by Gary Mays | Oct 19, 2021 | Consumer Issues, Gold Coast Plumbing, Insurance, Plumbing Legislation, Plumbing Maintenance, the going rate for plumbers, the recommended rate for plumbers
Is there a going rate for plumbers to charge?
Unfortunately, the myth that there is a going rate for plumbers or recommended rate for plumbing services is one of those lovely urban myths that will never go away. Some consumers promote it to avoid paying for plumbing services after completing the work.
Even more disturbing is the fact that it is also promoted by some plumbing contractors who are:
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lacking in necessary business skills and cannot do basic accounting equations to work out the cost of running their business and provide quality service at a fair profit
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engaged in payback against other plumbing contractors to undermine their competitors by claiming they are overcharging
Every plumbing company has different costs
Every plumbing business is not the same. Every plumbing business has different cost structures, overhead, and productivity levels required to set a selling price or a break-even price.
It is illegal under the Competition and Consumer Act 2010 for businesses to collude in setting prices or for any set or recommended rates by master plumbers associations.
When many one-person plumbing businesses start, it is far too complicated to put a budget together and calculate the cost of doing business. However, they need to do it to ensure they charge a rate for their services that covers the business’s cost. Unfortunately, most of the time, these one-person plumbing businesses decide to set the going rate for plumbers and be done with it.
So how do these one-person businesses determine the going rate for plumbers?
Very simply, they ring around all their competitors, pretending to be a prospective customer and find out what they are charging for their services. As no professional plumber can give a price over the phone, they tend to only get prices from like-minded one-person businesses promoting a whole undercutting philosophy based on some mythical hourly rate which then becomes the fictitious going rate.
The myth of a going rate is self-perpetuating by plumbers
To see how this whole myth of the going rate for plumbers becomes self-perpetuating, consider the following scenario, which is exactly what happens all the time.
Consider the scenario where Trevor bought a van, got a new mobile phone, used the tools supplied by his former employer, and opened up “Trevors Plumbing Service.” Trevor knew his old employer, “Gold Coast Plumbing”, was charging $130 per hour, but he knew that his former boss had lots of equipment and paid his employees above the award wages, so he decided to charge only $80 an hour.
A couple of weeks later, Jason, who does not like Trevor, hears that Trevor has opened up his plumbing business. He figures he’s much more intelligent than Trevor, plus he’s sure he’s faster and quicker at plumbing work than Trevor, so he decides to buy a ute, too and open up “Speedy Plumbing.” Jason gets his girlfriend to phone Trevor pretending to be a customer, to find out his charges. Again, Jason does not like Trevor, so he figured he could knock him out of business by charging $20 less and getting all his business. So “Speedy Plumbing” is now in business charging $60 per hour.
Plumbers start undercutting based on the mythical going rate
Meanwhile, Stephen had opened up “Super Coastwide Plumbing” a year earlier and had just had a builder who supplied him with 90% of his work tell him that he would be using another plumber to do his work in the future. This is despite Stephen providing excellent service but at $100 per hour was way above the going rate for plumbers. Stephen panicked on hearing this and decided to call around his competitors to see the going rate for plumbers. Stephen discovered that it ranged from $40 to $160 per hour. Stephen decided that to keep his business going, he needed to match the going rate for plumbers and, based on where most of his competitors were, opted to drop his rate to $65 per hour to be under the rate charged by “Trevors Plumbing Service” who appeared to pick up lots of work.
Meanwhile, over at “Gold Coast Plumbing”, the owners are having a meeting. “We aren’t making enough money to cover our costs!” They say. “Well, we can’t increase our rates because we’re already one of the highest in town — $70 higher than some after ringing around to find out the going rate for plumbers is.” The owners are frustrated because they’re gradually watching their business go down, a company that’s been in their family for three generations.
The going rate for plumbers myth destroys businesses and families
What happens next is textbook accurate and repeatedly occurs in the plumbing industry causing unemployment, financial hardship and family breakups.
“Gold Coast Plumbing” started cutting corners by using cheaper materials, cancelling insurance cover, not replacing old equipment, not replacing old utes and vans, charging clients for hours that were not worked, and using labourers and apprentices instead of qualified plumbers. As a result, their plumbers become disillusioned and start looking for jobs elsewhere. This forces “Gold Coast Plumbing” to use more labourers and apprentices to undertake the work that requires licensed and experienced plumbers.
Over at “Speedy Plumbing”, Jason is struggling to cope with all the work but cannot hire any licensed plumbers because he’s discovered he can’t afford to pay them plus buy more utes and equipment because his rates are too cheap and don’t cover the costs of running the business.
Trevor over at “Trevors Plumbing Service” is still working by himself, so he does not need a lot of work to keep him busy plus, the customers that hired him because he was the lowest price have left him and gone to “Speedy Plumbing”. Trevor is not concerned as he’s making more money than he did when he was an employee at ‘Gold Coast Plumbing” plus, he’s his own boss and doesn’t have to answer to anybody. However, Trevor has discovered that he’s got to cut corners to make sure he can pay the bills. He does not renew his QBCC licenses or take out public liability insurance. Trevor adopts a policy of never returning calls to customers who complain and starts using inferior quality materials.
Meanwhile, Stephen at “Super Coastwide Plumbing” struggled to pay bills since dropping his prices to the going rate for plumbers, with the losers being his family. Stephen’s wife is forced to return to her old job, supporting “the business” until it gets back on its feet. Even worse, cutting corners meant customers were not getting compliant plumbing work undertaken, with failures being the norm. Finally, employees started getting reduced or no training, with wages failing to be paid on time as there was never enough money.
No one ever wins in setting up a business based on the going rate for plumbers
Every successful plumbing business knows the starting point always is learning what it costs to run their business and setting charge-out rates that ensure they can make a profit for the long term, which is specific to their circumstances and business model.
No one ever wins in setting up a business based on the going rate for plumbers or recommended rate because they are a myth. The only guarantee is that the company will close, leaving employees, suppliers and customers all out of pocket and worse off for the experience in myriad ways.
Sadly, I repeatedly witness these “fictitious” scenarios on the Gold Coast amongst plumbing companies. There are no winners when you don’t operate a business to make a profit after covering every single one of your costs.
by Gary Mays | Dec 30, 2020 | Consumer Issues, Emergency Plumber, Gold Coast plumbers, plumbers call-out charge, plumbers call-out fee, the going rate for plumbers, the recommended rate for plumbers
What is a plumbers call-out fee?
A plumbers call-out fee is a set amount charged by a plumbing business to come to your home or business.
The call-out fee covers all of the costs incurred for the time it takes to arrive. In addition, the call-out fee covers employee costs, vehicle costs and business overhead costs.
Generally, for those businesses that charge call-out fees, the call-out fee only allows for arriving at your home or business. It does not allow for any investigation work of your plumbing problem.
What is a plumbing diagnostic evaluation fee?
Here at Whywait Plumbing, we do not merely charge a plumbers call-out fee to arrive at your home or business.
Since 1999 we have charged on every job we are called out to diagnostic evaluation fee. We require this fee to be paid by credit card when you book your appointment with us.
When you call us, we guarantee that we inform you of our initial upfront fault finding/investigation diagnostic evaluation fee and what that fee is.
Once you are happy to accept our diagnostic pricing, we’ll secure your booking by providing your credit card to cover the initial fault-finding/investigation diagnostic evaluation fee.
What is the difference between a call-out fee & a diagnostic evaluation fee?
Plumbing companies that charge a call-out fee use it to cover the journey for a plumber to arrive at your home or business.
Plumbing companies that charge a diagnostic evaluation fee cover the initial journey cost plus the cost to inspect your plumbing problems, diagnose the cause, and provide fully costed solutions.
Some plumbing companies heavily advertise that they have a no call-out fee. It may sound suitable for budget-minded potential customers, but…..I guarantee you will end up paying the plumbers call-out fee anyway.
Remember, if something is FREE, it has no value to the plumbing business offering it or to the customer receiving it. No call-0ut fee plumbing businesses transfer the costs of getting to the job in their other costs plus a margin, so either way, you pay.
The perception that advertising a no-call out fee creates is that you are getting something for free, as it will be cheaper. Perception is never reality, as no business can work for free.
Think about it, would you go to work for free?
What you should you ask about a plumbers call-out fee?
Always ask on the phone what their call-out fee is and what it includes. For example, many plumbing businesses have a call-out fee and an additional minimum charge for their time.
Clear communication is paramount to avoiding disputes. Determine precisely what the plumber will charge you to arrive at your home or business and investigate what work is required.
Always ask on the phone what is their call-out fee and what does it include. Many plumbing businesses not only have a call-out fee but an additional minimum charge for their time.
Clear communication is paramount to avoiding disputes. Be very clear in your own mind exactly what the plumber will charge you to arrive at your home or business and investigate what work is required.
Why do call-out fees vary so much?
Contrary to popular urban myths, there is no such thing as a fixed rate, recommended rate, or the going rate for a plumbers call-out fee.
Every plumbing business is not the same. Every plumbing business has different employee costs, overhead, and productivity levels required to set a call-out or diagnostic evaluation fee.
It is illegal under the Competition and Consumer Act 2010 for businesses to collude in setting prices. The Act aims to give all businesses a fair and competitive operating environment. It covers anti-competitive conduct, price-fixing, unconscionable conduct and numerous other issues, such as advertising. The Act also sets out consumers’ rights and responsibilities.
It is also illegal under the Act for there to be any set or recommended rates by master plumbers associations.
Other factors influencing call-out fees are the type of service required, the time of day, and which day. For example, significant variances will occur if you need plumbing service at night, on weekends or public holidays.
So how much should a plumbers call-out fee be?
The reality is that asking how much a plumbers call-out fee should be is akin to asking how long a piece of string is.
Remember, there are no recommended call-out fee rates, as every business has to determine what they charge.
As a rough guide, in my experience, a plumbers call-out fee during normal weekday working hours will vary from $0 to $150 to arrive on the job. However, for an emergency plumbing call-out, the costs increase dramatically, and you can expect to pay between $150 and $500.
I can only reiterate that you need to be clear about precisely what the plumber will charge you to arrive at your home or business and investigate what work is required.
Rights and responsibilities
Both the plumber and the customer have rights and responsibilities. Sadly there is a culture of mutual distrust between customers and plumbers, each being wary of being ripped off by the other.
Here at Whywait Plumbing, we aim to be always upfront with our pricing starting with our initial plumbers call-out fee or diagnostic fee. So when we ask you to pay that diagnostic fee upfront by credit card, we are both committing from the beginning.
We guarantee and disclose our diagnostic fee up front and provide an upfront fixed price guarantee for all residential and domestic clients. As a result, there is no game-playing, our clients are always informed of costs upfront, and there are never any hidden costs or nasty surprises.
by Gary Mays | Jul 5, 2019 | Consumer Issues, Emergency Plumber, emergency plumber Gold Coast, Gold Coast Plumbing, plumbers call-out charge, Plumbers Gold Coast, Plumbing Emergencies, Plumbing Maintenance, the going rate for plumbers, the recommended rate for plumbers, Whywait Plumbing
Be honest – would you work for free?
More and more Gold Coast plumbing businesses are advertising that they have no call-out fee or a $0 call-out fee.
This creates a perception that you are getting something for free as it will be cheaper. Of course, perception is never reality, as no business can work for free. Let’s face it would you go to work for free?
Call Out fees help ensure all costs are transparent
Legitimate, professional plumbing businesses charge a call-out fee because it costs $50 – $150 to arrive at your door.
A call-out fee is there to cover the expense of reaching your home or business. This is because employees are still paid for driving to your home, plus there is the running cost of the vehicle and all the other costs that never stop in running a business.
Simply the call-out fee helps cover costs, it’s not a profit centre, nor could any plumber live off a call-out fee.
If a plumber is not charging you a call-out fee, they will charge you the cost of travelling to your home or business elsewhere.
A no-call out fee is purely a marketing ploy
Advertising a $0 call-out fee or no call-out fee is purely playing with words.
A no-call-out fee is a marketing tactic to get you to call them to come to your job. Plumbers that use this tactic know that you are unlikely to send them away once they are at your home because you want the plumbing work completed.
There are four separate tasks involved in undertaking a plumbing repair:
· coming to your home
· inspecting the reported plumbing problem
· diagnosing the possible multitude of possibilities for what is causing the problem
· undertaking the repair
There is no such thing as a free lunch
Splitting costs into the above cost centres is sensible and transparent because every expense must be paid.
There is no cost advantage to you if you pay no call-out fee but are then charged $155.00 to inspect the blocked toilet that you already knew was blocked and then be informed the cost to unblock the drain is $660! It’s semantics and word games to get you to call them because you saw the word FREE.
Remember, if something is FREE, it has no value to the business offering it or the consumer receiving it.
Two old sayings apply when considering using a plumbing company that advertises no call-out fee:
· there is no such thing as a free lunch
· you get what you pay for
At Whywait Plumbing, we charge a call-out or diagnostic fee and provide an upfront fixed-price guarantee for all residential and domestic clients. As a result, there is no game-playing, our clients are always informed of costs upfront, and there are no hidden costs or nasty surprises.
by Gary Mays | Oct 25, 2017 | apprentice plumber, Gold Coast Plumbing, Plumber Brisbane, Plumbers, Plumbers Gold Coast, Plumbing Legislation, Queensland Government, the going rate for plumbers
Sadly employing an apprentice plumber has become an expensive luxury for many small plumbing companies throughout Australia. This is due to the complexities of the Fair Work Act, to their high wages and the length of time away from work on holidays and at TAFE training.
This has been further exasperated by the explosion in sub-contracting with 65% of all plumbing businesses being a one-person operation who employ no staff at all.
As an industry, if we don’t train for the future, then we have no future. This is why we at Whywait Plumbing have always made it a policy to employ and train at least three apprentices at any given time. Even throughout the GFC in 2008-10, we maintained employment and training for four apprentices.
If you go to university, you don’t get paid and incur a hex debt that you eventually payback for your study. However, if you become an apprentice plumber, your employer pays you for the entire four years of your training, every week, with annual increases.
Currently, the archaic document that purports to be a ‘Modern Award’, the Plumbers and Fire Sprinklers Award 2010 requires a first-year apprentice plumber who has completed year 12 to be paid $13.18 per hour. If the apprentice plumber is aged over 20, he starts on $19.07 an hour. Compare this with how much you will get paid to attend university in the first and subsequent years.
Apprenticeship numbers have been declining for the last 20 years. Much of the reason for this is due to decisions 20 years ago to focus everyone at high school on obtaining a university education. This has lead to many young people graduating with degrees and then being unable to gain employment in their chosen field of study.
The importance of well-trained plumbers to society as a whole cannot be underestimated. Plumbing as a trade will continue to exist and ensures young people taking up apprenticeships will always have a good job and a good future.
Interestingly apprenticeship completions at 64% is almost on par with university graduations of 67%. In plumbing, 80% of those who never finish their apprenticeship drop out in the first two years.
This decline in numbers of plumbers as a whole available to be employed has been brought home to us in recent months. We have been advertising for two licensed plumbers at that time, and these are fulltime jobs, not casual or sub-contract. It’s been alarming at how few plumbers applied for the job. Interviewing potential employees has been an intriguing and challenging exercise.
Dillon Lowes installing new sewer pipes at Niecon Plaza
We have employed two new employees in the last month as an apprentice plumber and welcome to Whywait Plumbing, Scott Moir and Dillon Lowes.
Unlike many of our competitors, we don’t employ sub-contractors, so everyone who works at Whywait Plumbing is a full-time employee. That means everyone working here is paid for six weeks of annual and personal leave plus two weeks of statutory holidays. Sub-contractors don’t receive those benefits plus they have to pay their own superannuation and work cover.
The combination of a reduction in plumbing businesses employing an apprentice plumber and the numbers of plumbers retiring means there is a shortfall of 13% between the number of plumbers available and the demand for plumbers.
All of these issues are increasing the cost of employing plumbers. This, in turn, increases the cost for plumbing businesses to undertake work across the board in both construction and maintenance. Ultimately it’s always a balancing act between supply and demand.
