Service Rates

[kwatt]

At the September DASA Council Meeting UKW was accused of trying to price fix repairs and I guess we’ve doubtless been dismissed as some kind of militant group that just wants to cause trouble and upset things.

Nothing could be further from the truth!

Currently many manufacturers and insurance companies are paying the same rates that they were paying ten or more years ago and they expect a higher level of service than they did back then. Simple things like e-communications, mobile telephony to customers and suchlike all cost money and have all added to our costs as service companies. In addition we have the effect of inflation over that time as well as above inflation rises in labour costs, our largest cost and fuel, our (normally) next largest single cost. It’s quite apparent that the trade (us) cannot continue to stand those costs.

We sometimes get blinded by reason and tied in knots with some of the rhetoric from companies as, in the main, most of us are service engineers not businessmen by choice but we’ve been forced to become businessmen by virtue of running our own companies. However, most of us in this trade would run a mile rather than do paperwork and when we do it’s normally illegible! 😉

Examples of this are in abundance these days, just look at abortive call rates, in some cases half a normal callout if the product is exchanged or the customer refuses the repair and even if the manufacturer cannot supply the spares fast enough. But let me ask you this, did that visit cost you any less to do in the first place? Were your costs involved in dealing with the call any lower than normal?

Then we have the old chestnut of reduced rates fro BER appliances, I would ask the same questions of that and point out that normally you have to write out reports, then fax or email them and wait longer to get paid as you are waiting on advice of what action to take. How does this cost any less? In fact I’d argue that it actually costs more!

If you haven’t already you should also read the “profitability” thread in the work and vacancies section.

I sat with an MD one day from a WP and he told that he’d managed to get a rise out of an insurance company of the rates eighteen months before to which I replied that the rate rise equated to less than 3{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} on the labour rate, nothing on spares and they’d reduced the BER calls to a mere £25 from a full labour fee. If you actually do the maths it is an effective rate cut overall.

Unsurprisingly he could not present an argument to that point. But you are expected to provide all these add-ons to a basic service just the same, out of the goodness of your heart!

To add insult to injury on that particular contract the management fee was then increased as well!

There are a lot of “flim flam” artists out there that will baffle you with numbers and percentages to make a potential contract look good or try to pull the wool over your eyes to keep costs down along the way but we can stop it and we can expose it if we so chose. All you have to do is speak up if you’re not happy about it after all, if someone conned you out of money in the street you’d either shout about or call the police, well UKW is a vehicle for your grievances to be aired and warn or advise others.

This is a part what UKW is all about, sharing the knowledge of how you should look at a contract, being able to scrutinise it and the costs of operating such a contract and indeed, whether it’s even worth the trouble to take on the work in the first place. Make no mistake, most of the WP’s and manufacturers are out to cut costs and increase their own profits and we’ve been a nice soft target to aid in that endeavour for many, many years and I believe that its time that that was changed.

K.

[admin]

Re: Service Rates

In October, for one contract, we made a total of 1108 service visits. This included 1st time fixes as well as recalls, as well as not in and aborted calls and of course 2nd visits to fit spares.

My costs per call were £26.72 and 980 of them went to payment required stage, now I’m looking at 6 rejections from that period to see why we got it wrong on these.

I’m no business man, just having to learn new skills to make sure we pay our bills, but I do know that you can’t make a profit and invest in your future if you sell yourself to cheap.

Do you know what it costs you to operate?

regards

Ted

[kwatt]

Re: Service Rates

ted wrote:I’m no business man, just having to learn new skills to make sure we pay our bills, but I do know that you can’t make a profit and invest in your future if you sell yourself to cheap.

Neither am I, never took a qualification in business studies in my life but I’m a demon with a calculator and a spreadsheet and was taught the old fashioned way how to work out profitability the way AEG did when they were really AEG. Including how to work out margins the correct way not the way they teach you now, which is incorrect mainly. Is a 25{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} mark up reall a 25{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} mark up, work that one out as most people calculate it incorrectly.

The point about selling yourself cheap is very valid and one I keep banging on about. In everything you do you have to show profitability from each service you perform, I would bet that most are not doing so in this industry, myself included in some cases.

ted wrote:Do you know what it costs you to operate?

Unfortunately I do! 🙄

K.

[Author]

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