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I had a conversation earlier, well two actually, both along the same lines so I decided to do a little exercise as I was interested in the results. They frightened me never mind anyone else!
What I did was to take the rates that I could find and those I could remember (mostly from constantly invoicing the suckers 😕 ) and add the real inflation for the las ten years, that’s correct a decade. So I did.
Results:
Of course this is only the application of the underlying inflation rate, it does not account for additional services and costs such as reporting, mobile calls, e-comms etc. etc. that have been introduced and “expected” FOC over the years. Nor does it take account of the huge rises in the cost of labour or fuel in our little industry.
I’m sure that will probably give some of you a bit of a surprise and some food for thought. I wonder how many of us as still being paid the 1994 fees for some contracts.
K.
Re: A Scary Thought For The New Year
kwatt wrote:
Of course this is only the application of the underlying inflation rate, it does not account for additional services and costs such as reporting, mobile calls, e-comms etc. etc. that have been introduced and “expected” FOC over the years. Nor does it take account of the huge rises in the cost of labour or fuel in our little industry.I’m sure that will probably give some of you a bit of a surprise and some food for thought. I wonder how many of us as still being paid the 1994 fees for some contracts.
K.
Thanks Ken that made great bed time readingyou should have been a professor of economics or something
Regards
LawrenceRe: A Scary Thought For The New Year
It’s not really that hard to work it all out Lawrence, it’s having the time to do so and not accepting some of the rubbish that we get fed by manufacturers,insurers and WP’s. I have yet to see one single contract in this industry that has an annual rate review or inflationary increase built into it and yet, in many other industries, this is perfectly normal or the rates are reviewed on an annual basis to allow for re-negotiation and adjustment. In this industry it just doesn’t happen all we get is, “that’s it, take it or leave it and tough we can’t pay you anymore”.
Correct me if I’m wrong.
That little exercise took about an hour but I think it highlights that even taking out the FACT that chargeable work is well on the wane and much profit from spares sales (both on contract in margins and to the public at large in volumes) has substantially dropped in the past decade, that we are not even being paid realistically now in labour for the job let alone taking into account other factors. The kicker for me is that I remember working out ten years ago that the warranty rates were too low then never mind now, in many cases we are all working for nothing or next to it, the numbers don’t lie.
Those inflation figures to 1998 are taken from government publications and from 1999-2003 from historical data from one of the financial websites. The 2004 figure is taken as one of the anyalysts predictions for this year for the FT (IIRC) so they are not just accurate they’re a matter of fact with the exception of 2004. All I did was to apply them to the rates from 1994 and see where it ended up, nothing hard in it.
What I think it will show (on top of the fact that we’ve been shafted over the years on the spares margins and ratios of work levels) is that I very much doubt that any of us are earning what we should be from virtually any contract we service. Remember, when you start to calculate in the increased double call rates (dropped first hit rates) that we’ve been discussing elsewhere, the drop in chargeable work, the loss of spares margins and revenue, increases in basic costs and all the other factors where do you end up?
Even taking the very basics of those figures you had an average call cost in 1994 of £33.19, today that should be an average of £43.58 before you factor in all the other bits ‘n’ bobs which is what I’ve been banging on about for ages now. I would doubt that many, if any, of us are achieving that sort of figure today.
Professor of economics, no. Gradute of real-world economics learned the hard way, maybe. 😉
K.
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