by Terry Mackenzie-Hoy
TO be candid, I have no idea how our clients perceive us. I remember one client: We had to go his farm three times to measure noise and do a report for legal purposes. Due the distance, we had to stay overnight in ghastly rooms with dirty sheets, mosquitoes and no air-conditioning. Worse still, we had to endure his and his wife's terrible cooking. And we had to get up at dawn to do the measurements. He won his case but moaned bitterly about our fees, which happened to be about 20% of the fees that the farmer's advocate charged. I just didn't get it. How much did he expect to pay?
We get about one appointment for every three fee proposals we send out. This is for three reasons: The first is price. We are not the cheapest consultants on the block. The second: The price - but this is not the price compared to others - it's just that the client's vision of the consulting engineer's service cost and reality are different. The third reason is the other consulting engineers who offer a cheaper rate for work that is shoddy and the clients who don't know the difference.
There is, occasionally, the rare matter of being under-priced - the client can't believe that your price can be so low and that the work will be done well.
You can see a recurring theme here - price and client education. How often does the electrical contractor know if the price he offers is market related or even if the client knows what is being offered?
How often does the electrical contractor even know what the client knows? An example: I asked a contractor to rewire my house for a Certificate of Compliance. His project manager sent three qualified electricians, each with a labourer, to do the work over two days. The bill was a staggering R38 500 excluding VAT.
I hate fighting so I just paid and told myself that I should have asked for other quotes. When I saw the contractor, I told him that I thought his charge was incredibly high.
"Well," he said, "you know, cable costs money."
"Oh," I asked, "and in which part of the house is there cable?"
"All over," he replied. "It's what we connect up with."
So I asked him if he was calling twin and earth ‘cable' - twin and earth, which (at that time) cost about R2.50 per metre. He realised that I knew something about electrical stuff and offered to give me a refund... but I declined his offer and told him to keep it.
Naturally, I've not sent him any work since. But, if he had bothered, a quick check would have told him that I am a consulting electrical engineer and his price would probably have been more in line. He would have sent one electrician instead of a team... and he probably would still be getting work from me.
So, my advice is to know your client. Also, know your prices. There is no need to waste the time of your competition by getting a mate to give them a bogus request for information just so that you can get their rates.
You just do it like this: Take the cost to your company of the employee (salary, pro-rata of overheads, petrol, bonus, PAYE, etc). Calculate this as a cost per day (no job ever takes less than half a day). So for any project, calculate how many days the job will take and multiply this by the cost per day. This is the cost to you of the employee. Now multiply this by 2,2. This is what the client should pay. If you really need to just peg along, make it 1,5 times. But, if you charge less than this, you might as well let the employee paint lines in the workshop because it's not worth the risk of a zero return or a negative one if the job turns sour.
Client education: Ask the Electrical Contractors Association for a list of recommended rates and print them. When offering your services, you can discount these rates and tell your client that you have done so. Give your client your CV and references without being asked to do so.
All of this will ensure that you and your clients will work more closely and, hopefully, to the benefit of both...
machoy@iafrica.com
