Pricing

Len Davis · Aug 8, 2021

My employer is closing this week so I am thinking of going my own for a bit but never done much on the business management end of things.

What are rates these days?

I also have 2 others that will come in with me but when you have technicians do you pay the same rate for them to travel as you do normal work?

What about over time and how would it work in the integration business?

Do you normally bill the customer mileage and a travel rate?

What about weekend work or out of town weekend work?

Not a lot of general information out there about this in our industry.

geniusintraining · Aug 8, 2021

Len Davis said:
My employer is closing this week so I am thinking of going my own for a bit but never done much on the business management end of things.

You should of started this about 2 years ago and slowly worked into full time

Len Davis said:
What are rates these days?

Way too much, KFC is paying 20 bucks an hour

Len Davis said:
I also have 2 others that will come in with me but when you have technicians do you pay the same rate for them to travel as you do normal work?
What about over time and how would it work in the integration business?

Do you have the funding to pay them? do you have insurance, LLC, Fed EIN, State Lic, etc. ?

Len Davis said:
Do you normally bill the customer mileage and a travel rate?

I charge one way but not to the next job (if there is one)

Len Davis said:
What about weekend work or out of town weekend work?

I dont go that far and I only work on my projects on the weekends

Len Davis said:
Not a lot of general information out there about this in our industry.

See the links below, there have been many of us on this site that jumped into the deep end of the pool and learned how to swim

http://www.plctalk.net/qanda/showthread.php?t=127883
http://www.plctalk.net/qanda/showthread.php?t=109667
http://www.plctalk.net/qanda/showthread.php?t=76148
http://www.plctalk.net/qanda/showthread.php?t=75099
http://www.plctalk.net/qanda/showthread.php?t=60769
http://www.plctalk.net/qanda/showthread.php?t=66487
http://www.plctalk.net/qanda/showthread.php?t=29767

Best of luck!

parky · Aug 8, 2021

I'm now retired, but in general this is the way many companies I have worked with do it.
Rates No idea now & UK is different than US so will not comment.

Travel is always the going rate (x per mile as per current recommendations of in UK the AA, this applies both ways) plus hourly rate for the engineer.
Here in the UK it does vary, some charge 1.5 x the going rate, others will keep it at standard rates, the reasons can be, engineers being staff often do not get overtime rates & in many cases, working week ends is considered extra income as the general running costs for the business per employee have been covered in the 35/40 hours of normal time (it may also depend if this is a call out or an existing contract). Bank holidays or unsociable hours are often charged at higher rates.
Being in this game expect to work all kinds of hours or you will limit your customer base, in my experience weekend work is common, even public holidays as that is when the plant is available.

Hotel & meals etc. are usually charged at cost or may contain a small percentage for the administration/booking etc.

kalabdel · Aug 8, 2021

Len Davis said:
My employer is closing this week so I am thinking of going my own for a bit but never done much on the business management end of things.

What are rates these days?

I also have 2 others that will come in with me but when you have technicians do you pay the same rate for them to travel as you do normal work?

What about over time and how would it work in the integration business?

Do you normally bill the customer mileage and a travel rate?

What about weekend work or out of town weekend work?

Not a lot of general information out there about this in our industry.

Watch this and look at their other webinars, many are quite good.

This is to give you the basics of pricing and cost.

What is not said there is that if your overhead cost is low that you may set your rate lower than anyone else and still make good profit; that strategy is a poor one. It may work in residential plumbing but in industrial markets perception of value is everything and cheap is cheap.

Do proper planning, determine your target market/s and what their needs.

Market yourself and company to them as the best solution to those needs.

Plan how to distinguish yourself from the rest, why you.

gas · Aug 8, 2021

Many cities have a Small Business Development Center that are a lot of help for beginners.

Len Davis · Aug 9, 2021

Ok so my wife inherited about 400K back in march so she gave me half to start this up with and the other half we are putting into our retirement fund so i should be ok on money for a while.

Lets just say my rate is $175.00 onsite is it common to have a lower rate for at the office engineering or shop work? If so how much lower from the $175.00

Is it common to have a lower rate if doing the work over remote access or doing phone support to the customer? If so how much lower from the $175.00?

For travel driving out of state is it common to charge the $175.00 for travel time or a lower rate? if so how much lower? does this typically cover gas, time, car if rental or is mileage, car rental added to the travel rate?

Hotel and per diem for meals is normally added correct?

What is a common rate these days to pay my technicians going on site? Is it common to pay the technicians a lower rate while they are traveling?

What about flying is it common to charge for the airfare as well as an hourly travel rate? if not eat the cost of the flight?

Is it common to charge overtime for anything over 8 hrs. in a day or for weekend days?

For out of town jobs is it common to charge 8 hrs. minimum versus the standard 4 hrs.?

Is it common to change the federal rate for hotel and perdiem on each place to go or just use a flat rate maybe based on your home rate and just let it level out?

JesperMP · Aug 9, 2021

We charge either a fixed price for both expenses and time, or actual costs plus time.
The fixed price is higher than the actual costs, because we don't want to shaft ourselves.
The more cost-conscious customers pay the actual cost, se they get the hotel and flight bills.
The most cost-conscious customers arrange hotel and transportation themselves (*).
The time is per day, so the customers pay the same regardless of the hours. Because of that, our daily rates are quite high.
The per-day includes any meals, usually the service guy gets a per-diem.

*: When the customer arrange the hotel and transportation then it requires our acceptance. We demand a certain minimum standard for our service personnel.

geniusintraining · Aug 9, 2021

Len Davis said:
Ok so my wife inherited about 400K back in march so she gave me half to start this up with and the other half we are putting into our retirement fund so i should be ok on money for a while.

Give her 100 back, if you cant start a business with 100k then you should not run a business... in theory you need 60 days worth of funding, after that the money should start coming in then you can start paying her back, dont touch your personal money and you should not need a lot unless your buying equipment, check with your employer now and see if they want to sell you their stuff and their customers. It would be easier to start if you have a customer base and not have to look for one.

Len Davis said:
Lets just say my rate is $175.00 onsite is it common to have a lower rate for at the office engineering or shop work? If so how much lower from the $175.00

Is it common to have a lower rate if doing the work over remote access or doing phone support to the customer? If so how much lower from the $175.00?

I do... I have some customers that send me their PLC/hardware and yes I charge lower

Len Davis said:
For travel driving out of state is it common to charge the $175.00 for travel time or a lower rate? if so how much lower? does this typically cover gas, time, car if rental or is mileage, car rental added to the travel rate?

Hotel and per diem for meals is normally added correct?

What is a common rate these days to pay my technicians going on site? Is it common to pay the technicians a lower rate while they are traveling?

What about flying is it common to charge for the airfare as well as an hourly travel rate? if not eat the cost of the flight?

I try not to travel more than I can drive so I will let the others comment on this

Len Davis said:
Is it common to charge overtime for anything over 8 hrs. in a day or for weekend days?

Make sure its spelled out for your customer and they know well in advanced, just to keep the paper work clean unless it was going to be excessive I would charge the one flat rate, just make sure your customer knows what and why they are paying...

For me there are two parts of the job that I HATE, collecting money and paper work, find a best practice that works for you and keep it the same

Plan on being audited every year, I have been... by the Feds and state, total waste of time but if you keep your **** straight then its easier to get them the information they are looking for.

cardosocea · Aug 9, 2021

JesperMP said:
*: When the customer arrange the hotel and transportation then it requires our acceptance. We demand a certain minimum standard for our service personnel.

This is a pretty big one in my experience although there will be some caveats. I remember one particular project where lunch was served in a container on a pier next to the ship and it was amazing food, dinner was at the hotel and was utter garbage. If someone were to describe these, the people at my office would probably sneer at the lunch and accept dinner despite the immense difference in quality.

pturmel · Aug 9, 2021

Len Davis said:
Ok so my wife inherited about 400K back in march so she gave me half to start this up with and the other half we are putting into our retirement fund so i should be ok on money for a while.

Lets just say my rate is $175.00 onsite is it common to have a lower rate for at the office engineering or shop work? If so how much lower from the $175.00

Is it common to have a lower rate if doing the work over remote access or doing phone support to the customer? If so how much lower from the $175.00?

For travel driving out of state is it common to charge the $175.00 for travel time or a lower rate? if so how much lower? does this typically cover gas, time, car if rental or is mileage, car rental added to the travel rate?

Hotel and per diem for meals is normally added correct?

What is a common rate these days to pay my technicians going on site? Is it common to pay the technicians a lower rate while they are traveling?

What about flying is it common to charge for the airfare as well as an hourly travel rate? if not eat the cost of the flight?

Is it common to charge overtime for anything over 8 hrs. in a day or for weekend days?

For out of town jobs is it common to charge 8 hrs. minimum versus the standard 4 hrs.?

Is it common to change the federal rate for hotel and perdiem on each place to go or just use a flat rate maybe based on your home rate and just let it level out?

You are thinking about the right things. Feel free to copy/paste from my rate sheet:

https://www.automation-pros.com/Rates2019.pdf

(Those will be bumping up soon.)

Since you will have technicians traveling, you will probably want to quote a separate rate for them. I recommend it being ~3x their hourly wage, to cover unbillable time, overhead, and the slice of your time spent supervising.

Be aware that if you are paying you techs hourly, you **must** pay overtime at least after 40 hours in a calendar week. Federal law. You might have further requirements in Louisiana.

And don't sell any services at all until you have your LLC set up & liability insurance in place. I strongly recommend you elect "S" corp treatment, and do *not* elect to be disregarded for federal tax purposes.

(A lawyer will cost you several hundred or so to set this up properly, but I would say it will be well worth getting every detail correct.)

geniusintraining · Aug 9, 2021

pturmel said:
(A lawyer will cost you several hundred or so to set this up properly, but I would say it will be well worth getting every detail correct.)

I just moved from SC to NC... I closed my LLC and opened a S Corp, my CPA was the one that set up everything and told me how and why, I also hired an lawyer and it cost 700 to set up the entity (S Corp) but for tax reasons its was better for me to use a S Corp over LLC but any way check with your CPA

FitBoy01 · Jan 21, 2022

Len Davis said:
My employer is closing this week so I am thinking of going my own for a bit but never done much on the business management end of things.

What are rates these days?

I also have 2 others that will come in with me but when you have technicians do you pay the same rate for them to travel as you do normal work?

What about over time and how would it work in the integration business?

Do you normally bill the customer mileage and a travel rate?

What about weekend work or out of town weekend work?

Not a lot of general information out there about this in our industry.

I work as an operations manager for an AR sortable FC. I enjoy it and would summaries my role as volume/rate/hours forecasting, detailed planning, tweaking plans as business needs change, bridging gaps, and developing leaders who report to me by teaching them what I know. as well as a slew of side projects and fires that arise along the way Please send me a private message if you have any specific questions.

JTCat · Jan 22, 2022

I'm only working weekends now, but when I was a road warrior I was paid two different rates.

The moment I left my house I was paid minimum wage until I arrived at a jobsite. At the job I was paid my regular hourly rate. When I left the jobsite I was paid minimum wage until I got home.

If I was sent out for 7 days, working 12 hours per day, I received 40 hours regular rate,
44 at 1.5x, and 84 at minimum wage. Of course, I was lucky to have an employer that provided pay for the entire duration of the trip, from door to door. The room and meals were always paid for.

jstolaruk · Jan 22, 2022

What happened to your employer's customers? Track them down and offer your services. Expect to offer a lower rate to attract business while asking for progressive payments. Some customers maybe leery of a new business, afraid of a crash, burn, and disappear before their project is complete.

gas · Jan 23, 2022

As a long time business owner you must look at Tim's vid:
https://www.youtube.com/watch?v=UJt6Ri740CI
I've seen many failures over the years including my first effort.

Pricing

Len Davis

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geniusintraining

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parky

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kalabdel

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gas

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Len Davis

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JesperMP

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geniusintraining

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cardosocea

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pturmel

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geniusintraining

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FitBoy01

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JTCat

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jstolaruk

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gas

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