How much should you charge for your Plumbing, HVAC, or Electrical Services?
For Plumbing and HVAC contractors, this is a question that plagues the mind of most. My unscientific research based on the interactions with a ton of plumbing, HVAC, and electrical contractors says:
- Over 75% use a hybrid of an hourly rate and flat rate/ fixed/ upfront pricing
- Most contractors can’t explain how they came to determining their hourly rate or fixed price for a specific service
- 99% of contractors that have an explanation for why/how they charge what they charge answer in one of the two following ways: “that’s the going rate in my area” or “that’s just how we have always done it”
- Many smaller contractors base what they charge their customers for service on how much they think they can get
- Regardless of how much or how a contractor prices, 80% of them don’t have a printed price book that is used
Should you charge time and material or use flat rate pricing for plumbing services?
I’m not sure yet. This question can only be answered after I ask a series of questions. We would love to have this conversation with you.
What should your pricing be based on?
Here is the formula.
Take your true total costs of providing said goods and services + the gross margin your company requires to end up at a reasonable net profit = selling price of said job.
Since the average plumbing and HVAC contractor is running at a net profit of less than 5%, there is some confusion amongst contractors-
1) Either contractors are targeting less than 5% net profit
2) The average plumbing-heating-cooling contractor is pricing their services improperly and/or running their business poorly.
We believe you should earn more than 5% net profit. I’ll bet you do too. Let PlumbAmatic™ stop the pricing cyclone in your brain dead in its’ tracks. When you have a pricing methodology that is based on your actual hard costs, and reasonable margins, your entire company can get behind it and your business will grow in profitability immediately.
Is gross margin another word for markup?
How do you calculate how much gross margin you need to achieve in order to hit your profitability target?
Send us a message, I’ll teach you how.