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View Full Version : When does the billing for a T&M job end?



huggytree
08-17-2009, 08:04 PM
I consider a T&M job to start when my feet hit the drive way and end when my feet are back in my van

I charge for the customer to explain the project, me to do the project and for the bill to be calculated and filled out. I even consider the time to write out the check....

Ive had a 2nd complaint in 2 weeks about when it officially finishes. So i thought id get some more opinions.

These customers consider it over when the work is complete. One of them didnt even want to pay for me to packup my tools. The other just didnt want to pay for the 10 minutes for me to addup all the parts & write out the bill.

opinions?

Steve B
08-17-2009, 08:22 PM
It sounds reasonable the way you have been doing it.

vangogh
08-17-2009, 08:33 PM
Packing up your tools is definitely part of the job. I'm not sure you should charge for writing up the bill though. I'd think that time is really part of your own costs as opposed to the customers.

Granted you and I are in different businesses, but in many ways the billing works the same. I generally don't charge someone for an estimate prior to getting the job and I never charge anyone the time it takes for me to prepare an invoice. With the estimate there are times I know it will take a long time to give an accurate price and in those cases I might charge a non refundable deposit, but most of the time I only charge for the actual work.

Since you have to have a physical presence in order to work I can see where you could charge for more than the actual work. You'd probably be within reason to charge for the commute in some situations, though I know you don't charge that.

The 10 minutes to write up the bill I'd probably skip.

huggytree
08-17-2009, 08:41 PM
i do charge a $55 trip charge (which rarely covers the actual cost) and have a 1 hour minimum.

I may write up the bill before i pack up my tools to make things look better.

when you have a $495 bill I dont know why you argue about $25...especially when I came over 3 hours after the initial call....its a 2nd job for this latest customer...curious if i get a 3rd job in the future....i layed in mouse poop for hours on her house...yuck!

vangogh
08-17-2009, 08:51 PM
when you have a $495 bill I dont know why you argue about $25

You can flip that too. If you're charging me $495 I don't why you're arguing about $25. I think it may be the principle to a lot of people. No one is really happy spending money so they're probably all going to be unhappy with your bill no matter what it is. Most will likely think the price high even if you know it's perfectly fair.

Imagine you buy a new tv from the store. The person who grabs it from the back says it's $10 to bring it to the register and then the cashier tells you it's $20 to scan the tv and take your card. I can't speak for you, but I'd walk out without buying the tv. There are certain parts of doing business that we as customers expect to pay and there are certain parts we expect to be the cost of doing business.

If you feel like you need to charge the money for the time that's fair, but you might avoid the complaints by absorbing that cost into other things on the bill. Add a few dollars to the parts if you can.

Spider
08-17-2009, 09:15 PM
This is why I would never work T&M. It is fraught with argument and contention. It is a classic way of offending people and encouraging them to not call you again. (Neither do I hire people on T&M, actually.)

I would take the time to prepare a list of standard charges for every item of work I do. I would have this in a manual that I carried with me and as the customer explained the problem, step by step, I would write down the items on a worksheet (duplicate copy for the customer.)

I would then refer to my manual for each item and total the prices.

I would then have the customer agree and sign. Then I would start work. (If they don't agree, I would leave without doing any work. If we were in a flood, I would turn off their water main and then leave.)

The exact moment I start and when I finish, and how long I took, then does not come into the discussion. The price is agreed before I begin and is paid when I have finished.

Baseline
08-17-2009, 10:53 PM
Disagree.

I tell people I get paid from when we leave the office untill we get back to the office. All extra's and restakes are T&M- because you can't have a fixed fee without knowing the scope. The key is to tell them up front- then remind them.

KristineS
08-18-2009, 12:37 PM
I was with you until you mentioned that the time you charge includes the time you take to write up the bill. Most of that could be done in advance. I think I'd have the bill mostly done and then just add whatever extras occurred during the job.

huggytree
08-18-2009, 01:01 PM
Many people dont have a clue whats wrong with their plumbing when they call, or they dont know the scope of it...i cant figure out whats wrong over the phone and have the bill made out ahead of time. Many times its completely different than described.

It takes roughly 5-10 minutes to walk through the house write down the fittings used and then look up the prices on each fitting, then write it all out on an invoice..

I agree about the flat rate price idea...problem is for these small jobs id have to show up to bid and my bids would be high and people would say no thanks..id have to charge for an estimate. for something eas like replacing a water heater a flat rate price works every time, but when they call with leaks you dont have any idea what it will be or when you start tearing the plumbing apart if something else will break...t&m covers me and the homeowner...its the fairest way to do a job for both of us...

I am going to start flat rating more jobs...i had a gas line to a stove & a dishwasher replacement yesterday which i could have flat rated....when i flat rate w/o knowing the true potential issues the price will be high...i will lose work because of this and my prices will be higher..w/o seeing the job I will have to cover all possible problems

Im just going to fill out the paper work from now on in secret before i clean up my tools...no one will notice i dissapeared to my van for 10 minutes.

Spider
08-18-2009, 01:29 PM
....I agree about the flat rate price idea...problem is for these small jobs id have to show up to bid and my bids would be high and people would say no thanks...Therein lies the problem! If customers would say No to your price *before* you start work, it is obvious they will complain about the price when you give it to them *after* you have finished. But they are stuck, and that doesn't feel good. They feel they have been cornered into paying more than they would have and resent you for it.

You can do your "before work" price calculation in such a way that it can be modified during the work, including keeping the customer 'in the loop' as you discover things that will modify the price.


....but when they call with leaks you dont have any idea what it will be or when you start tearing the plumbing apart if something else will break...t&m covers me and the homeowner...its the fairest way to do a job for both of us...I don't believe it is a fair way to operate. Even if it was, it doesn't feel fair to a suffering customer and when the customer *feels* he is getting screwed that is what causes the argument over the bill, whether he is getting screwed or not.


....I am going to start flat rating more jobs...I have advised this before so I'm glad to hear you are seeing that the process can have benefits. In fact, it will also save you time, which will increase your efficiency and help reduce your costs. This can translate into higher profit or allow you to trim your prices which can get you more jobs. There is a ripple effect to all this and you will be the winner for it.

vangogh
08-18-2009, 03:17 PM
Just a thought about the flat rate pricing. I have similar issues in my businesses since I can't give an accurate estimate of the cost without knowing the details of a project. However over time I've realized I can give a fairly accurate range of pricing for all but the exceptional cases. What I've been doing when someone asks for an estimate without providing much detail is give them the general price range, with the explanation that the details will be necessary for a true accurate price and a commitment from me to work at that price.

You might be able to do something similar. While you won't be able to offer an exact price without checking for yourself what really needs to be done, I wouldn't be surprised if you could come fairly close based on the home owner's description of the problem. It won't work in all cases so you let them know the price isn't final until you can come to the house and see for yourself what needs to be done, but you'll probably be able to come close enough for many jobs.

You could also make the initial estimate a little on the high side to weed out some and you can come in lower than your estimate if you want, which will make the customer happy. And if you don't come down off the high estimate the little bit extra helps makeup for those few exception jobs.

Harold Mansfield
08-18-2009, 04:30 PM
I think you should configure a set time for each of those functions, like say 10 or 15 minutes...or however long it takes you, and figure that into your hourly rate so it seems that you have stopped billing, but already have it figured in.
That way you can look like a stud by announcing "I have finished and your billing stops now !" (Visualize your hands on your hips, chest out, and cape flapping in the wind like a conquering hero).

It would only adjust your hourly by a small percentage and would hardly be noticeable.

JMO

Spider
08-18-2009, 11:55 PM
Here's another thought on the "approximate estimate."

Many times I find myself enquiring about the cost of something and I really have no idea whether it would be $500 or $5,000. Sometimes a prospective customer just wants a ballpark figure to help them decide whether now is a good time to proceed or whether to delay further enquiries.

There is work for the customer to do in preparing to answer the specific questions a supplier may need to give a firm quote. No-one wants to spend time making specific decisions for a vague project that may need to be postponed if the price is higher than imagined. Also, the price may affect the answers.

A method for approximate pricing may be useful for getting your brochure in a prospect's hands and your contact information on their desk.

vangogh
08-19-2009, 12:16 AM
Frederick that's where my approximate estimating came from. It was a combination of wanting to help legit inquiries and give them at least a rough idea of how much something would cost and also to weed out the less than legit inquiries, the tire kickers so to speak.

I get contacted often with a single "how much for a website?" or "how much to seo my website," neither of which can really be answered without more details. However I can briefly describe what your project most likely entails along with a price range and some questions to get more details. By giving my own description of the project you can at least compare it to your description of the project and getting a feeling for where the price will be. I also try to add in some thoughts about what might cause the approximate price to increase significantly.

orion_joel
08-19-2009, 05:40 AM
A good portion may also come down to that fact that in general people are looking to save anywhere they can. Some people just seem to be more onto what ever they can then others.

One guy may quibble over the price of a toilet the other times you to the minute. Be it product or time, different people argue over different things.

Ad-Vice_Man
08-20-2009, 03:11 PM
another idea is to bill only in whole hours.

so a job thats 1 hour and 30 minutes would be priced the same as 1 hour 50 minutes and so on. This would give customers an easier time of tracking the cost while you're there, and at the same time minimize disagreement of what counts, and what doesnt. Hopefully it doesn't take you more than 10 or so muinutes to write up a bill and pack up.

In instances where your there for only 5 or 10 minutes past the hours, you can play the hero and round down confident in the knowlegde that you'll more than make up for it on the 1.5 and the 1.75 hour jobs.