Pricing Strategies & getting paid! EVERYTHING you need to know
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- Опубликовано: 11 июн 2024
- Pricing & getting paid! EVERYTHING you need to know
This week’s guest is David Savery
Electricians Monday club podcast is for electricians, apprentices and anyone associated with the electrical trade, every week we record a podcast to talk about important subjects that’s electricians care about! But along the way you will find crazy stories lots of banter and hopefully come out the other side informed but amused….
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This episode hosts are:
David Savery DSES - / davidsaveryelectricals...
Davo Savo is one of the first electrical youtubers and quite possible the most controversial! never short on an opinion and basically a comedy genius… he is way to humble about his book smarts when it come to regs BS7671. He also runs a very successful electrical business with his life partner Nigel. David often mentors Nick Bundy they also attend a life drawing class together
Fatsam - / @fatsamelectrical
A industrial and commercial electrician who worked in London on every major project for the last 10 years, expert in industrial relations between agency electricians and tier 1 contractors. Still on the tools managing projects for the NHS and private hospitals
Nick Bundy - / nbundyelectrical
The peoples electrical youtuber! with over 60,000 subscribers and 10 million views! Nick is a domestic electrician who started hes own business at the young age of 17!!!! He has built a successful domestic business and employs the world’s most fortunate electrical apprentice (Adam Dunlop: / @adamtheelectricalappr... )
#electrician #electriciansmondayclub #evchargerinstallationuk #mondayclub #niceic #Electricalsolutions #Podcast #electricalPodcast #ElectriciansPodcast #Electricianstoolbag #Electriciansbelt #Electriciansworkwear #womeninthetrades #femaleelectrician #Electricialdiscussion #BS7671 #BANTER #dewalt #millwakee #bosch
price knockdowns - in the past I've had a customer say, "can you do anything with the price?". I've responded with "You own around £10m of property, I live in a 2 bed flat - I don't think I can lower the price". After that he was fine and never questioned invoices.
As a man new to the game my biggest take away from video was: I need to come back to this video later on down the line and just concentrate on getting my bloody course done before anything...
None the less, great tips and content, well worth a watch.
Thanks gents!
Great video guys.
I have found that companies will not pay for 90 days! Local authorities can make you wait for at least six months! Sharky, dodgy builders etc, they string you along until they have sold the property. It doesn't matter what is agreed at the outset, it's the outcome that matters.
🤣 Fat Sam is so cute. His face at 55:52 when the others are whinging about VAT and tax 😆😍
Great work guys, I always look forward to the Monday Club.
Nick, you should talk to your accountant about the benefit of becoming a LTD company, specifically around how you pay yourself and directors dividends
I’m with nick with on this one, price per point. Can’t be doing with fitting 20 down lights busting a gut and just get payed for a day rate or hourly rate. £80 per light, even with aggro you only gotta get 4 done and that payed for a day.
Fantastic listen, well done.
CEF are mentioned in here as a supplier. I’d like to know how they shop there and remain competitive in their quotes. I find CEF to be too expensive compared to my local small wholesaler and definitely to online retail.
excellent guys, thankyou
All the talk of fancy downlights and such. You can't go wrong with the OldSkool Rose 'n' Drop holder with a nice shade. They just work.
Agreed
I used to have a term on my invoices that said any discounts were void if payment terms were not met.
I only used it in court once and I had the benefit that the particular customer had already had one job completed so the term was definitely accepted.
As most difficult customers the bigger job went pear shaped, very lucky it was labour only but on a price. They were on stop with suppliers I was ordering from (warnings!) I had guys stood for days waiting for them to get kit turn up.
So when they missed the payment term of 30 days from completion I invoked the 'discount void' clause and billed at our VO day rate which tripled the invoice. If the original payment had magically turned up I would have called it a day, it didn't.
We did the whole court process and they turned up at court, 5 minutes in court and the judge ruled in my favour for the full amount, we then were awarded 95% costs.
The f**kers went bust the day after the bailiffs finally rocked up, but I did get a piece of paper saying I won.
Well sorry to hear that alec, but its stories like this that do help others 👍
It's a good term to have, the answer to any customer that questioned it was "are you planning on not paying on time?"
@@alecturner2008 I might even start doing that myself mate, cheers 👌
estimates - I over estimate but tell customer that. I say if it goes smoothly, it'll be less. I'm just honest with the time. Last year I well over estimated a job at £1300 and it took £700 in time/expense (was thinking of other jobs when quoting), I felt a bit stupid, but charge the true amount. I've never liked the idea of cockups cancelling out overcharging. I tell people that my service is just like filling up with fuel at the petrol station, you only pay for what you need. It does lose a couple of jobs, but once trusted, I get a lot of recommendations. Customers almost wanna better relationship with the invoice than the actual trade! Great show guys 👍
Im with young David, 30% markup on materials and a good estimate. Dont under sell yourselves. There's always someone that will do it cheaper.
Just catching up with this episode. Love the chat as always 💚
Especially appreciated Dave's car garage analogy @ 27:06 highlighting the absurdity of the unreasonably delayed payments which electricians, and probably every other tradesperson, are expected to endure every day! 😡
As a customer I would point out that problems with materials sometimes go the other way. On more than 1 occasion when I've left all material purchases with a tradesman and we agree on what to use (at least for the big items) I've found that substitutions have occurred when they start the job. They go to the wholesalers that morning, find some items out of stock and then make substitutions without asking because they want to start the job. So, these days if there is something specific that I want then I make sure that it is delivered before the job starts - especially if the tradesman doesn't often deal with that item.
I agree with Sam generally - you can't take your car from a garage without paying *there and then* - I don't see why people should be able to faff around to pay you. Similarly I won't get a new laptop shipped from $bigvendor without paying first. My policy is to pay all my and our suppliers at work promptly, none of this 30 day crap. We don't make suppliers wait. Equally we expect and require our customers to pay up-front - the number of objections is tiny and the time we spend chasing people is absolutely zero.
There should be NO issue about getting paid.Its mentioned in the quote and you get them to accept your terms . Domestic is same day
Great pod cast today , being VAT isn’t always a bad thing. We do a lot of work for big companies and they prefer to pay the VAT
Agree with pricing the job for what it’s worth rather than hourly rate. Dividing annual costs by 365 days is silly if you ask me as you haven’t taken into account days you don’t plan on working eg. weekends, bank holidays, birthdays etc.
David can afford to not make any profit and go home with £100- as he’s ancient and most likely has bought his house in the early 90s so is minted from the property boom. So long as he can pay the bills and buy a 12 pack of beer each night he’s ok. He’s should just open a corner shop or Electrical retail store as he’s so happy making 10-25% from the material. But for people our age (around 30) and aspiring business people of all ages we need charge for not just labour, coz let’s face it, it’s not just labour at all is it. Labour is just the physical aspect. There’s expertise, knowledge and experience involved which we are giving out. That doesn’t come free..
Always price for the job based on a pessimistic version of the day.
Also put in a proviso that if there is unexpected costs/labour they'll be discussed with client prior to carrying said unexpected costs and labour.
Dont charge per hour otherwise you will stress yourself and client out.
If someone says why is it so expensive for two hours, remember, you are charging for your experience that has made you able to do jobs in x amount of time.
Very interesting video chaps, particularly for me in Australia seeing how things work with VAT in UK. We have a Goods and Services tax of 10%. When a sparky buys materials they pay the GST as part of purchase. They then charge the customer GST for the labour and materials. The GST paid for materials is claimed as a refund to the tax office. $75,000 turnover is the threshold for GST registration. The GST for stuff purchased for the business like vehicles can be claimed back also . There's then depreciation and the collection of tax deductions. the This is a simplistic explanation.
Very similar to the UK
Like always great vid love the content.
I agree with Sam as soon as the job is done the customer should pay specially on a domestic job. Most of our Commercial jobs take a little longer because the invoice goes to the accounts dept they then go through the system but usually a week max. I see guys have mentioned tradify must look into that. Keep the vids coming 👌
Flat Rate VAT scheme for Electricians - 9.5% - if materials are more than 10% of your turnover which they are... this makes you better off....works for you between the VAT threshold and £150K a year...
Nick, what do you charge labour for Adam? Be interested to know as he is very competant and works hard so shouldn't be far off what you charge for yourself.
That was an interesting video from two different electricians.
Nick's running around getting slammed by the Vat.
Dave taking a relaxed view and keeping under the vat threshold.
The government should exempt you from the vat in the first year after you go over the threshold, so you can grow and then manage the vat when it hits you.
I feel Nick's going be looking at his materials bill, and haggling for more discount. Would doing less jobs per year with a health profit margin keep you under the threshold but give you a better profit margin or have you gone well over the threshold.
I'm kinda out tade these days
I used quote up, to accept job they had to pay the supplier direct so they owned the materials, makes customer feel incharge and getting "deal". But most suppliers are OK with putting market on, then crediting your account with that. Less layout, less turnover for tax reason etc
First time watching and it was pretty good, Sam got Nick's back up a couple of times 😂
Dave is like me, a piss can 🤣
I think it depends what part of the industry you predominantly work in, if its commercial it will pay to be VAT registered as your probably charging a vat registered company vat they can't claim back so your more expensive. But domestically it can be hard, but you don't charge the customer twice on vat. So price the materials excluding vat and add vat on at the end. The don't save anything by buying themselves as they pay the same vat just maybe less your markup if anything.
I dovall my vat returns and its so easy using Quickbooks, but there are some good benefits that come from it. Especially if you have business lunches at KFC and claim vat back 🙄 😉😂.
Good video guys nice to see different ways of doing it.
I use that stripe only if someone needs to pay by credit card, otherwise it's bacs.
I've emailed £3k invoices a few days after job is done, and got paid 2 hours later. That is nice. patiently wait 2 weeks before I make noise, 4 weeks and I'm going back to the house and having a word.
The VAT situation is just as talked about. 😒
Remember if you are paying a VAT bill, you are most likely making profit. So it's a good thing. 👍
You certainly don’t divide between 365. You divide your cost between the number of days you actually work.
I agree you should base it on 232 days per year. Which is (52week*5days) - 28 days holiday.
If you choose to work extra then that 'overtime' is almost all earnings.
Also, could you state if you do not receive payment within say 28 days then warranty will be null and void? I like, Dave's way of dealing with it.
In Nick's case; as his partner works for the business then it may work for her to call up once the job is done to organise payment. This would ensure cashflow continues.
you could state that if the terms are not met then the customer would be left with only the manufacturers warranty on materials. In other words "Don't call me"
Sum up only charge 1.67%, crazy not to have on, instant payment!!
The higher tax rate is anything greater than 50k, not 45k, although i do agree that it should be much higher, it makes it difficult for small companies to grow without being limited. VAT is much more preferably if you are working for VAT registered companies. New builds are generally 0% rated.
Deposit or not to deposit?
I have to sort out Adam 🤣. What an excuse. 🤣
Regardless of pricing structure you can only price for what you know/supply. On the occasions where customers provide things, if it has no BS stamp, kite marks or alike it doesn't get fitted because as soon as it's fitted you become liable for the decision the product meets the required standard when it may not.
VAT is great but it depends what works you do, for us even with domestic works it hasn't hurt us and allowed to put aside enough to buy a new van in the very first year of being VAT registered.
It's not suitable for everyone and the threshold and % makes absolutely no sense, especially when you start doing stuff for new builds and alike where VAT drops to 5% for certain things.
Nick, the higher rate tax you speak of as 'supertax' is based on your personal earnings, the wage you pay yourself, it is currently when you earn 'personally' between £50.271 and £150.000, it is currently 40% and increases to 45% when you personally earn over £150.000.It bears no relation to if you are VAT registered of not.
The figure you mentioned of £800.00 on top of a £4000.00 job would not make you £800.00 more than a competitor on a job as that competitor would still have to pay the VAT on the material content of the job and that cost would be included in his total price to the customer.
It really only makes the labour content of you job higher, I get that.
The abovee only really applies when you are working for a non VAT registered customer.
When you are working for a VAT registered customer, I'm afraid being not VAT registered yourself actually works against you as your VAT registered customer has no way of reclaiming the VAT you have paid for materials, and as such, even if your price for the job was exactly the same as your competitor, ie, your total invoice value against his total invoice value, you would be having to absorb the material VAT content where as your competitor would be claiming the material VAT content back ! Your competitor would be able to have some 'wiggle' room on his price where as you... may not !
The above situation can make you uncompetetive and, is also based on fact and one of the reasons I had to register for VAT.
I was competing for a job many years ago against two other companies, I was recommended by a neighbouring business and the company owner wanted me to do the job, he showed me the other two quotes and told me outright that the job was mine if I could match the lowest price.
The job was over 20k at the time, maybe 50/50 materials and labour for the benefit of this example.
I could match the price but.. and a big , BUT.. on materials alone, I would be 2K over the competitor and no way of the prospective customer claiming that back, it was no brainer, I had to register, quick ! That and it would have at some point that year take me over the VAT threshold at some point that year.
Interestingly enough, that customer was mentioned recently on the EFIXX channel... it was some 20 plus years ago !
For domestic work, I would never register for VAT, just an unpaid tax collector and it's a pain, I deregistered for VAT maybe two years ago and had to pay the VAT content of the Shogun Commercial I was running... I had forgot all about that, plus VAT content on phone, laptop,tools etc at the current value, what a bummer.
If any potential customer used to tell me that the have seen an alarm or CCTV kit online for less money that the kit I was proposing and could they supply the kit and myself fit it.. it was a definate no from myself and I would politely suggest they went elsewhere.
There is far more potential for alarm or CCTV kit to go wrong, especially with budget kit, than any light switch, socket or consumer unit and the first person they would call... day or night, would be myself. The customer would still view the situation as my responsibility to attend and fix... so a definate NO from me.
It would matter not that it was six months or even six years down the road, either way, for sure that person would expect a priority call out, and dispute a call out charge.
had a old taxi driver supply lights and sockets from the cheap bin in an old DIY store aall broke and wounded why I charged her for everything what she had got cheap
Hurry up and get this on the Apple podcast app please boys.
Done mate
@@ELECTRICIANSPODCAST I’ll be listening to it en-route to my next job after packing up in a minute!! Cheers pal
!00% payment on completion and if paying by card add the surcharge thats how the rest of the world does it! after returning back to the uk i am amazed people carrie out work and walk away with no payment, you have provided a service and that service comes with a price!
A few years ago they made it unlawful to visibly add the card surcharge. That doesn't stop you always adding it (no amex though) and applying discount for bank transfer.
Putting cash in the bank, my arse
Tradesmen’s attitudes towards payment is bizarre. Payment on the day latest. Some works I won’t even attend without a credit in the bank.
LAP have push fits these days, but the connector boxes are pony small
Nick. I sincerely hope you don't divide by 365? Most employed people would only consider working 210 days per year. Why should the self employed be any different? You really need to build it into your pricing, otherwise what's the benefit of being self employed? 🤔
I think Davo's way of charging is fairer, I get the bonus that Nick says about customer gets a fixed price and the one that takes ages the customer is happy, but what about the one that is really quick and easy, the customer will feel a bit ripped off?
Sorry guys, but the arguments supporting ‘28 day invoicing’ for domestic works are terribly weak.
Love Nick, but when I hear things like ‘customers have busy lives’ and it helps ‘build trust’ …. Sainsburys don’t want to builder trust with me they want the cash asap … so I want mine asap as well 😄
@@marlonw5429 I used to give 28 days but now give 14 days but that is purely because of doing work for commercial customers with accountants who always seem to pay on the very last day... Never had an issue, have had to remind a few people but always got paid... Some customers like to wait a day or two to make sure you have not bodged it and scarpered.. Also if you are not infront of the customer when you present the invoice then you dont get as much of the "oooh can you do it a bit cheaper" or "How much for cash".
⚡⚡⚡⚡👍
"pay me bitch" in only the way Sam can! Nice one gents.
Bumming! Somebody’s stuck in the eighties.
I am guessing that non of you guys get involved with sealed bid tenders then? there is non of that going back to the customer if you got your costings wrong to beg for a bit more money.
The only way you get to 'make up' any potential losses there id if the specification changes, there are delays on site that are under the contol of the customer, or, if the customere requires any extras. Virtually all local authority or government jobs are done on this basis.
When I worked for a large company costing jobs.. more effort had to go into acurate costings to get them right.
Since working for myself, following that job, I still had to work that way, there were no 'estimates' all were fixed price quotations to the end user, so costings just had to be right.
I did, for many years a mix of direct to customer jobs and sub contract work on a day rate, some the materials were provided, some, I provided materials.
With respect to invoices and payments, domestic work (in the main) was invoiced and paid upon completion. Comercial/industrial work (where i supplied labour and materials) were invoiced within days and payment terms were 28 days, in the main that worked. If I did not offer those terms, I would likely not to have got the work unless it was an existing customer.
Sub contract work, invoice on completion and get paid two months later... like it or lump it !
I rarely did call out work by the hour unless there was a problem that needed urgent attention and in the main, only for existing customers or a referral from an existing customer.
I learnt that doing call out work for unknown customers for a couple of hours usually ended up chasing the invoices for those jobs with more effort than for a complete installation ! wasting time and effort.
Did I ever get stung for payment ? sometimes on the jobs just mentioned.
I did get stung one year by a company, maybe 20 years ago, by a company I was doing regular sub contract work for, a mix of material provide by the company and some by myself.. the company went into CVA and total was maybe 20k or a bit more, it maybe took three years to get 3k back.
I had also paid for some sub contrat labour on that work.. it was a big hit for a self employed person back then.
The next year I got hit for around 15k by a company.
Other than that, in 25 yrs or so working in a mix of self employed and as a LTD company... maybe a total of another 5k.
With respect to registering for VAT, I had no choice as in my first year, one job came in that along with earnings to date, the above job plus forecast work for the year, I would have been over the threshold.
If I remember correctly, it was not what you had turned over that year that determined whether you registered for VAT, it was if your business even looked like you were going to exceed the threshold based what you had turned over and orders on the books and the potential to exceed the threshold before the end of that business year.
Always made me smile when a domestic customers used to ask if I could 'knock the VAT off for cash' I used to tell them, look, you are paying the VAT on materials whether you use a VAT registerd company or a non VAT registered company.
Phew... that was longer than expected !
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