Know the proper pricing in the plumbing, heating and cooling industry
There was this day in the summer of 1988 when it dawned on me that in 12 short years, all four of our daughters would be in college at the same time. Kelly would be a senior; Meghan would be a sophomore, and the twins, Colleen and Erin, would be freshmen, and that’s exactly how it turned out. Scary stuff for old-school parents who see the kids’ education as their responsibility and their priority.
I was working for a rep at the time, so I knocked on the owner’s office door that summer and asked if some day, somehow, I might be able to buy into this company and get rich like he was. He smiled and said, “Absolutely not.”
I explained about our growing daughters and our upcoming financial challenge. And then I asked what he would do if he was me.
“I’d definitely quit,” he said.
So I did. And then I went home to tell The Lovely Marianne our lives had just became that much more exciting.
“Where’s the money going to come from?” she asked.
“I’m going to write a book about steam heating,” I said.
“And how long will that take?”
“I figure about six months,” I said.
“And how will you feed us between now and then?”
“I will do some seminars,” I said. “And I will consult with people about their heating problems.”
“Well, you’d better get to it,” she said.
So I started to write “The Lost Art of Steam Heating,” which took three years instead of six months to complete. Who knew?
Oh, and people weren’t exactly lining up to hire me to do seminars in those days, so that left consulting.
“You’re not actually going to touch anything, right?” The Lovely Marianne said.
“Gosh, no,” I said. “I’m going to look, figure out what’s wrong and then write reports. The building owners can then get anyone they’d like to do the work.”
“How much are you going to charge these people?”
“I figure 50 bucks an hour,” I said.
“How did you arrive at that amount?”
“It seems like a nice number.”
“Well, get to it,” she said.
So here’s what I was thinking: A lot of people in this world are rich, cold and miserable. Many of them live in big houses right here on the Isle of Long, and they all have rich friends. Many of these houses are old and grand and they all have either steam or hot-water heat. Oh, and the steam pipes are banging. The air vents are squirting. The heat is uneven. The circulators are making a racket. The valves are in backwards. The controls aren’t doing what they’re supposed to be doing. The boilers are oversized or undersized. It’s a regular hot mess.
The friends come over to visit and they see and hear all these things going on. They ask their friend, the homeowner, why he doesn’t take care of these problems. The homeowner sighs and says he would love to, but no one understands these old systems. Everyone he called told him to have the system ripped out and replaced, and that was out of the question because it would involve tearing up the fancy old house.
And that’s where I came in.
People found me through a magazine article, or by word of mouth, and I went to see them. I listened to their tales of woe and asked myself, “What can cause that?” Then I worked my way through the checklists in my head and figured it all out. Often, it was a missing air vent. Other times, it was broken steam traps. Or it might be vacuum forming in a place where a vacuum shouldn’t be forming. And on and on.
It doesn’t take long to find the cause of the problem if you go about it in the right way. I’d spot it, explain it and write a report. And then I’d give them a bill. And since I am an honest guy, and it did not take me very long to figure out what was going on, that bill would often be for just $50 or maybe $100. I would bring this money home to The Lovely Marianne and she would smile at me.
So I’m doing this locally for about a year and having a ball. I got to poke around a lot of very snazzy houses, and this rich guy I helped would tell another rich guy, and that put the food on the table while I was writing the book.
What to charge?
One day, an attorney who practiced building management rather than law, called and asked if I could consult on a number of buildings that were having problems. I went to see a few of these buildings and the problems raised their heads and shouted at me. “Over here!” they said. It was like hydronic whack-a-mole. Easy to spot. Easy to bash. I’d dash off my report and send the attorney a bill.
But then he calls me one day and says, “Can you stop by my office? I need to talk to you about your invoices.”
And you know what that usually means, right?
So I gulped and went to see him.
“I need to talk to you about your pricing,” he said. “I love your reports and so do the board members of the buildings you’ve visited. But then I show them your bill, which is usually for about $100, and that’s a problem.”
“What’s wrong?” I asked.
“Well, as I said, they love your reports. You’re solving problems, and the speed at which you work is great, but when they see your bills they question your skills.”
“Well, Dan, you’re not asking for much. They look at these bills for a 100 bucks or 50 bucks, and then ask why I got a $50 guy for the job. Isn’t there someone better?”
“That makes no sense,” I said.
“It does if you’re rich,” he said. “These people smoke cigars that cost more than your hourly fee. Look, here’s what I need you to do. Whenever you speak to me, I want you to send me an invoice for $800.”
“Really? How are you coming up with that number?” I asked.
“Because it’s less than a professional engineer would charge, but it’s enough to get their attention and their respect. They need to feel as if they’re hiring a true expert, and true experts charge like these people charge in their own professions.”
“You serious about this?”
“You bet I am. You charge me $800 whenever you look at something and everyone will be happy.”
So that’s what I did. And having learned a great lesson about these particular rich, cold and miserable people, I began to do the same with all of them. I’d get a call. I’d listen to the complaint. Their fuel bills were higher than ever. Their pipes were banging. Some rooms were too hot and others were too cold. Their friends were asking why they didn’t do something about it. They were aggravated. They wanted solutions.
Oh, and how much do I charge?
“That will be $800,” I said.
“Wow! You must be great!”
“I’m as good as it gets. And for $800, I’m all yours.”
“You are the best!” they’d say. “When can you be here?”
And you want to know the toughest part of all this? It was saying the number. But it got much easier with practice.
So, for what it’s worth, if you know what you’re doing, I think you’re worth more than you probably think you are.
But what do you think? That’s really what matters.
This article was originally titled “For what it’s worth” in the November 2015 print edition of Plumbing & Mechanical.