value-engineering: service calls

Discussion in 'Landscape Lighting' started by Mike M, Jul 10, 2008.

  1. Mike M

    Mike M LawnSite Bronze Member
    from usa
    Posts: 1,941

    Here's a thought: led's can make us more money on service calls.

    Fixtures will still need to be routinely inspected, cleaned, re-positioned, re-aimed, etc. Save time and resources by not replacing a bunch of bulbs. Charge the same for the first hour, and be out quicker. That, while also being able to charge them significantly less on the total bill because of the savings on parts and bulbs.

    (just thinking out loud, looking to the future)
     
  2. David Gretzmier

    David Gretzmier LawnSite Gold Member
    Posts: 3,645

    Our rebulb service is 10% of installed price of system. I think it will be a hard sell to convince folks to pay much if all you are doing is labor. Folks need to feel you are bringing something to the party other than yourself. and realistically, labor wise, you will not be able to charge much more than 100 bucks for that call if you are there an hour or less. whereas in that same hour if you install 20 bulbs and do all the aiming and cleaning you mention, people gladly pay 400-500.

    Mark my words, although I Love LED's, and they will eventually be common in Landscape lighting, they will absolutely kill the value of your business when it comes time to sell it. a landscape lighting business that has 100-200k per year in rebulbs has tremendous selling value. an LED installing firm with 10k in "aiming/cleaning service" has very little selling value. but such is progress.
     
  3. Chris J

    Chris J LawnSite Silver Member
    Posts: 2,830

    With all due respect David, it only takes about 10 more seconds per fixture to include a lamp change when servicing a luminare. I don't see how you can justify another $300-$400 for these extra few minutes. I think it will be all in how you approach it, and how you explain it to the client, that will make the difference in convincing the homeowner to purchase the service agreement at a reasonable price. If your having trouble realizing the value of this service yourself, then it will certainly be hard to sell the client on it.
    Just my .02 cents.
     
  4. NightScenes

    NightScenes LawnSite Silver Member
    Posts: 2,207

    Chris, I think what David is trying to say is that if you can sell the client 20 lamps at $15 each, that's $300 plus $100 in labor. The labor stays the same but the material mark-up means that the overall profit is higher and revenues increase. Now we only do a complete relamp every other year once our maintenance plan begins so that's a whole other issue. I don't know why you would even consider doing a relamp every year.
     
  5. Chris J

    Chris J LawnSite Silver Member
    Posts: 2,830

    I look at it like this: I offer the service contract as an added benefit for my client, and not so much as a revenue builder. Even though service contracts are an excellent way to provide cash flow on an even and consistent basis, I would make a whole lot more if I simply charged per visit. I provide service contracts as a way to stay in contact with the homeowner and help them protect their investment. If I were to lose the benefits of relamping, I would simply charge more for the service itself in order to maintain a reasonable profit. The customer has the choice, but if I explain it correctly the customer will benefit by having the service agreement even if I have to raise the charge for it.
    As far as relamping annually, that is a contractor choice. Not all lamps have 4k, or 10k life. The long life 3156 lamps, for example, only have a 2k life span and are "theoretically" not designed to last two years. As far as MR16s, I would rather use the 4000 hr lamps and change them annually, than use the longer life lamps (at triple the cost). If I lived in a different region, I would probably consider using the LLs, but you should see what an MR16 reflector looks like after a year in this humidity.
    There are several different ways to approach a service plan, but the one I have been using for the last 8 years seems to be working well. Like the old saying goes, if it aint broke don't fix it.
     
  6. NightScenes

    NightScenes LawnSite Silver Member
    Posts: 2,207

    I agree Chris, I don't even use those so called long life lamps. I seem to get longer life from the 4000 hour lamps than the 10,000 hour.

    I guess it's all relative to how you perceive your business model that counts.
     
  7. Lite4

    Lite4 LawnSite Gold Member
    Posts: 3,112

    In our area, in the middle of summer our nights are the shortest at around 8 hours or so. In the winter it is dark from 5 - 8, nearly 14 hours. So if I average 11 hours of light on every night that is just a little over 4000 hours on those bulbs. I usually start seeing them go between 10 - 15 months. I had been using what was installed originally, Ushios, but have since been usuing only the GEs for my 16s and 11s. My customers tell me that the light looks so much brighter again after I relamp. So I have to believe there is some degradation of the reflector after a years time.
    I usually have been charging time plus material on my annual service calls. I do relamp annually and my customers DO see the value in that, rather than waiting for onesy twoseys to replace. My costs do seem to be hovering around the 7-10% range of initial install, depending on how much time I spend removing hard water stains from the fixture bodies and lenses.
     
  8. The Lighting Geek

    The Lighting Geek LawnSite Senior Member
    Posts: 875

    I change the lamps annually for the same reasons TIm said. The bulb still works but the reflector is sometimes almost clear after 12 months or so. I usually moving or adjusting fixtures as well as making contact with customer as Chris pointed out. I think you can increase the amount of referrals by keeping in touch with the customer. It is the service that most people comment about to me. It seems like my systems are the only item around the home that has a maintenance program and the customer really appreciate it.
     
  9. NightScenes

    NightScenes LawnSite Silver Member
    Posts: 2,207

    The thing that David is saying and I agree with is that when selling the business, which I'm sure all of us will want to do at some point, it will look much better to a potential purchaser if you have X number of dollars receivable annually in maintenance. This is income that the new owner can depend on without advertising and they will only have to work on getting new business. The more you can show, the better your business looks.

    Another thing that David was saying is that people don't like to pay very much for labor. If you don't believe that, try breaking down your proposal to separate materials from labor and see if they don't try to talk you down on your labor price. People will however pay for materials so you charge less for labor and more for materials and make as much or more in net profit.
     
  10. Chris J

    Chris J LawnSite Silver Member
    Posts: 2,830

    All of you guys have created profitable businesses, so I don't believe there is a wrong way to approach this as long as your approach is sell-able. I just don't agree with the concept that you have to provide "materials" in order to charge for your service. If that were the case, Doctors would not exist nor would attorneys or CPAs. The bottom line is that it is all about the way you look at it and respect your time and experience. Regardless if lamp changes are involved or not, the customer just wants their lighting system to look great every day. Either they pay what you need to receive for service contracts, or they "pay as they go". The latter, in my business model anyway, is more expensive for the client because I can not put it on a routine schedule. Because of the increasing cost of fuel and materials, I'm getting ready to increase my maintenance charges by as much as 50%. You may think this is alot, but I haven't had an increase in 8 years, and overhead is eating my lunch for the responsive service that we provide. Just today I drove 80 miles round trip to replace a $2.00 lamp for free! But that is the kind of service I provide, and that is what separates me from my competition.
    I'll give it 6 months to a year, and I'll let you know if revenues go up or down. I'm betting anyone $100 they will go up, and the customers will be as happy as ever with our service.
     

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