What price should be paid?
Posted by admin on April 2, 2008I’ve long suspected that many crime & trauma scene cleanup companies are overcharging clients. This feeling was somewhat substantiated the other day when I received an email from a well known company in this industry. The email was a solicatation for referral business. Attached to the email was a well drafted contract that guarateed me (or whomever referred business) a $750 referral fee.
Bio-Trauma 911, Inc. routinely offers up to $200 as a referral fee. The last two such checks cut were for $100. This isn’t because the company is cheap, it’s because we don’t charge the client enough to justify any more than $100 as a referral fee. I have to believe that most companies in this industry would be more than satisfied with a profit of $750 for a job. The majority of the jobs our technicians work take approximately 6 hours from start to finish. Since we send two techs, we would calculate the total cost of the job based on 12 hours. If we were to see a profit of $750 for a 12 hour job, which rarely if ever we see, the hourly profit would be $62.50. So, how does a company afford to pay out $750 for a referral fee? I have to assume they’re charging the client far too much for their services. Maybe insurance is paying for it - is it ok now to overcharge?
Although I can’t control what other companies charge, I do make it a point to let potential clients know about the wide range of prices charged throughout the industry.
My name is Gordy Powell and I currently serve on the Board of Directors of the American Bio Recovery Association (ABRA), a nonprofit organization that governs over the crime and trauma scene cleaning industry. ABRA is recognized by NIOSH, OSHA and the CDC as the leader in this industry in numerous reports, articles and interviews. As to the issue of pricing, yes there are rouge companies that do take advantage of those in time of need, but I found that to be few, far and in between as companies learn and become seasoned. I get numerous requests from insurance companies to review invoices across the country, and most of the time the errors (or greed factor) are in quantity of hours and material and most of the time the pricing is in line to industry standards. It has been my experience that those companies that low ball, do not have the proper nor required insurance and are not up to speed on protocols as it pertains to an employee’s well care. Most companies DO NOT KNOW that you have to maintain employee files 30 years after a termination, health care shots, annual physicals, not the basic physical a full rundown to include a blood screen, not cheap. There are a lot of unseen costs involved in properly maintaining a bioremediation firm. Blue Book Best 7 and other price guide programs for the industry recognizes these rates and have reflected such cost in their new estimating programs that insurance companies use. If a firm wants to be honest to the general public, make your price schedule open to the public, I know mine is, only for the asking. Our company has nothing to hide, and we have been the longest surviving bioremediation company in Georgia for over 11 years. Not trying to justify just hoping to answer the masses.
Mr. Powell,
Thank you so much for your professional and insightful comment. ABRA is certainly well known throughout the industry and I welcome any information or thoughts you can provide to this forum.
I too have received that same solicitation via email. Let it be known that I have referred numerous incidents to that company around the US since August 2007. I have NOT received a Referral Fee from that company as agreed. I have just spoken with one of the Regional managers again with a promise to send out the checks, I highly doubt that that will happen. So with that being said, BEWARE. Many of you in this industry know that I refer incidents for a 10% fee, I spend thousands of $ on internet advertisements monthly. I work on the Honor system, a Mans word is his bond, I see that this individuals word is absolutely no good.
David
Yes unfortunately there are people gouging customers in this business. I agree totally.
But can you rely 100% on your income from your biohazard business?
It’s hard to accept a statement that a company is overcharging their customer when the person making that statement derives a large portion of his/her income from other activities, such as being a police officer, firefighter or EMT.
Until you are relying 100% on the income from biohazard abatement work you can’t really say what others should be charging.
A biohazard abatement company must be able to stand on its own two feet 100% or it is not making enough profit to stay in business. If that company is not making enough profit doing ONLY biohazard abatement work, then it is not charging enough.
Don’t get me wrong, there is nothing wrong with being a police officer, firefighter or EMT and doing this to help people and make some extra money, but don’t criticize others who are willing to devote 100% of their life and risk everything they own to try to build a professional company and manage all the overhead and financial responsibility that comes with it.
I want to derive 100% of my income from performing these services, not have a job where taxpayers pay my salary that I can count on while I do biohazard abatement part-time.
A civil servant will never understand what it is to actually survive in the business world and not have taxpayers to rely on to pay their salary unless he/she is willing to quit the civil service and start a business from scratch.
I think Verizon rips people off and charges way too much, but the truth is that I have NO IDEA what it takes to run a company like Verizon. When I have built a company as successful as Verizon THEN AND ONLY THEN can I say what they should be charging.
This posting is not directed to any particular person. I am just worn out by people who pay their bills with money that comes from taxpayers telling me that I charge too much. They should try making it out in the real business world for a while.
In response to Mr. Tillman’s well written comment - I am a reserve police officer. I am not paid or compensated for my services through taxpayer’s dollars or through my department. As a successful business owner, I have made a living based solely on what I charge clients. Although the number one reason for my success has been my office staff, fairness and honesty have been equally instrumental.
Although most companies are fair and considerate when it comes to charging clients, there are those who feel a 150% profit margin is justified. You and I know Mr. Tillman that running a business is expensive and many of our costs are hidden from the client. However, having been in business for 15 years, I as a businessman and consumer feel that anything close to or over a 75% profit margin is extreme. I’ve been able to make a very good living, have a wonderful office and staff with over 140 employees (two different industries) while seeing no more than a 50% margin. As a matter of fact, in the security industry, we see about a 15% margin (if we’re lucky).
That being said, let’s all thank God that we live in America. I was a US Marine for six years (a public servant paid by taxpayer dollars Mr. Tillman). Because of the sacrifice made by fallen soldiers and their families, we are able to voice our opinions and concerns through forums such as this. Because of their sacrifice, we have the opportunity to conduct business in whatever legal form we desire in the best free market economy in the world.
Because of their sacrifice, we can charge clients whatever we feel is appropriate for the services or products we provide.
Mr. Tillman, you are right! You have the right to run your business how you see fit. And, you have the right to charge a rate you deem appropriate to keep your business running. Good luck to you in all your future endeavors.
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