Going Rate for Refrigeration Tech

[PAXFREON]

I recently took over my father's Refrigeration business. He has been in business for about 35 years and very old school about the rate he charges his customers roughly $35 an hr. What is the going rate for service now a days before and after you walk in the door? Do you charge for travel time?

Any Help would be greatly appreciated

[herefishy]

$65.00 AN HOUR... WHAT ARE YOUPAYING YOUR TECHS?

[Gary]

Way back when I was a contractor, in a last ditch effort to save the business I raised my rates very substantially.

To my amazement, not one of my customers complained, and several told me it was reasonable. Unfortunately, it was too little too late.

Whatsmore, shortly after I went belly up my competitors raised their rates even higher. They are still in business. I am not.

Make a profit or go to work for someone else.

[PAXFREON]

Originally posted by herefishy
$65.00 AN HOUR... WHAT ARE YOUPAYING YOUR TECHS?

It's a family business, just myself and my Dad were running the show.

thanks for your help!

[Abe]

Hello Pax

I appreciate Im not from the States, but heres a little "trick" you can employ

Disguise your voice, pretend youre a manager at some convenience store and ring up some local companies and ask what they would charge to come repair your refrigerator.

Im not sure what or who your target markets are, so you choose appropriate companies who are similar or in competition with you.

I hope what Ive suggested is not illegal, perhaps a little unethical, but all youre doing is a bit of market research, albeit in a sly fashion.

So there you go, and if you gather that the rate in Philadephia is a measly 35 bucks..............then you can head off south where you can double it to 65!!

But watch out................Stay out of Texas!!

[herefishy]

LOL!!!!!

Hi Aiyub. :)

I just call my competitors up (the ones I know) and ask what their current rate is.

Of course that runs the gammit of a price fixing scenario. :eek:

I'm straight up. :)

But in reality, figure what the average tech makes (or what you would pay one) and multiply by "3" (3X) and see how that looks. That should cover overheads and employment taxes and put you proper shape for a reasonable profit margin.

:)

[condenseddave]

Hey PAX, there are some fantastic books out by a lady named Ellen Rohr, on this very subject, and they have helped me considerably.

Her books are available at www.heatinghelp.com

She runs or ran a plumbing company, and speaks in "tech" language, rather than technical language.

Her books are cheap, too.:)

BTW, I'm about 90 niles North of you, in the Poconos, and we're getting 65/hr on the service that we don't flat rate.

[PAXFREON]

Originally posted by condenseddave
Hey PAX, there are some fantastic books out by a lady named Ellen Rohr, on this very subject, and they have helped me considerably.

Her books are available at www.heatinghelp.com

She runs or ran a plumbing company, and speaks in "tech" language, rather than technical language.

Her books are cheap, too.:)

BTW, I'm about 90 niles North of you, in the Poconos, and we're getting 65/hr on the service that we don't flat rate.

Thanks for the heads up on the books! There are a few companies in Philly charging $85.00hr but I think they are union shops. I just started charging $65.00 an hour with no complaints :)

Do you have some info on flat rate pricing you could email me?

[herefishy]

FLAT RATE !!!!!!!!!!

yuk. You're trying to thin your customer base, already?

[condenseddave]

I have SOME customers that are flat rate, like one ice supplier that has 400 machines in the area that I'm responsible for.

I use my own flat rate system for them and a couple others, I don't use one like Callahan-Roach, or Mr. HVAC, etc. because the rest of my service work is in supermarkets where I either have a service contract or they're used to T&M.

I make money both ways.

I always give full bids on the design-build installs, and replacement work.

So, in short, no, I really don't have anything available that would make sense to anyone but me...

[PAXFREON]

Originally posted by herefishy
FLAT RATE !!!!!!!!!!

yuk. You're trying to thin your customer base, already?

That bad.. huh?!

[herefishy]

Well, I don't know if it's that bad. Just the one's that I have known that use flat rate either can't add, or are just crooks. :(

Here's a financial test for you......

How do you price a part that you wish to see 25% profit on?

[PAXFREON]

Originally posted by herefishy
Well, I don't know if it's that bad. Just the one's that I have known that use flat rate either can't add, or are just crooks. :(

Here's a financial test for you......

How do you price a part that you wish to see 25% profit on?

multiply the listed price by .25

[Andy]

Hi Herefishy,
25% gross profit would by times 1.33 net:confused: Is that right:confused:
Regards. Andy:eek:

[herefishy]

Originally posted by PAX*****
multiply the listed price by .25

Okay, son. We need to get real smart, real fast.

Andy, your answer results in the proper figure ;)

But this is really what we are doing.

cost% + profit% = 100% (salesprice)

If the desired profit % is 25, then the percentage of the sales price that is cost = 75%

We know the cost (say we paid $1.00)

We also know that our cost should be 75% of the salesprice.

We don't know what the salesprice is (yet) right?... because that is what we are trying to derive.

We don't] know what the $ amount of the profit will be, right (unless you cheat and look at Andy's answer :p ).

Since we don't know the amount of the profit $'s, the profit margin (%) figure is useless to us in the calculation, okay. What you are representing by your response is "markup". Get this entirely out of your head... it will send you to the poorhouse, fast!

Since we know we paid a dollar (cost) and the cost margin is to be 75%.... it is easy to realize that the (yet unknown) salesprice multiplied by the cost % would result in $1.00 right?

If you remember your algebra.... you divide the cost ($) by the cost margin (%) you will derive the salesprice!!!!

$1.00 / .75 = $1.33 :)

$1.00 is 75% of $1.33

$0.33 is 25% of $1.33

$1.33 is 100% - it is the salesprice.
__________________________________________________

In response to your answer, PAX, if you multiplied the dollar by .25 and added it to the cost, your derived salesprice would be $1.25 Your profit would br $0.25 which is 20% of the salesprice.

If you performed your pricing as you suggested (don't feel bad, this is the most common mistake in this industry - that's why I asked you), and were anticipating a 25% GPM, you would be scratching the hair out of your head wondering where that other 5% went!

[PAXFREON]

Originally posted by herefishy
Okay, son. We need to get real smart, real fast.

Andy, your answer results in the proper figure ;)

But this is really what we are doing.

cost% + profit% = 100% (salesprice)

If the desired profit % is 25, then the percentage of the sales price that is cost = 75%

We know the cost (say we paid $1.00)

We also know that our cost should be 75% of the salesprice.

We don't know what the salesprice is (yet) right?... because that is what we are trying to derive.

We don't] know what the $ amount of the profit will be, right (unless you cheat and look at Andy's answer :p ).

Since we don't know the amount of the profit $'s, the profit margin (%) figure is useless to us in the calculation, okay. What you are representing by your response is "markup". Get this entirely out of your head... it will send you to the poorhouse, fast!

Since we know we paid a dollar (cost) and the cost margin is to be 75%.... it is easy to realize that the (yet unknown) salesprice multiplied by the cost % would result in $1.00 right?

If you remember your algebra.... you divide the cost ($) by the cost margin (%) you will derive the salesprice!!!!

$1.00 / .75 = $1.33 :)

$1.00 is 75% of $1.33

$0.33 is 25% of $1.33

$1.33 is 100% - it is the salesprice.
__________________________________________________

In response to your answer, PAX, if you multiplied the dollar by .25 and added it to the cost, your derived salesprice would be $1.25 Your profit would br $0.25 which is 20% of the salesprice.

If you performed your pricing as you suggested (don't feel bad, this is the most common mistake in this industry - that's why I asked you), and were anticipating a 25% GPM, you would be scratching the hair out of your head wondering where that other 5% went!

I honestly learned something new every time I logged onto this site!!