Employee rate vs. Hourly rate of contractor ?

[jmiles]

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..

[thermojohn]

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.

[MichaelPaladin]

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.

[Paul Bee]

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.

[meplumber]

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?

[valdelocc]

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.

[freemind]

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.

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.

[HvAckid82]

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.

[timebuilder]

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.

In some areas, a company turning union means they have access to contracts that they would not have otherwise. Some projects only go to union outfits. This would explain how the non-union company laid off 22 guys, and the union outfit laid off one.

It isn't that way everywhere, by any means. There are many, many factors. However, these dynamics affect the outcome.

[valdelocc]

In some areas, a company turning union means they have access to contracts that they would not have otherwise. Some projects only go to union outfits. This would explain how the non-union company laid off 22 guys, and the union outfit laid off one.

It isn't that way everywhere, by any means. There are many, many factors. However, these dynamics affect the outcome.

you hit the nail on the head! uphere in NY there are plenty of business that wont touch you unless your union, Wegmans is one of them.

[HvAckid82]

That wasn't my point. The big cities are all about unions. My point is that it doesn't matter if you are union or non union. Bad management, bidding practices can take down any size company, poor everything,
Unions outside of the big cities have taken a big hit during over the past couple of years. it's amazing how many loop holes have been found in the govt with prevailing wage and so on. Lots of shady things goin on that hurts all of us

[John Markl]

Lots of posts on lots of threads claiming that union shops charge less, but pay more...

Common sense dictates that there is more to this than meets the eye....and it's very likely that if you're not in management at one of these companies, you're not privvy to the reasons.

[nairb25]

My company charges $170 per hour and I get paid $13!! Looking for work elsewhere...

[MechanicallyInclined]

My company charges $170 per hour and I get paid $13!! Looking for work elsewhere...

You're billed out at $170/Hr.? What do you do? Last time I checked JCI wasn't even charging that for York Chiller Service. You have to be non-Union getting $13/Hr. $13 is barely half of the benefits and fringes!

[valdelocc]

My company charges $170 per hour and I get paid $13!! Looking for work elsewhere...

you ought to be kidding? Homedepot pays more than that and you have to do is run away when you see customers.

[valdelocc]

Lots of posts on lots of threads claiming that union shops charge less, but pay more...

Common sense dictates that there is more to this than meets the eye....and it's very likely that if you're not in management at one of these companies, you're not privvy to the reasons.

maybe the owners live withing their means and sharing the wealth makes them happy
Years ago there were 6 or 8 non-union sheet metal shops around here, today there are none, they all went belly up, while most of the union shops are still in business.

[HvAckid82]

That's stranger because around here union outfits are a thig of the past.

[nairb25]

you ought to be kidding? Homedepot pays more than that and you have to do is run away when you see customers.

I wish I was kidding!!! Been working at a non union shop just north of chicago. We service alot of the wealthy folks in the northern suburbs. I started at 13.00 almost a year ago, been a service tech and have been in the on call rotation for 9 months now!!! I think the owner may have the jew claw!

[John Markl]

maybe the owners live withing their means and sharing the wealth makes them happy
Years ago there were 6 or 8 non-union sheet metal shops around here, today there are none, they all went belly up, while most of the union shops are still in business.

Yeah, that's it...Union shop owners are all altruistic, while non-union shop owners just don't know how to run a business....

[albowrx]

I wish I was kidding!!! Been working at a non union shop just north of chicago. We service alot of the wealthy folks in the northern suburbs. I started at 13.00 almost a year ago, been a service tech and have been in the on call rotation for 9 months now!!! I think the owner may have the jew claw!

I wouldn't doubt it! Most of the companies north are owned mostly by Jews, which is not a bad thing at all but at $13 for a service tech I cringed! Residential or commercial? Sounds more like a residential company than anything.