“In reality, if most dealers can get four billable hours out of a day, they should be ecstatic,” Klein said. “However, when they price their services, they often price them based on an eight-hour day.” If you price based on an eight-hour day, but have only billed for four, you’re lucky if you are breaking even. “It’s a competitive environment out there, but if you price based on what the electrician charges, you are out of business,” he said.
Qualified installers, properly equipped vehicles and insurance all cost money, and should be factored into a company’s pricing accordingly. “The problem that every company has had at one point or another is getting over that hurdle, from charging a minimum amount of labor to do what used to be done as a retail sale to charging the proper labor to cover your expenses for a custom labor job—which also must include covering the expense of the back office personnel that oversee those projects,” DeAndrea said. Labor, and the installation department in general, is a separate profit center and cannot be funded solely based on the sale of merchandise.
So, should retailers charge for their designs? This is a sticky issue, DeAndrea said, noting that pure design/build firms generally model their operations in this way. Woodbridge opts to incorporate design fees into its labor charges. “It is factored in, because substantial work is required on larger scale projects,” he said, referring to the engineering and drawings that are involved in the design phase. “That’s all part of the cost of the labor that has to be factored into the project.”