Jumping in with both feet...

[DMiller]

WHEN I supplied parts the counterman would charge me one price and the invoice would show two to three options prices, those were potential markups. Not sure they still do that.
When I stopped buying parts the customers never saw the wholesale price.

As a rule to cover potential warranty lost money 6-10% markup was not uncommon dependent on regional sales by others and their pricing. If I had a reasonably close service call, time started when I left the yard until back on it, for distance was mileage and a fuel surcharge.

 

[funwithfuel]

Out here, it's port to port hourly plus $3/mile. But Im in union territory where prices are traditionally high compared to the rest of the country.

 

[thepumpguysc]

Doing injection pump work is "alittle different" as to parts, to say the least..
The part #'s aren't available to anyone off the street, so you cant "look-up" a part on the ol'interweb & compare prices.
Before I left, the shop rate was 115.00/hr.. 2.75/mile from door to door & time started when you left the shop until you got back, unloaded the tools & did the paperwork.
MY RATE is 65.00/hr & 1.00/mile if its outside of 50 miles..
Now if I'm out & about, I'll "swing by" & wont charge for a service call.
But if its a Saturday & its raining & its cold & you just GOTTA HAVE IT> dam right I'm chargin you.. Lol

 

[funwithfuel]

We did have a dollar a mile surcharge back when fuel was 4.50 4..75 a gallon

 

[Vetech63]

Your rate should be relative to your experience level. If you charge too much and can't repair or troubleshoot a lot your in trouble, and most of these companies you do work for all know each other, so word, good or bad will travel fast.if you establish a good reputation, charge a reasonable rate, and can be Johnny on the spot when they need you......word of mouth will bury you with work and you will never need to advertise. Be prepared to do things others won't, especially starting off. I think a reasonable rate starting now days is around $ 55-60. You also need a mileage charge , say $1.25 per mile. Also include a supply cost (nuts , bolts, tape, connectors, hand cleaner, rags, etc.....).........mine is usually 10% of labor costs on average. Don't get into any jobs that are too big or over your head too soon. Customers respect honesty and would rather you tell the, your limited than to dive in and cost them a fortune later.

 

[Birken Vogt]

My advice would not be to set the advertised rate too low. Set it on the low end of the established guys rate. And get it up where it should be in the future.

But charge the hours according to what an old hand would have taken. If you forgot something and had to take something back apart and rework something then don't charge for that time. If you break something then replace it for free. (Of course if it would have broken for the old hand then charge for it.)

This way the customer is not paying for your lack of experience but as you start to improve your speed and skill you will get jobs that go just as fast for you as the experienced guy and then you will be able to make the same money and start to get ahead.

I am not sure if this has been posted already but ALWAYS ANSWER YOUR PHONE. Even if you are in an inconvenient position if you pick up the phone and talk to the customer you will make everybody happy and get more jobs that way.

 

[crane operator]

When you say your experience is in "logistics" that doesn't tell me much, but by you're own admission you are "new" to any heavy repair. Sounds like your partner is the mechanic, and you are hoping to ad a lube service with it?

I'm guessing from what you've said that you are partners in this deal? You're the $ and he's the labor/ experience?

I'm not asking to try to get personal, but to give much for advice, I'd need to know a little more about what you're trying to do. Are you just answering the phone, and dealing with the paperwork/schedule, while he's out turning wrenches? Or are you hoping to turn wrenches too, or help?

I will say this much, its really hard to be the man in charge, if you have no idea what you're doing. If you're the guy answering the phone, its going to be hard, because the guys on the other end, want to feel like you know what you're talking about.

Its going to be hard to estimate how long jobs will take, because you have no idea. It's going to be hard to tell the guys that are working for you what they need to do (if you add employees), when you don't know what they need to do. Or if they're really milking the clock on a job.

I could see it working one office man, one wrench turner, but I think you're going to have a hard time generating enough $ off of that to keep both of you fed full time, by the time you take out the insurance, taxes, workman's comp, and fuel and all the other stuff. Its kind of like a buddy says about dump trucks, you need to either have just one truck, that you drive yourself, or you just as well have 10 trucks, as only having 2, because the paperwork is the same, but the money coming in goes up. But I wouldn't wish 10 dump trucks on anyone.

Good luck, its the american dream to own your own business, a lot of guys on here do. There's a ton of great advice here that you couldn't pay for, and you won't find very many situations, that someone on here hasn't seen before.

 

[Tenwheeler]

Parts under $100 something like cost plus 30%. Parts over $100 cost plus 15%. To remain in business you need to make money off your parts and your labor. Customer supplied parts are great but it should not be your responsibility to warranty them. Tell them that up front.
I did an inboard brake job for Mr My Own Parts once. He came back about a week later with a leaking wheel seal and asked if we can repair that today. Sure and while he watched. Checked wheel bearing play, none. Pulled the hub and visually inspected seal and all mating surfaces, good. Replaced the seal and handed him the bill. Oh no I just paid you to replace that seal. Yes you did but the bearings were not loose. The seal was not damaged and was installed properly with the correct tools. It was not my seal that is leaking it is yours and here is your bill.
When the wheels roll two hour minimum or service call plus time type charge. Yes mileage plus hours from the time you leave the shop until you get back.
There are all kinds of deals with good customers on parts, cost plus, on sight work etc. but you can't work for free. Do not BS and don't take any either. Do good work and stand behind it. Good Luck.

 

[funwithfuel]

CraneOp hit the nail on the head . I just thought, what are you gonna offer for "lube service"
For example, oil requirements for pre -emmisions engines vs modern engines, Gear lube for open diff vs lockers, hydraulic oil, wet brake oil, synthetic blends , ATF...
Are you gonna rely on the customer to tell you what lubricants go in what cavity? We all know that they can't cuz they never check themselves, let alone read the ops and maint manual. Do you or your tech know where lithium grease is preferred over moly and vice versa. Do either of you have a clue on some of these volumes? A good size excavator with a 2k hour service, you could be handling 120-175 gallons combined. How 'bout coolants. There's a lot of choices there as well.
Are you gonna offer oil sampling and analysis?
Again, food for thought. If you were to top spec , some customers may not appreciate it. Like mobil 424 is a good oil that serves as hydro and wetbrake but not for all models. Limited slip gear oil can be used in a lot of gear boxes but at 75w90 wont protect 85w140 applications. Engine oil is everywhere, 10w30 SF/CK 10w40 , 15w40 and most engine mfrs are now spec'ing their own oil. Wrong oil in the wrong cavity could open you up to liability.

 

[thepumpguysc]

Not to burst your bubble here BUT> I've seen 2 businesses fail with this same scenario..
1 money man & 1 experienced man.. the experienced man goes out day after day, bustin his hump & starts to feel like he should be getting more of the profits.. That normally doesn't sit well with the money man because HE bankrolled the whole thing & if it wasn't for HIM, "we" wouldn't have any of this..
So the experienced man starts to take projects on the side, "off the books".. then the business suffers & friendships end & courts & lawyers get involved to dissolve the partnership..
I sure hope this doesn't happen to you guys..
MY opinion is> partnerships are like room mates.. & room mates suck..

 

[Vetech63]

And try not to show too much profit by years end. The IRS just loves taking your money and supporting 12 other people that refuse to work for a living.

 

[Vetech63]

......and a few more things now that ive had some coffee this morning
1. Make a good impression, but leave a good impression also. Keep your field truck clean and organized (that makes a huge impression when dealing with first time customers especially). Clean the area where you were working when you leave ( do not leave ANY trash, cable tie clippings , used rags, wiring tails, spent connectors, etc... I carry trash bags on my truck just for this. Leave the area you worked in as clean or cleaner than it was when you left.) Clean the machine in the area you worked ( don't leave greasy handprints all over the machine. If you replaced a fuel pump or hydraulic pump they leak everywhere.......clean it up nice. I keep a case of brake cleaner and a bucket of solvent on my truck to accomplish this.)

2. Have a set minimum charge. There IS such a thing as being too good a value. I cant count how many thousands of dollars ive lost being the NICE GUY. It happens a lot, someone will call that has been working on something for days and is stumped, I pull up and have it fixed in 30 minutes. If you charge by the hour and only charge for an hour, your devaluing your experience. I added up the numbers a few years ago and was shocked at how many times this happens in a year. Its not your fault that they cant fix the machine, so don't YOU pay for it. My minimum is $400.00 here, providing I fix the problem.

3. Some customers will require that you have insurance on your truck and your work (general liability and products coverage.) While having this is great protection and worthy of the expense, it is expensive. If you have a lot of customers and only 1 requires it, make sure you do enough work for that 1 customer to justify the cost. I had this scenario come up a few years ago. It wasnt worth the costs of the insurance they required ($2 Mil.) so I ended up having to stop the relationship with said customer because I didn't do enough work for them to justify the cost of the insurance. In my business here $500 K is plenty.
\
I'm gonna have another cup of coffee then I'm off to the next job this morning. I'm sure I will think of 100 more things after ive left.

 

[DMiller]

Parts under $100 something like cost plus 30%. Parts over $100 cost plus 15%. To remain in business you need to make money off your parts and your labor. Customer supplied parts are great but it should not be your responsibility to warranty them. Tell them that up front.

May be the times as to % markups but seems a taste high for what I see in our region. As to the parts supplied my Mr. I will get the cheap crap, I made note no parts warranty on every ticket, had a stamp made JUST for that, had the customer sign it before would start the work. Only had two try to take me to small claims, neither found a attorney to do it so represented themselves. One had to pay receipt PLUS court costs and a fee for my attorney, the other dropped the case before made court and hauled ass. I actually lost to the second as never paid bill(stopped check) and had attorney fees.

 

[Tenwheeler]

With the extreme cost of health insurance and some other things in business today the % is a requirement. That is still normally well below list. If you don't make it there you have to make it some where. We do some exceptions on tires, high dollar parts and big jobs. Some people tell me I am way to cheap.

 

[HeavyMetalMech]

CraneOp hit the nail on the head . I just thought, what are you gonna offer for "lube service"
For example, oil requirements for pre -emmisions engines vs modern engines, Gear lube for open diff vs lockers, hydraulic oil, wet brake oil, synthetic blends , ATF...
Are you gonna rely on the customer to tell you what lubricants go in what cavity? We all know that they can't cuz they never check themselves, let alone read the ops and maint manual. Do you or your tech know where lithium grease is preferred over moly and vice versa. Do either of you have a clue on some of these volumes? A good size excavator with a 2k hour service, you could be handling 120-175 gallons combined. How 'bout coolants. There's a lot of choices there as well.
Are you gonna offer oil sampling and analysis?
Again, food for thought. If you were to top spec , some customers may not appreciate it. Like mobil 424 is a good oil that serves as hydro and wetbrake but not for all models. Limited slip gear oil can be used in a lot of gear boxes but at 75w90 wont protect 85w140 applications. Engine oil is everywhere, 10w30 SF/CK 10w40 , 15w40 and most engine mfrs are now spec'ing their own oil. Wrong oil in the wrong cavity could open you up to liability.

What we will be offering:
PM#1 (250hr): Engine oil, oil filter, fuel filters, cleaning of primary fuel screen, outer air filter, sample of engine oil, check all fluid levels & greasing of all points.
PM#2 (500hr): All of PM#1 services plus Transmission filter & oil, Hydraulic filters, and sampling of transmission and hydraulic systems.
PM#3 (1000hr): Includes PM#2 plus inner air filter and sampling & oil change on gear boxes

We are going to base our lube recommendations based on the serial# of the machine, but this isn't my area of expertise

 

[Vetech63]

What we will be offering:
PM#1 (250hr): Engine oil, oil filter, fuel filters, cleaning of primary fuel screen, outer air filter, sample of engine oil, check all fluid levels & greasing of all points.
PM#2 (500hr): All of PM#1 services plus Transmission filter & oil, Hydraulic filters, and sampling of transmission and hydraulic systems.
PM#3 (1000hr): Includes PM#2 plus inner air filter and sampling & oil change on gear boxes

We are going to base our lube recommendations based on the serial# of the machine, but this isn't my area of expertise

If this is what you are going to do, heed this word of advice. On EVERY invoice, Include a statement that dictates that your PM service does NOT prevent breakdowns. A lot of company officials seem to think that PM service prevents breakdowns. I don't know how many times Ive heard that, and when a major component fails ( which it will) they believe it shouldn't have. I even had a company try to sue me once over this.

Another word of advise........Operate on your own money. Do everything you can to NOT borrow money from a bank. Those bankers are your friend when your making money and will beat your door down trying to get you to borrow......when you really need to borrow, its almost impossible, a catch 22. When you borrow money, they tend to think they know your business which they know nothing. When things are good and you can make the payments, things are great. As soon as there is an economic dip and you struggle to make payments, they will tell you that's YOUR problem. There is only so much you yourself can control, but that banker wants his money every month, on time......or he OWNS you.

Another word of advise LOL......be diversified. Don't have all your eggs in one basket ( 1 major customer). Get customers in different areas of operations ( have some in earth moving, highway contracting, paving, oil field, general construction.......just all over). The economy goes up and down and will carry companies with it, but usually there is always one sector that seems untouched to help carry you through.

OK.......1 more and I'm done LOL. Take good care of your small customers and they will take care of you. Over my experience of 30+ years, the big companies don't have near the loyalty. Numerous times over the years my smallest companies I work for have kept me alive and kicking through some of the most difficult economic times.