From time to time I receive questions about our billing. As a past office dweller I can relate to the emotion of controlling things from a spreadsheet in an environmentally controlled cubicle. Even the highest IQ’s among us can find difficulty aligning price with value. The mere thought of uncontrolled costs can drive a person crazy, but the fact of the matter is our business wouldn’t last very long if we were in the habit of taking advantage of our customers. It’s all about trust.
So in response to a good customers desire for clarity I had written the following:
“I have 23 hours logged on the boat which doesn’t count BS hours from our crew, just real hours. My average unit labor cost is around $38/HOUR. What I do in most instances without telling the customer is I actually take my labor cost, apply a profit margin that is not egregious and divide the result by 80. This gives me a fair billable hour amount. It also cuts into our profits on many jobs.
What my labor cost does not include is the cost of the facility, the permits , utilities, air compressors etc etc. Regarding skilled vs unskilled I would rather use a bathroom cleaned by a “skilled” worker than the latter and I would rather eat a burger prepared by someone with health insurance than not. Our guys have medical insurance too.
The crewmember who performed the work on your boat is named Alonso. He is a graduate of the Oxnard Community College Auto Technology Program and he is a homeowner. He is 22 years old. He is a star.”
So there you have it. Needless to say, the customers clarity was enhanced and full capitulation occurred. All we need to do is communicate!
Please refer to an earlier piece entitled “Marrakkesh, Intel and Today 4/2010