Our industry has too many contractors working at minimum wage levels - and yet too many consumers think we charge too much.

Last December I wrote an article titled "A Dear John Letter," regarding a service technician who quit a PHC company after explaining he was fed up with the hard work, low pay and lack of customer appreciation. A contractor sent a copy of that article to a customer who had "fired" him for charging too much. The customer then wrote to me. Here are excerpts from that customer's letter, followed by my assessment:
    . . . I will say that Mr. (Contractor's Name) has done several plumbing and heating jobs in my home over the past several years, and I have found his work to be very good . . .
I hear this all the time. The company does good work, but the contractor charges too much. This is the crux of the problem right here. When people admit that you do good work and then in the same breath say that you charge too much, they are saying that the work you do is not worth very much. When customers see everything you do in terms of dollars and cents, an important message is not coming across about the value of the work you do. PHC work is not unskilled labor. Our profession is woefully undervalued in the eyes of the public.

Let's see what this job consisted of.

    . . .It consisted of converting from well water to town water - a pretty straightforward job. The job took him 4.5 hours at a cost of $546.55. . .
Turns out that the contractor in question billed the customer at a time and material rate of $50 an hour, which is far too low in my estimation! The rest of the billing consisted of materials, one hour of apprentice time at $40, permit fee and taxes.

Later I spoke by phone to this angry customer. Among other things, he was put off by being billed for the cost of an apprentice. Just who is supposed to pay to help train apprentices, if not the customer, I asked. People just don't get it.

Taken For Granted

The job in question involved the basic issue of bringing potable water into the home. This is something everyone in the Western world takes for granted, but millions of people around the world die because they lack it. It's pretty much a once in a lifetime job, but not worth $546 in this customer's mind. (Blau Plumbing probably would have charged twice as much!)
    . . .I spoke to a neighbor who also had been connected to town water at the same time. To my astonishment, he told me he was charged $50 by his plumber. . .
Same old story, some slug who doesn't have a clue about his cost of doing business and how to price a job sets the "going rate" for every plumber in town. Besides, he is comparing apples to oranges, as follows.
    . . .I admit, I had a few minor adjustments done, such as installing a pressure valve, but definitely not $500 worth. Also, we were charged an additional $20 for a plumbing permit. A quick call to Town Hall and we were told the permit was $15. Mr. (Contractor's) explanation - his time and gas for his truck, even though he was picking up permits for other neighbors. . .
The "minor" adjustments, like installing a filter along with the pressure valve, keeps the drinking water flowing. Again, this is a valuable service that takes considerable skill, but is undervalued by people like this consumer.

All of you time and material folks who think we flat raters are "rip-offs," what do you say about someone who marks up the permit fee by a third? Why is that OK, when reasonable profit markups on our true cost of labor is not?

By charging a reasonable markup on your labor, you can make money the old-fashioned way, by truly earning it. You don't have to chintz around trying to squeeze out five bucks on the permit fee.

The Materials Game

    . . .I priced the parts he used on the job and found I could have bought them for $78 less than what he charged me. By the way, of course I don't qualify for a plumber's discount. So, "just who is ripping off whom?"
This job entailed some $268 worth of materials, and this guy is upset because the contractor took a markup of about 41 percent on those materials. Is there a better argument on behalf of flat rate pricing? Itemizing materials just invites people to do some comparison shopping.
    . . .A little background. I'm a retired engineer who worked 39 years for the same company, retired five years ago and never reached $50,000 a year! Your article certainly hit home with me regarding the inequities existing between technically educated professions and those with less skills and the salary gap it presents, but I doubt that Mr. (Contractor) had in mind when he handed me your article. . .

    I'm sure he has to make a living, but to what extreme? Am I off base on this situation?

Way off base, as far as I'm concerned. I'm sorry his income never topped 50 Gs. Maybe he was as underpaid as most service techs in our industry. Yet, he seems to be agreeing with my main point that most of the people in our industry are undercompensated, undervalued and underappreciated. Only he doesn't want to be the one who pays the price of fair compensation! Let everyone else pay it, he seems to be implying.

The ultimate irony is that the $50-an-hour contractor who did the job is typical of the forlorn souls who populate our industry. I talked to the man. He's 45 years old, has little to show for decades of hard work and his W-2 form for last year shows an annual income of about $19,500. Working for himself, he estimates that he put in upwards of 4,000 hours in the business. That means he's working for less than the minimum wage of $5.15 that you can legally pay any employee!

Yet, this customer thinks he charges too much!

My friends, is there a sorrier commentary about the state of our industry?