service fee

[Dave A]

Where does the escalation train end?

Charging based on what the rest of the supposed peer group charges will inevitably lead to bubbles & incredible distortions. Charging based on a fair, honest profit, could possibly lead to a very different paradigm.

I'm a strong supporter that people should charge the rates they want without being a slave to what others are charging around them. However, very few people have really thought their pricing strategy through and matched it with their medium and long term goals - if they even have medium and long term goals.

Charging at rates that simply puts bread on the table at the end of the day and nothing more isn't exactly advancing your future prospects much.

[desA]

How would/could price-control legislation affect charge-out rates?

[wynn]

I had a clear example of market distortions in comparing the price of a certain component in SA & SE Asia. The SA price was 2.4 to 2.8 times that of the identical component in SE Asia.

One of the reasons for higher prices in SA is tax.
EG. most models of SA vehicles also available overseas are half the price.

Perhaps your components are also under that catergory.

[desA]

^ Could be, wynn.

Question is though, why tax something to the hilt that is not even manufactured in SA?

I am beginning to see why SA is on a hiding-to-nothing in the international marketplace. At this rate, no-one in their right mind, will manufacture stuff in SA. It will be manufactured off-shore & the easiest way found to bring in the parts/sub-assemblies for local consumption.

The ones who are getting reamed are the customers - with the net result being declining job numbers as the 'old industries' go out of business. All a bit daft, in my view.

The same perceptions seem to have invaded the 'fair value' thought processes. In the end, the local market becomes an incredibly-distorted bubble, which just has to burst at some point. People need jobs - jobs are created by industries either supplying local demand, or for export. The tax mechanism puts effective brakes on most new export-based developments, I'll wager. To encourage local industry to develop in the medium-to long-term, the taxes need to be lowered, not raised.

[murdock]

dave you starting to sound like my bank manager who told me i wouldnt last 5 years because i had no goals or bussiness plan...just got out there and did it

it took me 10 years in bussines to come up with my company logo...so i am a slow starter...my next to goal is to come up with a bussiness plan and sit and decide where i want to be in the next 5 years....i just hope it doesnt take me 5 years to do it

[Dave A]

How would/could price-control legislation affect charge-out rates?

It is my experience that any form of price control at any stage through the value add chain reduces productivity and effectiveness, with all the knock-on consequences of that. It also increases customer price sensitivity because there is too much focus on displayed price in the industry and not enough focus on value for money and value propositions.

my next to goal is to come up with a bussiness plan and sit and decide where i want to be in the next 5 years....

There's a long weekend ahead - set a goal to have something on paper by Monday night

It doesn't have to be fancy or complicated - just some thoughts commited to paper.

[murdock]

Are those rates better ?

they are bcause i only charge time and a half instead of double time...but then i make it up on the speed that i work...because i would sit and chat to the customer while his wife brings coffee bicuits etc and him thinking he is getting a good deal dosent even realise how he is getting screwed with a smile.

[SilverNodashi]

This is a tough subject, especially for start-up's and slammer companies (generally one-man-band type companies) We make a clear point of our costs, upfront before doing any work for a client. And most of the times we even require a 50% deposit, depending on the nature of the work to be done.

But, to accommodate smaller clients I have decided that the first hour's labor is included in the callout fee, within a 10KM radius from our office. This brings in less money, per job, but more clients so it does pay off

[desA]

^ That is smart. Give a little more, get a lot more.