the franchises like Mr. Electric? They charge top dollar and don't seem to be hurting for customers. Matter of fact, from what I heard I don't think I would hire them to change a light bulb.

It's all in how you present your company, the service you provide and the quality of work you do that will set you aside from the competition

I service a couple of different areas some metro and some urban. I charge the same in both places. The urban area is a vacation destination so people there have the money to spend on second homes.

Nothing wrong with having different pricing tiers to account for more affluent areas that can afford it.

-Hal


.

 

[WasGSOHM]

some metro and some urban. I charge the same in both places.

canned response.

According to ZIPcode data or city data you can probably charge more based on the median income they post for where they live.

My response to the HO: Only you can decide if you're getting the value you deserve from my work.

Off the record, most HOs probably are not a good judge of value vs. price.

 

[James L]

If someone asks why my price is so high, I just tell them I'm the best. Just like the best quarterback makes triple what a mediocre quarterback makes. They're not paying for some schmuck from "Average Electric"

I also tell them they have the option to just say no thanks.

I'm with Hal.
The only companies that stay around decade after decade are the ones who charge yhe most

 

[WasGSOHM]

The only companies that stay around decade after decade are the ones who charge yhe most

They're the ones who can afford lobbyists.

Them that has, gets.

I can't tell what the OP "deserves" because I don't even know what I deserve.

Not a psych guy nor do I play one on TV, but for the OP to even ask this question means he is not narcissistic.

 

[James L]

They're the ones who can afford lobbyists.

Them that has, gets.

I can't tell what the OP "deserves" because I don't even know what I deserve.

Here's a good rule of thumb - if you're landing every job you bid, you're not charging enough.

People who value you will hire you.

People who have no concept of finances are always gonna tell you that you're too high. Many people think you're gonna come give free estimates, do the work, carry liability and warranty, buy tools, etc for less money than their NET pay.

Gravitate toward those people in those areas, who understand money. As for me, I stay away from inner-city work because of that.

One of our metro-area counties is in the top 5 nationally for median income. Guess where I do most of my work?

 

[ramsy]

not paying for some schmuck from "Average Electric"

Or exploited laborer billable for working backwards

 

[Hv&Lv]

Let’s play here a second or two..

Change the “number of occurrences” to “Number of billable hours worked” with 8000 being 80 hours.

Let’s change the “measured value” to “Dollars per hour” with 0 being $40.

So an electrician charging $40 per hour isn’t making any real money unless he is working 80 hours per week. Who wants to do that??


The theory here is an electrician(or any worker) that charges too little will have less work because the work and reputation is tarnished since he isn’t charging enough’ (“he can’t be that good, he doesn’t charge enough”)
Ever heard that before?

if the price is so high that you have priced yourself out of the crap work, do you care? Your price and reputation should be high enough that you can be on the right side of the bell curve instead of the left side.
This way you maximize your income with less hours worked.

By the same token you can price yourself so high that you go to the extreme right on the bell curve and work very little hours. This equates to less income also. “(He’s way to high for what he does”) you ever heard that about someone?

just make sure your on the right place on the bell curve...

 

[hbiss]

... just make sure your on the right place on the bell curve...

Only way to do that is to keep raising your prices until your work starts to drop off.

-Hal

 

[Hv&Lv]

Only way to do that is to keep raising your prices until your work starts to drop off.

-Hal

Your exactly right. I have a couple of friends that build houses. I had this discussion about 10 years ago with one of them. Hes been going up little by little for the last few years. Is he high? Absolutely. He also stays busy because people want him to build their house.
The other friend has a couple of helpers and he’s good, but he’s afraid to raise his prices...
He’s still on Obamacare and works all the time.

 

[WasGSOHM]

Only way to do that is to keep raising your prices until your work starts to drop off.

-Hal

What I heard is that you raise your price 10%, wait 6 mos, if OK, do another 10%, repeat. . .

Online journals on management science probably have some hard data on this.