Refrigeration Charges to the Customer

[Abe]

I service the small to medium business sector concentrating on the corner shop, restaurant, pub, take away sector. I have been away fro the business for a number of years but am starting up again. I wish to know what the current rates are for service, ie: call out, mileage, labour costs, and the mark ups I can realistically seek on components. I erect quite a few cold rooms to the butcher trade. What is a reasonable mark up, which will maximise my earnings, but maintain competiveness. Any help will be appreciated. I am located in the East Midlands. Any experiences other engineers have had on costs, prices would help me gain an overall picture. Regards

[subzero*psia]

Hi Abe, I would like to see some answers to your question also.

There is a variety of ways to charge of course... for parts sometimes I multiply by 1.6 for the part charge and add labor hours. Then again I have found flat rate to be good too.... 2.5 times the part, when doing service.

Installs are different.

[Brian_UK]

I suppose what you can charge depends on your locality and the good old supply and demand.

The firm I work for are based in South Bucks covering AC and refrig. The hourly rate that we poor suckers are charged out at is (GBP)£27/hr with £.45 mileage charge. All travelling time is also charged at single time.

Overtime rates start, I think, after 8 or 9 hours at 1.5 x rate.

Material mark up I'm not sure of although I think it is something embarrassing!

One of the increasing costs now of course is reclaim bottles and the disposal of waste refrigerant, around £6 per kilo I think.

Hope this helps and good luck on your restart.

Brian

[farfield]

In addition to local market realitivity, consider what you know, and where you want to be by the next time you consider a rate change.I assume your in the USA.

I'm so tired of being told or suggested by others you cant charge more than the market will bear and then go to just under what someone you respect charges. I have approached it in a different way.

1st I realize that there is a time when my time (what I sell) is worth more to others, and then a time when it worth less to others.

2nd I have employees and the added cost of insurance and overhead of FICA and taxes I have to match.

3rd I have a marketing stratagy that goes like this "Mr Customer I can't give you the world. I can give you the fix of your current problem. I see you need (the part and this material) right now. Keep in mind that it may have another problem that wont show up til we get this first step taken care of. The cost will be $xxx.xx (and I usually include the part and labor I usually have a good idea of how long it will take, my OH, and the materials)."

4th I can't make this equipment new by repairing it but what I do replace will be guarnteed for a year. My labor will be guarnteed for (usually) 30 days.

5th the replacement option is another thing we can look into if your interested. The range of the replacemt equipment has been $XXXX.XX to $XXXX.XX.

6th (the close) "Now Mr Customer which of these options would you like me to schedule, consentrate on. Do you need financing of the new equipment? Do you want to pay just the diagnostic charge and wait til youve thought it over?" (which is 1hr min and the truck crg mine is $60 + $15 = $75.00)

This is the most honest and streight forward approach I have developed to date. The customer has been given: Information, (which I feel in most all cases is worthy of a fee)
Options, (which customers today feel more in control if they have options to choose from at the verry least repair or replace)

Thoughtfullness (consideration of the customers finances has it relates to the options I have presented).

I believe that all people are basicly the same. If you are honest and senseer about your approach to their problem and offer solutions (which is why they call us in the first place) to their problems, consider their needs in the future by addressing what the repair on a 1 yr old vs 20 yr old piece of equipment will cost and the peace of mind they can hyave by using your expierteese, you can and should charge more than the guy down the street.

Now to get them to call you in the 1st place instead of your competition, My best approach has been in person contact with a business card, a reference or 2 from some other customers and maybe a ink pen or other freeby with your name and ph # on it. When your waiting on breakdowns think about offering clean and checks to prevent breakdowns on bussy days. And offer a labor reduction or no truck charge for customers that have your service agreements. Again be honest and up front. Cleaning wont prevent all breakdowns! Just nussance ones.

Good luck and keep us posted on how you decide to go on with this. I 'm always willing to try something new.

[subzero*psia]

Sounds very fair to me Farfield. I charge $50.00 per hour (minimum charge) plus a $10.00 truck charge right now but I am going to be raising it soon. Some of the contractors around here are charging $25.00 per every 15 minutes plus a truck charge and parts during peak cooling season.

I enjoy working on restaurant refrigeration equipment primarily.

I am glad to see you and Abe posting, welcome aboard to the both of you.

[Abe]

I appreciate the no nonsence straight honest manner in which Farfield approaches the business. Its the way to be to be successful in this business. Honesty in the refrigeration is important for the following reasons, customers are wary of refrigeration engineers who are likened to plumbers as rip off merchants. Refrigeration engineers are not the greatest communicators either, and often we speak on a technical basis assuming the customer understands. The customer on the other hand tries his level best to get the job done as cheaply as possible and just sufficiently to get the temp to an acceptable and legal limit.

Good communication at the onset, comprehensive understanding of the issues, options available, covered by assurances and warranties, all serve to imbibe confidence into the customer. Getting the customers trust in you is fundamental. Once he trust you, hes all yours. You slip up, and you can sour not only your relationship with him, but with 20 other of his associates and your likely future customers by recommendation.

Good rapport, honesty, straight, firm but fair attitude, and above all a professional work ethic which does not cut corners or lean on assumption, lead to a good harmonious relationship.

[Simon]

Abe,

I have worked as a service manager for a couple of national companies in the North West, the way that i have charged customers has always had to be flexible. If you are chasing new customers then you're upfront prices ie labour costs will fall to the same level or lower of their previous contractor. If however a customer comes to you because they are dissatisfied with their current contractor then you should charge your standard rate.
The big boys tend to charge more to smaller companies as the supermarkets etc get the lowest prices. For the one man band I would consider £25 to be a minimum hourly rate and £32 as a maximum during normal hours. Also some companies do not charge for mileage which they use as a selling point (WR).

You were spot on with comments on communication, talk to your customers in a language they understand, if you do make a mistake on a job admit to it and make a reduction on the bill if necessary, it pays in the long run.
It is often easiest to charge list prices for spares as long as you are getting a good discount, if you are getting 33% discount then you can carry a catalogue such as RPW's and show the customers the list price if they query you're invoice.

Good Luck
Simon

[Abe]

Thanks Simon, I can understand charging a customer for site time, presently £20.00 per hour. But if it takes me a hour to get there and another hour to get back, am I justified charging him for these two hours travel time
Carrying the RPW book is a handy idea. I normally show the customer the list prices, especially condensing unit prices as most of them are on the verge of a heart attack when they are given an estimate when the compressor goes down. If the condenser is filthy with grease I quote a condensing unit, not a compressor only

[Gary]

Here are your choices:

a. Restrict yourself to nearby customers, or
b. Charge for travel time, or
c. Work long hours for short pay.

Here are the customers choices:

a. Restrict themselves to nearby contractors, or
b. Pay for travel time, or
c. Find a contractor who is willing to work long hours for short pay.

I'm sure there are more choices. These are what immediately come to mind.

[jheffernan]

I would say that the time you spend traveling is "for the customer" and is time you could be working for another customer if you weren't on the road the present customer.

Everybody charges us travel time and it's a 3-4 hour round trip. As a consequence we end up doing things for ourselves that would be easier to call a contractor.

Jim Heffernan

[Simon]

Abe,

Some companies charge travel time only to the site as when they leave thay are travelling to another site, other companies charge a "service vehicle charge" which is fixed and the customer is aware that if he places a call he will have to pay this charge on top of travel time. What you have to remember is that the customer is probably paying twice what you're charging per hour to get the brake pads changed on his car, and he goes to them!

Simon