referall fees; 101 :)

[Tom Servinsky]

----- Original Message -----
From: <JIMRPT@AOL.COM>
To: <pianotech@ptg.org>
Sent: Friday, August 31, 2001 1:28 AM
Subject: Re: referall fees; 101 :)


>
> In a message dated 30/08/01 7:54:14 PM, mfarrel2@tampabay.rr.com writes:
>
>
>
>
>
> <<"This sounds like a very good thing.">>
>  If by this you mean "rebuilding/rewhatevering"...it is... but there are
> drawbacks also.
> Particuarly if you run a one person shop, which I do.
>
> The first drawback is lack of contact with other people and having to
guard
> against a 'hermit' mentality! :-) I must say that pianotech helps in this
> respect..............
>
> Another drawback is a physical limit to the amount of work that can be
> produced in one year. With one person the only way you can speed up work
is
> to learn quicker ways of doing things or cut out those steps which tend to
> turn an 'adequate' rewhatever into a 'verrrry' nice job.
>
>  So short of raising prices a single person shop has limited their income
at
> a certain range level..........'if' they stay busy all year long.
>
>  In order to make something like this work well you must have the
knowledge
> and a supply of work that you yourself do not have to go out and get.
>
>  ***I have often said and still believe that one can make more money doing
> only tuning and simple repair work than running a one person shop.***
>
> <<"Reading your post, it is hard for me to make the numbers add up.">>
> Which numbers are these? I have only used your numbers as examples.
>
> <<"After adding up parts plus markup, adding up projected hours to
complete
> the
>
> project at your hourly wage that includes your labor, training,
retirement,
>
> rent, insurance, equipment, tools, and some profit, you can still add 20%
to
>
> the total (to pay the referral fee) and get the job?">>
>
>  First a "referral" fee for me would be 5%, or 500 dollars on a 10,000
dollar
> job where I got a signed contract.
>  A referral means that someone would call and give me a name/phone number
and
> I would have to......... call the people,...... go do the estimate,.....
> check my prices,..... work up a formal quote,........ do the work (IF I
got
> the job, and no one that I know of gets all their quotes as contracts) and
> supply all the needful after delivery services.
>
>  As a subcontractor I agree to a contract that someone else has gotten, do
> the work, write a check for 20% and I 'usually' never see the piano again.

Jim, technically speaking, and we might be beating the dead horse a bit much
on this thread, but if you are receiving the total check and then writing
the check to the tech for 20% you are the contractor, they are the
subcontractor.  But since the 20% is going not for work provided, other than
their contact with the customer, your 20% you have paid is a referral fee.
In fact it sounds as though you might even doing a quasai partnership with
the techs.  Not that there's anything wrong with it...it just a different
set of circumstances to follow. Even if you agree to the other tech's
contract, when someone like the customer is paying you the full amount you
are the contractor. Subcontracting is when someone else deals with the
customer, answers all the customer's concerns, writes up the contract,
follows through with the contract, recieves the total amt. of money,
disperces all the money,and most  importantly,dictates how and when the work
is going to be done, just like a building contractor. The contractor tech
goes into contract with you the subcontractor, to provide the following
services at particular price, yada, yada. You agree, sign, and are bound to
provide those agreed upon items at an agreed upon price. You do the work,
you are paid for the work, the instrument is delivered...your hands are
clean at that point. What follow it really done of the subcontractor's
business, other than if something has gone wrong with the job. It's up to
the tech, the contractor, to do all the necessary follow up work after that
point.
For those who have been following this thread it might sound like we are
splitting hairs, but classifications on how we determine what role we play
in a contract can make a huge difference in accountability, liability, and
for nothing more, a good, productive relationship with others. As many have
chimed in, there have been ample stories of working relationship gone sour,
which all in all, could have been avoided by articulating the contracts and
roles each of us play more carefully.  This is another reason why SCORE is
such a healthy source for small business. For  absolutely free, one can get
great counseling sessions on these and other type of working related tid
bits which will aid in our ability to exist in a tough, competitve,business
world.
Tom Servinsky, RPT

> Let's compare a 3,000 dollar contract first as a "referral" job and second
as
> a
> "sub-contract" job
> Referral:
> Time spent:
> 1. average 3 phone calls to make initial contact @ 3minutes per call.....9
> minutes
> 2. Talking with the customer making sure that they are in fact a customer
> (qualifying the customer) and making room for appointment to gather
estimate
> facts.................5 minutes.
> 3. traveling 20 miles one way to keep appointment.......... 40 miles @ 40
> cents a mile...plus 55 minute total drive time.
> 4. making careful estimate/evaluation checking all the needful
items.....60
> minutes
> 5. working up formal quote after checking current pricing on needful
> items........60 minutes plus 4 long distance calls @4.00???
> 5. answering questions from the customer after the formal quote is
received.
> ......10 minutes.
> 6. making arrangements for pick-up if the quote/contract is accepted...5
> minutes.
> ****Total time expended 144 minutes or 2 hours and 24 minutes plus 16
dollars
> for auto expenses plus 4.00 for phone calls
> Not bad..... but since my experience says that I get a signed contract
about
> 50% of the time on "referrals" I expend 4 hours 43 minutes plus 40 dollars
> for car and phone expense. for each signed "referral" contract.
>  While I am getting this "referral work the shop is just sitting here idly
> ticking away at the expense ticker and producing nothing. On the light
side
> let's say that my shop expense is 10 dollars an hour for a 'normal' 40
hour
> week. Considering this I need to add this to the cost of obtaining
"referral"
> work.
> So adding these up for "referral work I get........................
> 4 hours 43 minutes lost shop/labor time @ let's say 25 dollars an hour.
> 4 hours 43 minutes idle shop time @ 10 dollars an hour.
> 40 dollars direct cost for car and phone.
> Oh yes...... and 1 dollar for office supplies and stamps :-)
> Thus we have the costs of 207.07 plus 150 "referral" fee for each signed
3K
> contract..Total cost 357 dollars.
>
> Using the same figures for a "sub-contract" job
> 1. answer phone call from prime contractor 5 minutes.
> 2. answer follow up call from prime contractor 10 minutes.
> 3. make/answer coordinating call from customer 10 minutes.
> 4. make moving arrangements 10 minutes.
> total time 35 minutes (yes this 'is' typical of the time spent and
> sub-contract work has proved to be almost 100% signed for some reason)
> lost shop and labor time expense......... 20. 41.
> total cost for "sub-contracting" this 3,000 dollar job..........620.41
>  Thus we have a 357 dollar "referral" vs a 620.41 "subcontract".
>
> Homework assignment........................................
> Where is a/the cost difference/benefit here, for the rebuilder, between
> "referral work at 3,000 and a "sub-contract at 3,000?
> Jim Bryant (FL)
>