Can You Believe I Am Being Sued For Making A Profit.

Brock

FASTEN YOUR SEATBELTS BOYS

Many of you fine construction gurus have flamed me for my "no mark-up" business model.

Hate to say I told you so.....but this is a prime example of how things can go south. If I bid this job it would be COD for delivery. The homeowner gets my discount passed on to him. The only money I receive is for my time to install the unit. I set my price to receive what I need for my time. That price has the profit margin and overhead figured into it. The customer decides if he likes my hourly wage "before" I do the work.

I know all of you think I'm crazy, but this method has worked wonders for me for the last 20 plus years and it would have caused this particular job to go off with nothing more than a thankyou and a handshake at the end.

Dr Heat

Sure but do you give a warranty? How do you pay for advertising? How do you pay for your showroom office fabrication shop tools .......

If I do the math correctly would need to charge about 350 an hour for a two man team to cover a normal furnace install (I'm not getting rich so I am not overcharging). Remember we are talking about a highly competitive market with long held traditions of markup. In reality your method opens the door to all the guys who cant get dealer certification

Brock

warranty is manufuc warranty and 1 year on workmanship. all your other items are figured in to the hrly rate. I have about a 70% closing rate.

mahlere

simpler solution is to not have your pricing on the shipping ticket...

Dr Heat

I do not know what you specialize in. I have been in HVAC for 28 years. We cover 1 year on new installs and have to provide labor on most manufacturing defects.
Also no reputable wholesaler will sell direct to a customer. You need EPA certification.

rbsremodeling

There are other contractors and handymen that use the method Brock uses and are just as successful as the ones that markup across the board.

The closest systemized use of this system I have found is called capacity based mark up

__________________

Brock

I don't know what you call it but I can tell you why I do it. It all started when I got my drivers licsense in 1978. I bought a junker car and had an even junkier job. Whenever I would take the car to the mechanic he would mark up the parts. I would call the parts store and could get the part 60-70% cheaper than what he was reselling it for. He ofcourse would not let me buy the part and bring it in with the car. Needless to say I became my own mechanic from a very young age. Once I started my own business I knew I could never operate like that so I developed my own system. I need "x" amount per day for P/O. I estimate the jobs by this figure. I know I will have to run to the store a few times, parts and materials aren't going to just appear out of nowhere. I figure that drive time into my time estimate. It's not rocket science. It's the opposite. Easy. Plus I occaisionally check myself to see if I am still competetive. For example had a guy ask for a privacy fence the other day. I normally don't do fencing. I figured materials I needed and my time multiplied by my current"x" amount and it came to $27.00 per foot. I called 4 fence companies and all of them ranged from 25-30 per foot. I also ask to see the other estimates when I win a bid and sometimes (not very often though) they give them to me. That also helps me to determine the magic labor rate each year.

Now the Dr. Heat guy probably has a very low rate because he retails his parts. I give away my parts but have what some might say is a very high rate. Who is right who is wrong? I don't know. I just know my system works for me.

Dr Heat

Brock I am interested to know because as you said it works for you.

I buy bulk parts, at the beginning of a season it cost front money but at times I can save 50% or more by buying case lots or pallets. Now the question is how do you handle that?

Brock

No you are a retailer. You inventory supplies. Then you resale them.You have to mark up. That would be comparing apples to oranges. You have no choice.

I never inventory anything. Not even nails. I have no warehouse. I don't store anything. I build a deck,call the lumberyard and whalaa the deck is delivered. That is why my model will not work for anyone that stock parts in a delivery truck or warehouse.

Dr Heat

Nice! that would never work in HVAC though we buy everything from wholesalers pain in the A**

747

Counter sue. Your entitled to fair market value for your services. Thats not it. The judge doesn't expect anybody to work for free. Actually i can hear the judge really giving it to this guy.