Georgia

Regarding trip charges, I personally don’t like the concept of trip charges. First I never go onto a job unless I’ve inspected it, regardless of the size of the job.

The trip or as I call them sales calls is an important part of building your business and building a relationship with your customer. This is the perfect time to educate your customer, so when your competition makes the sales call the customer is better informed and will ask the questions necessary to make a decision who is the better contractor to perform the services in their home or building.

This is a great time to sell care products during your sales call which will defer some of the cost of sales call. Educating your customer on the proper cleaning procedure often turns into a sale. Carry the care product line with you to be prepared to make a sales should the customer ask for the products, if nothing else you have set up the sale of care products after you complete to job. Just make sure your customer knows there are no magical products out there to fix their problems.

I would first ask what profit margins are you looking for? 50 , 60, 65, or 70 % What is your daily operating overhead and what is your breakeven point.

The profit margin you are looking for will depend upon what you include in the cost of the sale.

These items usually of the following

1. Labor cost

2. Material cost

3. Minor repairs to equipment

4. Fuel cost to and from the job

I usually look direct labor cost to run between 25 to 28% of the sale.

Material and supply cost should run between 5 to 7 % of the sale.

If your cost are higher you need to investigate why your cost are higher.

Once you understand your cost there is a simple multiplier to use to achieve 60, 65 70 % profit margins, first you must know your daily cost and the cost per sq ft for diamonds, polishing compounds per sq. ft cost and labor per sq ft cost, once you know these then you can figure your margins.

Getting back to charges for sales calls this cost then goes into your sales overhead cost and if you are achieving 60 to 70 % margins these cost will be covered. I usually look at overhead cost to being between 42 to 44 % if your cost are running over this then you need to look at what you are putting into overhead cost.

Unfortunately sales calls are a necessary evil for doing business and needs to be placed into the operating overhead for doing business.

John E. Freitag

President/Director

The Stone and Tile School

Office 407-567-7652

Cell 407-615-0134

jfreitag@thestoneandtileschool.com

schoollogo

www.thestoneandtileschool.com

From: bkornet@fabracleen.com [mailto:bkornet@fabracleen.com]
Sent: Tuesday, June 16, 2009 10:06 AM
To: Restoration and Maintenance
Subject: RE: [sccpartners] Financial question

We find it better to add it into your cost. A fuel or trip charge does not go over well with our clients

BK

Brian Kornet
Fabra Cleen
fabracleenstoneandtilecare.com
fabracleen.com

From: Georgia Rivera
Date: Tue, 16 Jun 2009 09:47:22 -0400
To: Restoration and Maintenance<sccpartners@stoneandtilepros.com>
Subject: [sccpartners] Financial question

I have recently been going through our expenses and trying to find ways to cut our expenses. I realized how much money we spend on gas. Do you think it is reasonable to have a trip charge? I know local AC repair people out here charge $60.00 for a trip charge.

There is this new car coming from India called the Nano car by Tata. It is $2500 new and it is a 2 cyl. and goes up to 65 MPH. I thought it would be great to have one for running all the errands and doing all the estimates. I can take a "sample kit" in the car with me to give samples to my customers, but this will eliminate the ability to do a job on the spot, which is rare anyway.

But I was thinking, until the Nano car is available later this year in the USA, I would like to charge a $20.00 trip charge for estimates within 40 miles and $40 within 80 miles. If we are hired we could credit that trip charge towards the invoice. This way my estimates are still free and I am not out of pocket so much in gas. But do you think this is something that would prevent a customer from finding out more about us? Or would that type of customer be a cheapster and not worth my time anyway? I go back and forth on this. What are your thoughts?

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