To all subbies

[Danny11]

I need a bit of help on charging customers/clients.

Im charging around £1100 for me to put in a 3.5kw system(thats also buying the unit)

The unit cost me around £300-400 the rest is mine and tax around 23%

Is that dear or cheap and could anyone give me a couple of examples on job you've done and prices.

Thank you
Danny (www.airconsquad.co.uk)

[Argus]

.

There’s no quick answer in numbers of pounds. It’s all down to cost and quality. Your labour cost and those of any other competitor near you should be about equal, however, what type of unit are you offering in competition with the other guys?
Cheap bulk imports do not compare on an equal cost or quality base with the more established manufacturers.

In a free market you can charge whatever you like. You can even charge below cost, if you want to go bust quickly.

You need to refine your market research. The knack is to be competitive with all the other companies chasing your client base, whilst still attracting an acceptable profit in return for a fair price and a quality product for your client.

.

[thermo prince]

Very nicely and wisely put, Argus.

Fair market price after doing some research in your locale - the old adage " a fair day's work for a fair days's pay".

Market positioning ! - where do you wish to position yourself? What's your reputation? Are you rookie, mid or highly experienced.
Who are your competitors ?
You seem quite young and starting off on your own.
If so, you cannot charge high fees like the highly experienced crews down the road.
You also have to accept liabilities, inevitable 'comebacks' and breakdowns in your pricing, offer 24/7 service and so forth I imagine.
Are you set up to do that yet?

regards
T-P

[Grizzly]

Danny.
Did you realise that your website link has a link that directs straight back to this forum.
With your post asking how much to charge as one of the posts visable...
Check it out!
Grizzly.

[The Viking]

Normally you would look at your charges as 4 different parts.

A. The cost of the unit and materials (to this you might want to add a DBF value).

B. Labour costs, this should cover your wages.

C. Transport, the costs of getting you and material to site.

D. Markup. This could be anything between 10% and 50%, it's there to cover your cost of breakdowns during the warranty period, the costs of running your company and, maybe most important, to give you a profit. This percentage needs to be balanced, too low and you will eventually go bust (as you would loose money on your jobs), too high and you will eventually go bust (as you would loose your customers)

So, to summarise;

(A+B+C)xD= Total sell value (exclusive of VAT)

There are courses out there that will explain this in greater detail, some of which are free.

[paul_h]

I'd add one thing, have a basic charge for mounting the i/u, chucking the outdoor unit on the ground, making the peneration through the wall, and for installing the c/b. Then have a price per metre for the distance between units and to the meterbox, then have a fixed price for outdoor unit stands, brackets, slabs, pipe ducting etc.
That way you can quote a job $x amount plus per metre of pipe and wiring, plus optional extras, eg stands 20 pounds, brackets 20 pounds, pipe covering 5 pounds a meter.
eg for a back to back, ground mounted o/u.
your base price is 300 pounds, the pipe length is 2m (at 15 pounds a meter), it's 15m to the metrebox at 5pounds a meter), they don't want outdoor brackets, stands or pipe covers, done, job quoted.

Now lets say they've changed their minds, they want the o/u round the corner, up the wall and pipes covered.
pipe length 7m @x poumds a meter, add optional extra wall brackets and 7m pipe duct @ x pounds a meter.

the base 300 pounds install is to cover your labour, the other stuff is just charged at markup. Obviously it won't always correlate, like if they want you to mount the unit 3 storeys up a wall or difficult pipe runs. But I think it's a good idea to come up with a system that allows you to quote standard jobs straight away rather than make up a quote for each and every unit with slight variations.
edit: BTW all prices made up, just find out how much you get charged a metre and double it, as you are suppling materials and labour to fit them.

[The Viking]

A practical example:

I want to earn £40k if I were to run my own company, I'm willing to work 10 hrs per day, 5 days per week. I also want 6 weeks holiday.

40000/((52-6)x(5x10))= An hourly charge of £17.40.

So you said the unit will cost you £300.

I estimate the install to take one day or 10 hrs.

I estimate the cost of running my van to be £0.2 per mile but that I only will be able to charge for 20% of my mileage each year and therefore needs to charge £1 for every mile. For this job I will have to travel 100 miles to do do the installation.

I'm also guessing that one day a week I will spend running the company (20% of my working time) and that I will spend no more than 20% of my time dealing with warranty breakdowns/unhappy customers.


£300 + £150 (for all the other bits needed) = £450
10 x £17.40 = £174
100miles x £1 = £100

Total COST = £724

MARKUP 20% of £724 =£145


TOTAL SELL VALUE £869 +VAT

Below this my company will make a loss, anything above this will be a profit.

[Danny11]

Very nicely and wisely put, Argus.

Fair market price after doing some research in your locale - the old adage " a fair day's work for a fair days's pay".

Market positioning ! - where do you wish to position yourself? What's your reputation? Are you rookie, mid or highly experienced.
Who are your competitors ?
You seem quite young and starting off on your own.
If so, you cannot charge high fees like the highly experienced crews down the road.
You also have to accept liabilities, inevitable 'comebacks' and breakdowns in your pricing, offer 24/7 service and so forth I imagine.
Are you set up to do that yet?

regards
T-P

Yes i started the business about 5 months ago and been in the A/C industry for 5 years got a steady income in with 12 contracts,but as you might know tax kills you plus insurance and other things.

[Danny11]

A practical example:

I want to earn £40k if I were to run my own company, I'm willing to work 10 hrs per day, 5 days per week. I also want 6 weeks holiday.

40000/((52-6)x(5x10))= An hourly charge of £17.40.

So you said the unit will cost you £300.

I estimate the install to take one day or 10 hrs.

I estimate the cost of running my van to be £0.2 per mile but that I only will be able to charge for 20% of my mileage each year and therefore needs to charge £1 for every mile. For this job I will have to travel 100 miles to do do the installation.

I'm also guessing that one day a week I will spend running the company (20% of my working time) and that I will spend no more than 20% of my time dealing with warranty breakdowns/unhappy customers.


£300 + £150 (for all the other bits needed) = £450
10 x £17.40 = £174
100miles x £1 = £100

Total COST = £724

MARKUP 20% of £724 =£145


TOTAL SELL VALUE £869 +VAT

Below this my company will make a loss, anything above this will be a profit.

Thank you viking big help as always.

Your mark-up im suggesting thats your TAX/NI

Iv only got 12 contracts service and maintenance,so my motto is that i will beat any other companies price by 10% without putting my business out of pocket.

Also i have my brother helping me as an apprentice.SO a little comes out for him.


Cheers

[The Viking]

No, my tax/NI comes out of my wages, included in the labour cost.

The company's tax will have to be included in the markup and the VAT is itemised separately on quotes/invoices.

The main reason for the markup is to cover the costs of running the company and to give an acceptable profit.

[The Viking]

To always beat someone else's quote..

Now that's sounds dangerous, wouldn't you rather be known for being better/giving better service than everybody else?

Take it to the extreme, I can give away maintenance contracts for free but I would never visit site to do maintenance and I would have to charge a fortune for attending their breakdowns.

I'm not in this line of work as a charity, I got a mortgage to pay, therefore my customers will have to pay.

[eggs]

I need a bit of help on charging customers/clients.

Im charging around £1100 for me to put in a 3.5kw system(thats also buying the unit)

The unit cost me around £300-400 the rest is mine and tax around 23%

Is that dear or cheap and could anyone give me a couple of examples on job you've done and prices.

Thank you
Danny (www.airconsquad.co.uk)

Short answer.

Yes your about right for a little Hitachi or Sanyo. Put in a Tosh or a Daikin, you need to charge a bit more. LG or Samsung double it, because you will get call backs.

Eggs

[Danny11]

I can beat most quotes and still give great service.Its called hard working.This past 5 months as been hard,but i think in the next 5 months it will get easier and hopefully i can employe office staff.

Cheers guys for you help

Danny

[The Viking]

I can beat most quotes and still give great service.Its called hard working.

That's why you started your own company??
Most people does it to either earn more money or to enjoy the freedom from a boss.

This past 5 months as been hard,but i think in the next 5 months it will get easier and hopefully i can employe office staff.

That's when the responsibilities starts, they will cost you money regardless of how many jobs you got on. Their livelihood depends on YOU making sound business decisions at all times. They will also increase the costs of running your company, so your markup will have to be increased.

See office staff as dead weight you have to carry on your shoulders. What most people do in your situation is to employ engineers and spend more time in the office themselves.

An engineer's time is directly chargeable to the customers and you can eat of the markup on his work, whilst office staff on the other hand eats of the markup on your work.

The more office staff you have per engineer, the more expensive your work will be.

(look at my example in the previous post but to the £40k for yourself, add £20k for office staff and you will see what I mean)

[Karl Hofmann]

If you are VAT registered, then businesses prefer that, they can claim it back. But a tip when dealing with the general public is to add it on in the price but don't list it separately.. Joe public seems to think that they have the god given right to have the VAT knocked off if they pay you cash.. Start doing that and you can end up in all kinds of bother... Accountants, I find are the worst for this

[Magoo]

There is a relevent saying "that you are too busy trying to make a living than to make any money"".
OK, down here; heat pump installs are for the young and hard working. Get envolved with a distributor that farms out the installs, 1/ yu don't carry the cost supplying equipment.2/ standard charge for install, for example a back-to back split hi-wall, standard charge $700nzd .. can be acheived in two hours with a fridgy and a sparkie including a power supply to outdoor unit, set up so as they can do at least four systems a day. They make each $200nzd an install, you cover material costs at nominal $100nzd. The good thing the client pays at install, generally with cash. Use subbies only on a job for payment basis. While they are there pay a spoters bonus to sell an annual maintenance check pre-summer check. Start a data base, keeps subbies busy all year round, and you bank the moneyand manage the whole system. Apply figures to local currency, but you need subbies that want to work. Variations such as ducted and multi heads and commercial have factors for degrees of difficulty.
cheers magoo

[saharco]

I need a bit of help on charging customers/clients.

Im charging around £1100 for me to put in a 3.5kw system(thats also buying the unit)

The unit cost me around £300-400 the rest is mine and tax around 23%

Is that dear or cheap and could anyone give me a couple of examples on job you've done and prices.

Thank you
Danny (www.airconsquad.co.uk)

the price seems to be in the normal range

you have to find out all the costs of your company(electric, water, wages,taxes, bills etc) , and find out the minimal required to keep your company running.
then you calculate how much money per hour you require to bring in to keep the company running and muliply that by factor of 4.


if your hourly rate is more than the market rate , then there is something wrong with your company and needs to be economized or downsized.

to make the quote just add in the costs and all taxes of machines, your hours, transport(also markup cause of gas prices) , materials like pipes , sealants etc etc, and any other extra work you did.

at the end of the day both the client and you should be happy. 1100 is very fair price



good job!!

[taz24]

I can beat most quotes and still give great service.Its called hard working.This past 5 months as been hard,but i think in the next 5 months it will get easier and hopefully i can employe office staff.

Cheers guys for you help

Danny

Hi Mate.
Are you married?
If you are why not employ the wife to do some of the office work and keep the money in the family.

You need to be very busy to start employing staff.

Cheers taz.

[grump]

300+300+300=900+50%=1250-900=350-50%=175-40%=
105x50=5250.
50x300=15000-40%=9000.+5250=14250
50x1250=62500-45000=17500-8750=8750
50x300= 15000
15000+8750=23750-40%=14250?
Based on 50 units pa 50% mark up (25%oh)tax=40%
Included 15a 1phase supply to outdoor,existing fuse available up to 15mtrs.

? income after tax
Based on turnover 62500 installs 23750 gross.repairs maintenance,renewals50000 20000
43750-35%=£28437.
Year1

[Andy W]

I always intended to employ office staff but 10 years on I still do absolutely everything myself, the only extra thing I did was take on an office and workshop to get the business away from home and became limited to get out of the £40% tax bracket, regarding tax, if you have only been trading for 5 months and if you did your homework first you will pay very little tax and if it has already been deducted because of CIS4 etc the value of your vouchers will be deducted from your tax bill anyway, the only thing that you need to be prepared for is advance tax, for a new business it can be a real killer.

A good accountant will advise you on what set up costs you can get back, any tools and equipment that you already owned can be sold to the new company so can your computer and office/study furniture, claim for use of a room at home for an office as well as the garage for a workshop, claim for washing your overalls and claim some weekly allowance for the wife or girlfriend to do your books and administration, even if she doesnt as long as she is a low or no tax payer.

Regarding the cost to install a small machine, I did a Fujitsu 2.8 kw back to back recently in 3 hours, £995 + vat, I work out all my material costs, add 50% plus an hourly rate of £30 p/h or a day rate depending if its just me or man & mate of anything between £240 - £350 per day, regarding mileage, if its local I dont charge it, if it is distant the travel time is normal rate + £0.40 mile, I have done very well out of this trade.

[grump]

300+300+300=900+50%=1250-900=350-50%=175-40%=
105x50=5250.
50x300=15000-40%=9000.+5250=14250
50x1250=62500-45000=17500-8750=8750
50x300= 15000
15000+8750=23750-40%=14250?
Based on 50 units pa 50% mark up (25%oh)tax=40%
Included 15a 1phase supply to outdoor,existing fuse available up to 15mtrs.

? income after tax
Based on turnover 62500 installs 23750 gross.repairs maintenance,renewals50000 20000 gross
43750-35%=£28437.
Let me know you get on
Grump Year1

[frank]

300+300+300=900+50%=1250-900=350-50%=175-40%=
105x50=5250.
50x300=15000-40%=9000.+5250=14250
50x1250=62500-45000=17500-8750=8750
50x300= 15000
15000+8750=23750-40%=14250?
Based on 50 units pa 50% mark up (25%oh)tax=40%
Included 15a 1phase supply to outdoor,existing fuse available up to 15mtrs.

? income after tax
Based on turnover 62500 installs 23750 gross.repairs maintenance,renewals50000 20000 gross
43750-35%=£28437.
Let me know you get on
Grump Year1

I'm finding your posts a little difficult to decipher grump???

[The Viking]

I'm finding your posts a little difficult to decipher grump???

Glad it wasn't just me, I almost thought that I had had one too many already

[thermo prince]

Danny 11 - b.t.w don't know which part of England you are working ?.
Who are your target customers? i.e ... the crusty " Chelsea Tractor " set OR the down home, honest to goodness folk ( the real rural tractor set I guess ).

Keep that in mind too ... how much the market can bear in terms of mark-ups.
A lot of good ideas .... I like Magoo's thinking a lot
Get someone else to subbie the sub -contract while he lives the life of Riley ....now there's Gravy for ya! LOL

best regards
T-P

[thermo prince]

PS .... Magoo, you must be part Irish to be cunning like that? Go on, tell me .... make me feel more proud of ya!

all the best
T-P

[puddleboy3]

I need a bit of help on charging customers/clients.

Im charging around £1100 for me to put in a 3.5kw system(thats also buying the unit)

The unit cost me around £300-400 the rest is mine and tax around 23%

Is that dear or cheap and could anyone give me a couple of examples on job you've done and prices.

Thank you
Danny (www.airconsquad.co.uk)

Danny just one question does your install allow for the power supply to the system?

[Danny11]

Danny just one question does your install allow for the power supply to the system?

No sadly im not electricity qualified,I can do it but rather get an electrician to do it for health and safty reason.

They only charge me around £75-£125 to give me a 240v supply,so not to bad.

Cheers

[grump]

Cost=900 Sale=1350 ie 50% mark up,overhead=25%mark up 225.so sale 1350 - cost900 - overhead 225= 225.
225=pre tax profit - 40%tax= 135 nett.
135x50 units = 6750 nett income from installations.
300 labour allowance per unit one man band x50= 15000
15000 - 40%tax = 9000 + 6750 = 15750 total nett income from installations Year1
Income from maintenance,repairs,call outs(estimated)
say 30000 - 25% overhead = 25000 - 25% tax =18750
18750 + 15750 = £34500 net income year 1
Year2 = £ let me know. Grump

[Danny11]

Cheers guys for all your help.

Take care

Danny
www.airconsquad.co.uk

[IceMan08]

edit-stupid question deleted!!!

[paul_h]

The place I used to work at was regular call out/travel fee, + regular 15min for wall units, 30min for cassette and 45min for ducted.
Our call out fee included 15min though so really it is 30min/45min/1hr respectively.
I found that handy to have a higher call out, plus have a reason to charge for 5 min jobs the full fee. ie not $60 callout and no labour, but $85 and that included labour.
Plus for a simple diagnostic quote, your time is covered for 15min in the call out fee.
Obviously for larger commercial installs you might ask more as roof access, key access, time to service etc could take for time, my prices are for domestic.
I've kept the same system as when people call me up to look at their system and they want a up front price, quote them the call out fee.

[IceMan08]

ignore my post, I now have my prices sorted!
I charge £35 p/h (service,domestic), including travel as there is no call out fee, on arrival whether im there 5mins or 55 they get charged the full hour. This is because if I've travelled an hour to an emergency call and then find nothing wrong its wasted my time,they called us so dont be surprised when I charge you for doing nothing!lol, registered charity im not!
as for the original post:
always quote for at least a day extra - if you finish early, you've earnt more, if not you havent lost, also if you do finish early and get called back at some point you have been paid already BUT as far as the customer is concerned you have come out for 'free',-now thats good customer service