Maintenance shop wants to add markup on the work of prop / engine shop! Is this normal?

[Bell206]

So far, we didn't sign anything.

Based on this estimate, I authorized them to remove the engine and to crate it.

Gg:
Unfortunately, I think you're a bit late in the whole process to keep the high ground after you verbally OK'd the engine removal based on a verbal estimate. Now there is a complex situation with 3rd parties involved and the shop, for whatever reasons, is covering their financial liabilities as the project gets deeper. Without a written version of the estimate to guide the specifics I'm afraid you're at a disadvantage. Before it bleeds more, I would recommend a work stoppage, regroup, and get things as they stand today in writing from all parties you plan to send a dollar to.

 

[UngaWunga]

I dont think it was a reasonable expectation to just repair a 17 year old engine. It is not uncommon for a couple of thousand extra in work to show up after an engine is disassembled. It is probably the principal financial risk to doing a field overhaul rather than shipping a 'running when removed' engine to Lycoming or Conti.

True, but he should be able to get an explanation to the costs.

 

[German guy]

True, but he should be able to get an explanation to the costs.

This is exactly what I am complaining about - costs almost doubled, but no reasonable explanation. AFTER they had ripped the plane and the engine apart.

 

[Tom-D]

AFTER they had ripped the plane and the engine apart.

You never know what it in any engine until you tear it down.
I just finished an estimate for a prop strike tear down on a 0-300 If the crank is re-grindable it is a $710,00 charge to re grind and polish.
If not it's $8763.66 for a new one.
If the cam is good to regrind it's $190.00
If not it's 2098.18 for a new one.

Things change a lot went the micrometer is applied.

Like I've said many times, every engine is a Pandora's box.

 

[Salty]

Taking my engine hostage and charging me for the privilege is bs I wouldn't stand for.

 

[GRG55]

This is exactly what I am complaining about - costs almost doubled, but no reasonable explanation. AFTER they had ripped the plane and the engine apart.

That seems quite a different issue from the problem described by the thread title.

 

[German guy]

That seems quite a different issue from the problem described by the thread title.

Sorry for the confusion, I tried to keep the initial post brief and focus on what I thought is the main issue. Thinking about it, the unexplained jump of the repair cost and that they now hold the engine and the aircraft hostage is however the real issue. Only because of the much higher than expected repair costs, we though about going for a full overhaul, as this at least adds some value to the aircraft.

 

[iflyvfr]

Oliver, sorry to hear your new Mooney is giving you grief. Maybe it's time to call these guys? https://www.savvyaviation.com/savvyaviation-home/savvy-services/
I'm sure you've heard of Mike Busch. I cannot imagine not having the say-so on which engine shop overhauls my engine.

 

[Omalley1537]

The markup on others’s work is standard business practice. The part that concerns me is where they are marking up the work but still (a) making you deal with the outside company and (b) saying that in the event you have an issue you’ll have to deal with the company. The only reason anyone would be willing to pay said markup is for the convenience of having the primary shop deal with it for them.

The other deal breaker for me would be them insisting on which shops I use. BS. If I’m dropping 30+ on an OH, you better believe I’m going where I want to go. That’s certainly not to say that I wouldn’t listen to the primary shop’s input from experience etc. But I’ll be darned if you’ll tell me “you have to go here...”

 

[GlennAB1]

But you gotta have your A&P's buy off on the engine...

 

[Salty]

No. You have to have AN A&P signoff. That A&P has no right to do work on your plane you don’t approve of.

 

[Omalley1537]

But you gotta have your A&P's buy off on the engine...

I see your point if I have “Billy Bob’s Discount Overhauls” do the engine. But he mentioned Zephyr. That’s a recognized shop in the industry based upon what I’ve seen/read. There should be no reason for the A&P to refuse signing that I can see. Personally I’d be finding a new shop if I were the OP. Sounds like they are putting their kids through Harvard...

 

[GlennAB1]

There should be no reason for the A&P to refuse signing that I can see.

Well, only he can make that decision.

 

[German guy]

Thank you very much for all your responses, they were certainly most helpful.
I sent on Sunday an e-mail, requesting the shop to invoice us for the work they have already done, so that we have a clear cut.

Monday we had another call, to which they came much better prepared and with a more open attitude. It turned out that the engine overhaul would include a brand new crankcase (Zephyr assumed a used one) and that they had $3,000 for crating, shipping, handling, profit and the handling of future warranty claims baked it. The overhaul itself was almost exactly $30,000. Considering the new crankcase, but otherwise identical contents compared to Zephyr (minus the one way shipping which was included in the Zephyr price), the quote now made much more sense and was pretty much on the same level as Zephyr, who quoted $27,900 with a used crankcase.

Our maintenance shop was also willing to lower their markup to $2,000, the total now comes to $32,000 plus the costs for the for removal and installation of the engine. The overhaul is done by a pretty reputable engine shop for which I found quite a few recommendations on PoA and in the Mooney forum. It comes with a 2 year warranty.

Please understand that I don't want to mention any names, as I still find the tone, the poor preparation and in-transparency of our shop's past communication unacceptable. I therefore feel that I neither have to warn other pilots, nor do I at this point want to promote them.

I am glad, though, that things worked out OK. I received earlier today a formal quote, based on which I already placed an order.

Oliver

 

[PaulS]

Glad it worked out Oliver. Now I hope they deliver.

 

[Ravioli]

All in all, a good discussion with some lessons for the plane owner and the shop owner.

Now get that thing back in the air, schnell!

 

[Isosceles]

could not help it...

1st Bob: So you physically take the specs from the customer?

Tom: Well... No. My secretary does that... or they're faxed.

2nd Bob: So then you must physically bring them to the software people?

Tom: Well... No. ah sometimes.

1st Bob: What would you say you do here?

Tom: Look I already told you, I deal with the @#$% customers so the engineers don't have to. I have people skills! I am good at dealing with people, can't you understand that? WHAT THE HELL IS WRONG WITH YOU PEOPLE?!

 

[SkyDog58]

Sounds like comparing apples to apples is a better idea than comparing apples to oranges.

 

[UngaWunga]

Funny how actually communicating solves problems. Good to hear.

 

[blueskyMD]

what the shop doing to you is totally unfair and there is no way to justify this. I am pretty sure they will be able to keep their lights on without the 20% markup on engine but this is just simply greed. I am always OK with markup on the parts but markup on services done by others is unheard of. But your situation is messy and there at no good options. sorry

 

[Paulie]

what the shop doing to you is totally unfair and there is no way to justify this. I am pretty sure they will be able to keep their lights on without the 20% markup on engine but this is just simply greed. I am always OK with markup on the parts but markup on services done by others is unheard of. But your situation is messy and there at no good options. sorry

No markup on services done by others? It's done by many different businesses. What about magneto overhauls, the engine shop probably sends them out, so that's a third hand outsource. Fuel servo overhaul? How many engine shops do you think are willing to buy the equipment to do that? Radio repairs? Do you realize how many specialized shops there are in the aircraft industry?

 

[Kelvin]

Math is hard...

what the shop doing to you is totally unfair and there is no way to justify this. I am pretty sure they will be able to keep their lights on without the 20% markup on engine but this is just simply greed. I am always OK with markup on the parts but markup on services done by others is unheard of. But your situation is messy and there at no good options. sorry

Monday we had another call, to which they came much better prepared and with a more open attitude. It turned out that the engine overhaul would include a brand new crankcase (Zephyr assumed a used one) and that they had $3,000 for crating, shipping, handling, profit and the handling of future warranty claims baked it. The overhaul itself was almost exactly $30,000. Considering the new crankcase, but otherwise identical contents compared to Zephyr (minus the one way shipping which was included in the Zephyr price), the quote now made much more sense and was pretty much on the same level as Zephyr, who quoted $27,900 with a used crankcase.

Our maintenance shop was also willing to lower their markup to $2,000, the total now comes to $32,000 plus the costs for the for removal and installation of the engine. The overhaul is done by a pretty reputable engine shop for which I found quite a few recommendations on PoA and in the Mooney forum. It comes with a 2 year warranty.

Oliver

 

[Paintyourplane.com]

Our maintenance shop, which we have been using for the first time, was supposed to do the annual inspection on our Mooney.
They found that the crankcase of our angle valve Lycoming IO360 has two big cracks and that the prop needs to be re-sealed.

It turned out that they insist on handling the repair / overhaul of the prop as well as the engine and that they will be adding a profit margin of around 10 - 20% on the invoices of both, the prop and the engine repair shops. I addition, they will still charge us for their labor and the materials they'll be using.

Is this a common practice or a rip-off? Local friends believe they are trying to take advantage of us and so do I.

What do you think?

Oliver

Edit, for clarification: Removal, crating and installation of the engine and prop are NOT included in the markup. We still have to pay for all of this separately. Zephyr quoted $27,900, while our shop wants $33,000 (they are using a different engine shop) for an overhaul with the same contents. The only thing that is out of the ordinary is, that we will need a new crankcase, what is also included in the Zephyr quote.

Removal, crating and re-installation of the prop and engine will cost us at least another $3,000, based on what I was told (also for this, no written quote).

As a shop owner, we incur cost in many ways while servicing your plane. Even while the parts are off to third-party vendors, we are still storing your plane, covering it by insurance, and it is taking up space in our shop. we do incur admin cost, shipping and labor cost. Material cost for crating. Now we use a sliding scale on the total amount too. There may be a 200% markup on a bolt but an 8% markup on a $10,000 part.

 

[coloradobluesky]

It costs money to order and receive parts. Frequently, getting the RIGHT part is the hardest task of the job. Same with shipping out a unit for repair and getting it back. Shop needs to be compensated somehow.

 

[Paulie]

Jeez, it kills me how guys think nothing of spending $6k to get their Porsche tuned up but scream when a mechanic tries to make a living. There's a guy on my field that wants me to sign off a engine he's building. For free. It's just a signature no effort he says. Fat chance. Meanwhile he spent $50k on cars last month.

 

[Isosceles]

Aviation mechanics have to be poor. It's the only way to overcome the liability. They won't sue if you got nothing to lose

 

[Derek Zeanah]

I think a lot of folks are looking at this from too close, and are lacking perspective here.

My mechanic gives me the option of buying parts myself or letting him do it. If he does it he charges a mark-up, as you'd expect. This is fair - if it's the wrong part, he makes it right or eats it. If the part fails, he deals with sending it back to the manufacturer and gets a replacement part on his dime. If I buy the part, that's all on me. That's enough that I prefer to have him buy the parts most of the time, and the additional 20% is worth it to me.

Now, with an engine as the OP indicated, this gets different. Suddenly the OP is on the hook for buying a $30,000 engine that the local mechanic wants (presumably) $6,000 for sending to the engine shop, receiving it, and installing it. Issues with the new engine are to be handled by the airplane owner, period. The owner can't use the shop of his choice that quoted a lower cost for reasons that aren't explained. That $6,000 as originally discussed wasn't the cost to remove, package, ship, reinstall, and test - that was an additional cost.

I think it's fair to ask your mechanic "what service are you providing for this four-figure sum you're asking to be paid?" In the OP's description, as originally indicated, the answer was "not just nothing, but less than nothing, because we are forcing you to use an engine shop whose reputation you don't respect, that costs more than a name-brand shop you would normally choose."

That ain't right.

Yes, mechanics should charge a mark-up in most cases - it's good business, and they need to be compensated for fronting the money for the purchase and dealing with any issues that pop up.

But if I want to buy a new $40,000 engine from CMI and ship mine back as a core, is that a reason for a mechanic to bill me $8,000 in addition to the cost to remove/ship/install the old/new engine? I think it's reasonable to say "no, I don't see how this is a fair charge, because you're not doing anything in this transaction other than forcing yourself to be an unnecessary middle-man."

It's a fair perspective to have. And it's not an anti-mechanic perspective. Most of us expect some sort of value in return for the money we pay. I see no value in the scenario as originally presented.

 

[PaulS]

I think a lot of folks are looking at this from too close, and are lacking perspective here.

My mechanic gives me the option of buying parts myself or letting him do it. If he does it he charges a mark-up, as you'd expect. This is fair - if it's the wrong part, he makes it right or eats it. If the part fails, he deals with sending it back to the manufacturer and gets a replacement part on his dime. If I buy the part, that's all on me. That's enough that I prefer to have him buy the parts most of the time, and the additional 20% is worth it to me.

Now, with an engine as the OP indicated, this gets different. Suddenly the OP is on the hook for buying a $30,000 engine that the local mechanic wants (presumably) $6,000 for sending to the engine shop, receiving it, and installing it. Issues with the new engine are to be handled by the airplane owner, period. The owner can't use the shop of his choice that quoted a lower cost for reasons that aren't explained. That $6,000 as originally discussed wasn't the cost to remove, package, ship, reinstall, and test - that was an additional cost.

I think it's fair to ask your mechanic "what service are you providing for this four-figure sum you're asking to be paid?" In the OP's description, as originally indicated, the answer was "not just nothing, but less than nothing, because we are forcing you to use an engine shop whose reputation you don't respect, that costs more than a name-brand shop you would normally choose."

That ain't right.

Yes, mechanics should charge a mark-up in most cases - it's good business, and they need to be compensated for fronting the money for the purchase and dealing with any issues that pop up.

But if I want to buy a new $40,000 engine from CMI and ship mine back as a core, is that a reason for a mechanic to bill me $8,000 in addition to the cost to remove/ship/install the old/new engine? I think it's reasonable to say "no, I don't see how this is a fair charge, because you're not doing anything in this transaction other than forcing yourself to be an unnecessary middle-man."

It's a fair perspective to have. And it's not an anti-mechanic perspective. Most of us expect some sort of value in return for the money we pay. I see no value in the scenario as originally presented.

Let us know how that works for you when you have your own ac mechanic shop. The people who think this way would have their head spin until it twisted off and fell on the floor if they knew how much "mark up" they pay at retail stores.

 

[Derek Zeanah]

Let us know how that works for you when you have your own ac mechanic shop. The people who think this way would have their head spin until it twisted off and fell on the floor if they knew how much "mark up" they pay at retail stores.

OK, Paul. I understand your perspective. It's work, you need to stay in business, cash flow is king, and so on.

So how about a direct question, which I hope has a direct answer. If I come to PaulS's Airplane Shop and say "PaulS, I need a new engine, and I looked on Continental's site and they have a rebuilt O-470R that I'd like put into my plane. CMI charges $32,642 for that engine, and I'd like you to remove my current engine, package and ship it to CMI, and install the new engine once it shows up." You're going to tell me "the cost is $x,xxx to remove/package/ship/reinstall your engine, plus I'm going to charge you $6,528.40 for the CMI engine instead of letting you pay CMI directly, and if there are any issues I'm going to charge my full labor rate and force you to deal with CMI directly for remedies."

That's essentially the situation the OP described in his initial post.

My question to you is this: what exactly am I getting in return for that $6,528? Other than the knowledge I'm helping keep your shop open?

There are valid answers here:

• I'll cover labor for any issues that pop up with new engines, because we know a new engine from CMI should be (but isn't always) perfect.
• I'll cover warranty work and deal with CMI for compensation, so if you need a new cylinder in the warranty period I'll buy the cylinder, do the work to install it, and deal with CMI.
• Maybe it covers the cost of dealing with the engine and accessories that need to be serviced too. Maybe it covers installation (not as described by OP). Maybe there's some other value here.

I think the wrong answer is "you're going to pay it because you're stuck with me and most mechanics charge a mark-up so stop whining and just be thankful you're not having me as a middle-man for a turbine engine you whiny bastard."

 

[PaulS]

OK, Paul. I understand your perspective. It's work, you need to stay in business, cash flow is king, and so on.

So how about a direct question, which I hope has a direct answer. If I come to PaulS's Airplane Shop and say "PaulS, I need a new engine, and I looked on Continental's site and they have a rebuilt O-470R that I'd like put into my plane. CMI charges $32,642 for that engine, and I'd like you to remove my current engine, package and ship it to CMI, and install the new engine once it shows up." You're going to tell me "the cost is $x,xxx to remove/package/ship/reinstall your engine, plus I'm going to charge you $6,528.40 for the CMI engine instead of letting you pay CMI directly, and if there are any issues I'm going to charge my full labor rate and force you to deal with CMI directly for remedies."

That's essentially the situation the OP described in his initial post.

My question to you is this: what exactly am I getting in return for that $6,528? Other than the knowledge I'm helping keep your shop open?

There are valid answers here:

• I'll cover labor for any issues that pop up with new engines, because we know a new engine from CMI should be (but isn't always) perfect.
• I'll cover warranty work and deal with CMI for compensation, so if you need a new cylinder in the warranty period I'll buy the cylinder, do the work to install it, and deal with CMI.
• Maybe it covers the cost of dealing with the engine and accessories that need to be serviced too. Maybe it covers installation (not as described by OP). Maybe there's some other value here.

I think the wrong answer is "you're going to pay it because you're stuck with me and most mechanics charge a mark-up so stop whining and just be thankful you're not having me as a middle-man for a turbine engine you whiny bastard."

Derek, your scenario about PaulS's airplane shop isn't what happened. Have you read through all of the OP's posts, suggest you do if you haven't. My take on this shop is that it has tried to work customers as you described and it turned into a nightmare for them as mistakes either by the engine shop or the customer were made and this shop had to sort it out, then the customers told this shop to screw when it asked for compensation for handling problems the customers were supposed to handle. I've had similar things happen, in another industry, you either get paid for what you do, or you go out of business.

 

[Salty]

Derek, your scenario about PaulS's airplane shop isn't what happened. Have you read through all of the OP's posts, suggest you do if you haven't. My take on this shop is that it has tried to work customers as you described and it turned into a nightmare for them as mistakes either by the engine shop or the customer were made and this shop had to sort it out, then the customers told this shop to screw when it asked for compensation for handling problems the customers were supposed to handle. I've had similar things happen, in another industry, you either get paid for what you do, or you go out of business.

It sounds like you think it's ok to charge $6,000 AND have zero risk of any issues you have to deal with. Again, what exactly is the $6,000 getting the customer besides the pleasure of your company?

 

[PaulS]

It sounds like you think it's ok to charge $6,000 AND have zero risk of any issues you have to deal with. Again, what exactly is the $6,000 getting the customer besides the pleasure of your company?

First, you need to read the rest of the posts too to see what happened beyond the first post. But to answer your question, the $6000, or what ever the markup is covers things like shop rent, heat, tools, electricity, insurance, taxes, employee costs and the myriad of other expenses someone there to service your airplane incurs. It also covers part of what it costs to handle the inevitable, a screw up beyond the shop owner's control, if things go great, then the owner profits. Profit is why these guys are in business and it isn't determined by some guy on the internet who has no idea what running a business is like, then decides it is too much.

In the end the OP talked it out with the business owner and ended up satisfied with how it is supposed to happen, I don't think we've heard any more from him as to how it went.

 

[Salty]

First, you need to read the rest of the posts too to see what happened beyond the first post. But to answer your question, the $6000, or what ever the markup is covers things like shop rent, heat, tools, electricity, insurance, taxes, employee costs and the myriad of other expenses someone there to service your airplane incurs. It also covers part of what it costs to handle the inevitable, a screw up beyond the shop owner's control, if things go great, then the owner profits. Profit is why these guys are in business and it isn't determined by some guy on the internet who has no idea what running a business is like, then decides it is too much.

In the end the OP talked it out with the business owner and ended up satisfied with how it is supposed to happen, I don't think we've heard any more from him as to how it went.

I'm paying you $6,000 to run your business, then you shouldn't be charging me a markup on parts, or anything more than the exact amount you're paying the specific employees that work on my plane, actually no, there should be no hourly rate, since I just paid you for "employee costs". I might as well buy the tools, heat, hangar space, employees myself.

Thank you for reminding me how lucky I am I don't have to deal with shops like that.

 

[Derek Zeanah]

Derek, your scenario about PaulS's airplane shop isn't what happened. Have you read through all of the OP's posts, suggest you do if you haven't. My take on this shop is that it has tried to work customers as you described and it turned into a nightmare for them as mistakes either by the engine shop or the customer were made and this shop had to sort it out, then the customers told this shop to screw when it asked for compensation for handling problems the customers were supposed to handle. I've had similar things happen, in another industry, you either get paid for what you do, or you go out of business.

It's been a day or so, but I've read the thread. And the explanation the shop offered made this situation a bit better than the original post suggested, but refusing to write an estimate is a questionable business practice in my opinion, and I wouldn't choose to do business with a shop that wouldn't give a written estimate. I'm one that understands that "estimate" doesn't necessarily equal "final bill" either - I'm a pretty reasonable guy, and I just want to be treated fairly by a competent mechanic, and I want to pay him a fair wage too. My mechanic has expressed that I'm one of his favorite customers, and that's because I'm reasonable in my expectations, I work to understand mechanical issues while giving his expertise the respect it deserves, I pay his full rate on-time, and I'm not a jerk.

That doesn't mean he treats me like an ATM though. I expect fair value for fair pay.

I understand if past issues have made a shop wary of dealing with customers whose expectations don't line up with reality. This may come across as controversial, but I'll bet most aircraft owners have never dealt with an issue like replacing an engine and have no idea what reasonable expectations are. I believe it's your job to explain what a customer is in for. Something like the following (and I may not get all these issues correct - I've never done it) on the quote would probably be enough to eliminate most problems that might pop up:

Your Aircraft Mechanic Inc is happy to install an engine from your source of suppliers if you have it shipped to us. We estimate the total cost to replace your engine with the new one and ship the old one back is $3,500 assuming that everything works as it should, but you as the aircraft owner need to understand that in many cases something goes wrong. Some of the issues that may require additional payment are listed below, and it is your responsibility to pre-pay for parts and pay for all labor before picking up your aircraft:

• Incompatibility between the new engine and your existing engine accessories.
• Identification of other failed/failing components once the new engine is installed.
• Receipt of an incompatible engine from the engine builder you chose.
• Receipt of an engine without essential components installed due to misunderstanding
• Additional work required to remove the new engine if it fails post-installation testing, plus all the work to follow. Aircraft owner agrees to pay us our normal shop rate of $xx per hour for these services.
• Issues beyond your/our control which require extended downtime, in which case you will be billed $xx per day for storage of your airplane in our hangar
• ....

As a customer something like that would seem fair and easy to understand. Much more so that "gimme 20%. Don't ask questions."

 

[Bell206]

As a customer something like that would seem fair and easy to understand. Much more so that "gimme 20%. Don't ask questions."

The one thing that is missed in these latter posts is that the OP authorized the initial work without a written estimate or quote. Whatever transpired after that, whether right or wrong, made for a very slippery slope to move forward.

Then when the bills started to build everyone wanted out. It became the proverbial he said/he said which nobody wins without a written agreement. So while your comments on the original issue hold some merit they are made with hindsight not foresight and tend to skew the original problem and its resolution. Plus without any input from the shop we will never know the complete story.

As for the markup of services, parts, etc. it happens in every business. That is Business 101. But for some reason in aviation it is always looked at with a suspicious eye. I’ve never figured that out. Ever wonder who paid for the shopping carts at Walmart? I can tell you it wasn’t the Walton family.

 

[Derek Zeanah]

The one thing that is missed in these latter posts is that the OP authorized the initial work without a written estimate or quote. Whatever transpired after that, whether right or wrong, made for a very slippery slope to move forward.

That is very, very true.

 

[Salty]

The one thing that is missed in these latter posts is that the OP authorized the initial work without a written estimate or quote. Whatever transpired after that, whether right or wrong, made for a very slippery slope to move forward.

Then when the bills started to build everyone wanted out. It became the proverbial he said/he said which nobody wins without a written agreement. So while your comments on the original issue hold some merit they are made with hindsight not foresight and tend to skew the original problem and its resolution. Plus without any input from the shop we will never know the complete story.

As for the markup of services, parts, etc. it happens in every business. That is Business 101. But for some reason in aviation it is always looked at with a suspicious eye. I’ve never figured that out. Ever wonder who paid for the shopping carts at Walmart? I can tell you it wasn’t the Walton family.

A markup on parts, sure. A markup on an outsourced service, that you are providing no value add on? No, that is not cool.

It's like going to a sit down pizza place, and they call domino's and order the pizza for you and add 20%, plus they still charge you for the drinks and a "fee" for the chef's time that they have to employ (even though they are doing nothing in the transaction), and another fee for the waiter to give you the drink you ordered. The pizza is delivered by domino's not the waiter. Then, if there are anchovies that you didn't want, you have to call domino's to complain about it. And, if you don't like Domino's. Too bad, you can't ask for Papa John's.

It's insane.

 

[Bell206]

A markup on an outsourced service, that you are providing no value add on? No, that is not cool.

Curious, have you ever owned/managed a full-fledge service business? One of the main reasons 75% of all new businesses fail in the first 18 months is loss of cash flow. They don’t charge enough to cover their overhead which includes “outsourced services.” The other side of the coin they charge too much and don’t engage the customer base they need to cover their overhead plus make a profit.

So on the aviation side, how would you prefer I cover my overhead and earn a profit each month: charge you a day rate regardless of the work you request which will guaranty my overhead/profit and chase you away as a customer; or charge you a fair hourly wage with appropriate markup for the work I perform?

 

[Salty]

Curious, have you ever owned/managed a full-fledge service business? One of the main reasons 75% of all new businesses fail in the first 18 months is loss of cash flow. They don’t charge enough to cover their overhead which includes “outsourced services.” The other side of the coin they charge too much and don’t engage the customer base they need to cover their overhead plus make a profit.

So on the aviation side, how would you prefer I cover my overhead and earn a profit each month: charge you a day rate regardless of the work you request which will guaranty my overhead/profit and chase you away as a customer; or charge you a fair hourly wage with appropriate markup for the work I perform?

Obviously, the only way to stay in float in a "full-fledge service business" is to charge every customer 3 times for the same service.

You're not being honest if you pretend your hourly rate is $50 but your clients are actually paying $300/hr.

It's not the client's job to figure out how to calculate your job rates and hourly rates. Charging for everything 3 different ways is usually only necessary when you are trying to defraud or launder money.

 

[Norman]

This discussion reminds me of a customer our shop had in the early 2000'. He wanted oil filters installed on his Baron then pitched a hissy when the oil change prices went up. He had the stones to come into our hangar when the boss wasn't there and ask me if I would moonlight on his plane. I made it perfectly clear to the skinflint I would not be so disloyal to the guy who employed me. We never saw him again and didn't miss him.