13 SEER Splits not cooling!??!

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youd better make sure that your local area will support it first. if youre the only one charging flat rate and everyone else is T&M youll most likely go broke.
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Nathan W. Collier
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Stormy, why do you have to ask these type of questions, if you are at that point in your career that you need to think about these things please report yourself to the BBB and ask them to protect society from you!

Why would that be the case?
I would rather know upfront what a repair is going to cost before it is done. That is all that flat rate is.
The pricing structure in flat rate allows you to charge less or more than T&M. I it depends on who is doing the repair.
A properly designed flat rate book that you show the customer, shows the customer everything that is involved to do the repair, it entices them to purchase maintenance agreements because of the discounts that are afforded to agreement customers.
The customer is not going to be watching you and their watch too make sure your not taking too long and increasing her bill.
Any competent company now a days is on some type of flat rate system. Going Flat rate in a town of T&Mers would probably do very well.
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ive seen it myself. one of the largest shops up here went to flat-rate and it hurt them BAD. i picked up many of their customers.

and when you run into more trouble than you expected, then what? you charge the customer more than you quoted him? for example, you diagnose my burnt up 25 year old compressor and you sell me a condensor. after you install my new condensor, you find that the fixed orifice is plugged. you now have to recover the refrigerant and open the system.
......i give customers a rough idea of what the overall repair will cost, but in the end i only charge them for exactly what they needed. i figure if i cant make a living being fair, then im in the wrong business.
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Nathan W. Collier
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Did you do that by being a low ball contractor, what is your overhead per hour?

Why would you install a condenser without a new coil?

What if your rough estimate is a couple of hundred less than the actual bill?
Nathan, i am not trying to bust your stones, I am just debating the benefits of something you do not believe in. I have been using flat rate for many, many years without hardly any complaints. I cover my overtime and try and make a 15% net. My four experienced guys make over 45,000/ year, and get 40 * 52 with great bennies, health, dental, vision, life, vaca, personal days, short and long term disability. If I priced T&M my customers would chase me away by my hourly rate, when I charge flat rate and include all of my costs and my net profit, customer doesn't mind. My OH is $165/hour @ 60% billable time.
When I was on my own working out of the house, I charged half as much because my OH was about half. But I still made a great slary and a nice net.
Customers that are just shopping by price and not quality, longevity, and experience are not my customers, nor do I market or cater to them. I ask customers looking for estimates if they are looking for the cheapest price, if they say yes I let them know upfront they do not want to deal with me. I am $1-several K over most other contractors, and survive solely on referrals. Even my installs are flat rated.
The one big company that went out of business after flat rate and you got alot of their customers, may not have gone out of biz because of flat rate, but may have tried flat rate as a last resort after several other problems, you never know.

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absolutely not. my rates are in line with my competition.

in the last two years this particular customer (large developer with dozens of commercial properties and over a hundred rental units) has spent over $60,000 on my services, and im not going to jeopardize his account by pushing anything that he doesnt want. he was aware that if we had to go 13 seer that it would require a new coil, but i found 15 units (10 seer 2.5 ton) at my local RSD (no 10 seer coils) which is what he wanted.

i dont think ive ever given a low estimate. i usually quote really high, and then the customer is especially pleased when he gets his bill. in the event that it was going to be more than my original estimate i would discuss it with the customer before i exceeded the amount quoted. regardless, i always make it very clear that its just a rough estimate.
how did you arrive at that?

i currently work out of my garage that we have outgrown. at this point we're considering either leasing or purchasing commercial space.

sorry if i was misleading. they didnt shut their doors, but they lost at least half (im just guessing, based on what ive heard) of their customer base as well as many of their employees.
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Nathan W. Collier
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Our technicians are factory trained and certified to repair everything we service, and due to our low overhead our standard rates are well below industry standard. We don't have incidental charges (such as mileage* or "trip/service" charges) and we don't mark our parts up like other service companies. We also offer many service packages for commercial and residential customers. Call to find out more at 406.252.TECH (8324).
Nate, this is what the industry considers a low ball contracotr, these words are from your website. And, for not doing resi work, your site surely seems to cater toeards it. If you are doing commercial Heat and Cool PM's for a FLAT RATE of $50 you are not going to make it much longer
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I figured how many billable hours out of 2080 I actually was able to bill for and than divided my overhead expenses for one year by the number of techs I have and the number of available hours I had to sell.
Your big developer that has given you 60K in business over 2 years obviously has faith in you, or is he only using you for how cheap your prices are. IF your work is that good I am sure an additional 10 percent would hurt that relationship. I think that comes to about $250 per month. He is only giving you 2500 per month, not what I would consider a big customer, unless you have about 10 of them. Does that even cover one week of payroll.
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(I meant would not)
hurt that

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Is that 2500 GROSS?? or NET??
2500 GROSS is only 2-3 days work for me.
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Steve,
touche'
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Bob Pietrangelo
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I suspect that good business men are always considering options. I missed a good chance to get some business education. Accounting and such. So, while I am learning AC skills, I'm also learning business skills.
As to protecting society from me, I'm much more concerned about folks who are hellbent and determined to do it the same old way. A man who is considering the big picture "Can we make it better?" is less danger.
--

Christopher A. Young
You can\'t shout down a troll.
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i disagree with flat rate billing on moral grounds. i give the customer what he needs and whatever preventative maintenance applies and bill him accordingly.

my focus is commercial refrigeration, but i do handle hvac for commercial customers and very limited residential hvac (for landlords only, to much bad debt in residential work). using your example and assuming the job is in town (a LOT of rural driving in montana) i drive out to the house and diagnose a bad condensor fan motor. i should have one on the truck, and assuming i paid $90 for the condensor fan motor the customers cost is $198 ($90 x 2.2). i install the fan motor, chemically clean the condensor, check evap for air flow, check charge by superheat (subcooling where applicable) and bill accoringly.
labor 2 hrs - $120 trip charge - $10 fan motor - $198 ($90 actual cost X 2.2) capacitor - $25 nu-brite cleaner $15
TOTAL - $368 + anything else i might find wrong (such as if the evap needs cleaning which is more labor + evap pow'r cleaner). in addition, there is rarely a time when i find nothing else wrong. one of the most common issues i find is overcharged systems that require recovery (creating more labor and a $25 recovery fee). the most basic principle of hvac/r, and sooooo many technicians screw it up.
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Nathan W. Collier
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I do a lot of driving in rural south Mississippi, and with you not charging for condenser coil chemical cleaning, you are leaving another $100 on the table, and only charging $25 for refrigerant recovery would cost *ME* money. Its a minimum of $77 for me to take the recovery can off the truck up for up to 4 lbs.... more than that cost more. When I went to flat rate, my -average- ticket went from $125 up to $312. BTW... how do you justify 2 hours to change a condenser fan motor and capacitor?? and your getting overcharged for your fan motors.
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cool. i was born at keesler AFB by biloxi.

but i _am_ charging them for it. $15 for nubrite, which i only use about 1/4 gallon on a typical residential condensor + labor.

that number is for pulling out a pound or less due to an overcharge. larger recoveries certainly cost more.

as i said, that covers driving to the jobsite, diagnosing/repairing the fan motor, PLUS washing the condensor, checking airflow over the evaporator, checking charge/superheat, and doing the paperwork.

granted rescue motors are cheaper and so would my bill be when applicable, but it depends on the fan motor.
http://img291.imageshack.us/img291/1323/jscanpt4.jpgi had to order these just last week, for bryant condensors in a church. some of the larger refrigeration condensors are much, much more.
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Nathan W. Collier
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Nathan, do you have any real overhead or are you working for yourself?
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Bob Pietrangelo
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hi bob, i dont understand your question. yes i work for myself, and of course i have overhead (trucks, stock, etc.).
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Nathan W. Collier
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Nate,
What is yyour overead per hour? I am being curious, not argumentative.
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Bob Pietrangelo
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quite honestly i wouldnt know how to answer that with any real accuracy. i tend to look at what i gross that month, and compare it with what i paid out that month.
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Nathan W. Collier
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Nate until you know that, how can you dare guess how much you should charge? After you figure that out, then you add what you want for a profit margin. Also you have to prepare for growth. If not when you start to do it you will be pulling your hair out. your first instinct is to grow smaller to handle it yourself, because no one can do it as good as yourself.
read two books. The e-myth revisited by Michael Gerber, and Another Contractor by John Hall. If you are truly at two years your are going to hit a brick wall in about another year or so! Then you have to make a choice to implode or design your company properly.
If you are doing better work than everyone else charge what you are worth, and not what everyone else is getting. You will lose customers, but the ones that will stay will be happy to pay nore for your services. Less work more money, more referrals from the people willing to pay more for quality services.
I charge 20-30% more than everyone else. I do not have an ad in the yellow pages, and I get a new custoemr almost everyday.
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ive been charging what i feel the market will bare, based on what the competition charges.

heh.....sure seems that way sometimes.

thanks. ill look into them when the heat breaks and things slow down a little.

after dropping residential i have no need for the yellow pages. new customers come from either direct solicitation from me (stop in, shake hands, introduce myself, and tell them why i can do it better), or mainly (anymore, anyway) word of mouth.
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Nathan W. Collier
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