Originally Posted by Awake
Some people are so defensive. You guys seem to attack me because I question your margins.
So lets try a very simple question:
Why you you charge large markup and hour fees? If it takes you 15-20 hours of work to do a task, I pay more hours. Fine by me. If it takes 40, I pay for forty. You do more work, I pay more money. Seems simple and rationale. So why the markup? Charge higher rates rather than hide it in the markups. Your rate includes salaries, overhead, profit, etc. More complicated tasks take more time and entail more risk but you bill for more hours.
This is how I interact with lawyers, accountants, and many other professionals. They do what I tell them as long as I pay their rates. My accountant doesn't care who they need to work with to get the job done (Morgan Stanely or stupid idiot bank) -- if it is harder for them, they work longer and charge me more.
Because I have no control or little control over the products I must integrate. If you'd like to pay time and materials I'd sell you gear at a discount. But Would you really like me to only work when I'm on your job site? Might you see some benefit from my working on your program when I'm off site? What if installation took 2 men 7 8 hour days to install your system? That is 16 man hours @ 95/man/hour or 10640.00 What if in addition to that installation fee it took me 21 days to design the GUI, program the equipment and code that system. Let's say I only worked 8 hour days but the reality is I work longer. At 150/hour that's 25,200. What if you had any issues? Cable box does not work, some RF interference, interface into other trades, shades lose their limit switches, you want to change the lighting scenes, turn on volume, or lord knows what. That is 1.5 hours travel time at my hourly rate x the time I need to be on site, with a minimum of 4 hours.
What would stop me from doing what the lawyers do? Namely running up the hours by working slowly, charging for every telephone call we have or I have with trades? There is a reason why even amicable divorces cost a fortune. Believe it or not I either discount labor or equipment. I need a bottom line number and you can pay me for my time or pay for the job. Even data entry takes time. The more time, no matter how trivial or simple the data entry, the more you will have to pay.
Moreover, I have far less control of my enviorment then do your legal eagles. They have the law and precident. I have constantly changing equipment, protocols that are after thoughts, heat issues no one wishes to deal with when the price of real estate approaches 800/sq ft. Put in the tiny touch panel but make it so I can control my whole house, including pool, jaccuzzi, CCTV, security, lighting, HVAC and shade subsystems. If any of those do not work you make it so they can. If I do not like the way the networks transmit programming on HD channels then ought not I have to fix it? What if you Toshiba TV will not tune in QUM digital signals? What if it has not discrete IR or serial jack? What if it just behaves funky? What if it has a secret handshake to enter service mode? What if it will not be addressed and put on the system? Who pays for the time to trouble shoot it? If you'd like to absorb that risk then let's sign the contract now.
Did you know that a security door contact costs .50 and sells for $8.00 That is much more profit than I make on a plasma and while your projector may seem as if I'm off to the bank I caution you to take account of what happens if it craps out? Who pays for shipping? Who pays for time trouble shooting, removing the unit and then reinstalling it? HDMI will not work? Fix it. I don't like the way aspect ratios display on the TV you sold me--yes that 10k projector. I don't like pixelization from the cable TV box on the 10K projector you sold me. That 10K projector used to work but now it does not turn on?
Do I get to act like a plumber? Do I get to charge for every man hour I am in your home? Let's go. I'm your man. It will be the first time my net profit exceeds 12% in years. We will move to a labor only model in the near future and you will pay more for my services not less. And I will have less responsibility not more. If it doesn't work I'll come back time and again and fix it and you'll pay for every trip.
Keep in mind also that I travel to 5 states, and even when I'm local I have to fight different traffic patterns every day. Unlike your lawyer, I don't drive to the same office every day. I have to fight architects and decorators and sometimes clients to get the proper engineering specifications built into their gorgeous mill work. I took a call yesterday from an architect upset because his gorgeous cabinets are not deep enough to accommodate a HD cable box. His solution? Go to a SD box. Can I get away with that were you to hire me?
The point is that since you don't know my costs how can you know if my charges are outrageous? If you'd like to pay for everything, as happens with lawyers--phone calls, faxes, copies, then go to it. My favorite is the client in the above example--who has yet to hire me-- who has called me 6 times and spoken with me on my cell for at least 3 hours-- and has solicited my advice on product selection but followed your preferred purchasing method of buying on line. If I go out of business is that in your interests were I to have coded your system? The bottom line is what's important not the price per line item. If you paid 40K more in labor than my quote but the bottom line is the same as when I sold the system with equipment at MSRP and labor discounted or if I discounted the equipment and charged more for labor.