Employee rate vs. Hourly rate of contractor ?
If a company charges $100 an hour as there rate no matter if you are working on a large chiller or a roof top unit.. Why don't all techs make $40 an hour?? I mean the guy changing a rtu compressor is making say $25 an hour but the company is still charging the customer $100 an hour?? Just like a tech capable of working on a chiller but he is taking $40 an hour..
It all comes down to what the company expects for profit margin. A techs wage is a direct cost to the job like a part is. The more $ in parts and wages, the more the bottom line is.
I would have a different billable hourly rate for a $40.00/hr tech than a $25.00/hr tech.
Well you have to remember that company may be charging $100 per hour, even though the Tech is only getting $20-30 per hour.
But that company is also paying for insurance on the Van/truck the Tech is driving, and the gas plus maintenance on that vehicle. Along with having to pay the Companies contribution to Social Security for that Tech. Also pay for that Techs health insurance. Plus a Company has to pay a tax on the amount of payroll they pay out. They also have to pay the office help as well. Then figure in business taxes, local and state taxes. So depending on the size of the company, out of that $100 per hour charge, they may only make $10-15 in profit, if that much.
When you do a job, Always make it easier for the next guy, because you may be the next guy working on it.
How about vacation? who pays for that? Holidays? Uniforms? Vacuum pump, recovery machine, recovery tanks? You have never owned a business have you? Did you know that commercial vehicle insurance is double what you pay for car insurance? I was part owner in 2 service companies with multiple technicians and had my own 1 man shop for 12 years, none of these ventures made me rich. If you don't like the way it is I encourage you to start your own company and charge what ever you want and pay yourself as much as you want.
Challenge yourself, take the CM test --- Certificate Member since 2004 ---Join RSES ---the HVAC/R training authority ---www.rses.org
There was an article in HVAC Business (I think) a couple of months ago showing the breakdown per man hour in percentage of gross margin.
The previous responses are all correct. To add, the reason they charge the same for a RTU and a Chiller tech is simple. Dollar cost averaging. The amount of office work that would be required to bill at two separate rates is a pain. It isn't worth the headache. So, the differential average between the profit made on the RTU tech and the Chiller tech averages out to accomplish the desired gross margin.
Extract everything that the company is responsible for and you get the net margin on that hour of labor sold. The industry average for large commercial companies is between $6 and $10 clean net margin per hour of labor sold.
Some 1 and 2 man shops with lower overhead can see slightly better, but not much.
Do you think that $6 an hour profit is raking it in?
I'm union and our total package averages $51/hr, my employer charges between $75 to $105/hr depending on the customer contract.
The two largest non-union competitors are charging up to $120/hr but their techs make significantly lower wages.
Union and non-union face the same operating costs yet in one side the worker takes more.
last year my employer let go just one tech cause we were slow, our competitor let go 22 non-union techs.
We tried to organize this outfit once and the union was defeated by a 2 votes margin, the owners scared the crap out of the techs threatening the with layoff, we are about to try again.
See, this is the kind of stuff that makes me chuckle.
Originally Posted by valdelocc
I am NOT a union guy, but I don't have a problem with their existance either.
I don't run an HVAC business, but I have experience IN business. There are lots of "places" to add costs to make the tax bill lower, and seem like you aren't making the money you actually ARE.
How is it that a union employer, paying his workers significatly MORE can stay in business? If you are only netting 10 bucks an hour, the union employer is already in the hole, according to some.
Well... Perhaps what it looks like on paper just isn't really the way it IS, you suppose?
I don't have a problem with EVERYONE making all the money they can. I do have issues though, when you do it by lying, deceiving, or bullcrapping.
if they turn union does that automatically mean they wont lay guys off?
Just because they charge more per hour means nothing, how about when they bid jobs maybe they bid too low and lost their shorts. So many variables hourly rates mean nothing. Maybe they have higher wages for engineering, sales and so on.
Hey guys... this is not ARP.
Originally Posted by Dad
Minds are like parachutes. They only function when they are open.