I would be lying if I said I had never been asked the question “Why are plumbers so expensive in Canberra?” The people who asked this have compared our rate’s to that of a Doctor’s and Solicitor’s, and so I thought it was about time I created a blog post so that I can send those commenters here for some fun reading.
Firstly, to understand how a plumbing business owner has come up with their rate, you need to understand the costs behind running a Plumbing Maintenance Business in Canberra and the unique differences between us and that of professionals with appellations after their name.
Firstly, I am not sure about the legal advice that you have obtained, however, I know for a fact on the few times I have had to engage my solicitors for advice I can assure you that the hourly rate I am being charged is between 2 to 3 times the rate of which we charge our plumbers out at. In fact, in the most recent solicitor invoice I received, I was paying the legal secretary the same amount we charge our plumbers at. And don’t even get me started on my ENT visits with my local Doc.
So I would like to squash that argument here that we are charging the same rate if it’s ok with you…
Notwithstanding the above, we do truly understand that the cost and timing of a plumber is often unexpected with maintenance having not been planned for in the family budget.
So I will go on to hopefully shed some light on the costs of running a plumbing maintenance business in Canberra.
Before we go on, it is important to understand the most basic principle in business that is, if a business incurs a cost, that cost needs to be incorporated into its charges and can not just be worn as “bad luck” or “not fair”. If that’s not clear, please don’t bother reading on.
Down Time
Our largest expense as a home service business is without doubt downtime. By downtime, I am referring to the hours during a day that a tradesperson is not directly billing a customer for. A solicitor, accountant, engineer, or any other professional that conduct’s their work from an office PC has basically unlimited efficiency in between jobs they are working on as they can switch client files within seconds and a few mouse clicks. Many even charge in 6 minute blocks.
As a plumbing company, we have to work extremely hard to ensure our staff are as efficient as possible. Despite this, the standard Tradesperson could still perhaps only have 5 billable hours during an 8 hour day. Or to put that another way, the business needs to ensure that every billed hour is covering 1.6 hours of the cost of the tradesperson.
This is due to things like
- Travel time in between jobs
- Estimates on how long a job will take blowing out –
- ie if a job takes less time than you had scheduled and you can not get to your next appointment early or it takes three times as long so you have to pass on your afternoon job.
- Note – Finding the perfect balance is hard. Companies that overbook themselves earn the industry the unreliable reputation we have all heard whilst companies that underbook increase their costs which need to be passed onto their clients.
- Stocking the vehicles at the suppliers
- disposing of rubbish/waste
- Customers cancelling at the last minute
- Returning to sites for warranty repairs or material defects (whether or not this is a fault of the installing plumber)
- Job postponement due to weather conditions
- Unexpected vehicle breakdowns or equipment failure
Work Health and Safety Training
Work health and safety in the ACT is, as it should be, at an extremely high level. Whilst additional site time is, of course, chargeable to the end client, there is a great deal of time outside of billable hours that must be accounted for. This includes attending safety courses and refresher courses on an annual basis.
Staff Costs
As Chairman of Master Plumbers Australia and New Zealand I may be biased or see the plumbing industry through rose coloured glasses. Regardless of this, it is important to understand that becoming a licensed plumber is not an easy feat. It takes 6 years of study, an additional 2 to 3 years than just about every other trade out there. During these 6 years, plumbers are trained to an extremely high standard which is often overlooked and the reason that many apprentice plumbers who start their apprenticeship do not make it to the licensing stage.
One of the reasons training is so rigorous in our industry is the huge importance of maintaining our city’s potable water supply and ensuring the sewer sanitation is kept to high standard, preventing disease outbreaks and protecting our properties from water, one of the most damaging elements to building/property.
Licensed Plumbers are professionals and experts in their fields that often have jobs that are not very pleasant and labour intensive.
Plumbers are also required to work under their own license putting alot of responsibility on them.
Because we require such well-trained professionals, like other industries, as an employer we are then committed to ensuring our staff receive the benefits of the Plumbing Award which set out the minimum conditions an employee must receive. This includes clauses such as a minimum of 8 hours pay (4 hours at double time) for an employee on a Sunday, even if they are on-site for 15 minutes.
The cost of the employee’s wages and accounting for Annual Leave, Sick Leave, RDO leave, training days, and unproductive hours is all calculated together to get to a gross cost price that can be used to calculate an hourly rate.
In Canberra, as you would expect, the hourly rate for a plumber is increased slightly from the “public service effect” on the basis that other employment opportunities exist and the plumbing market needs to stay competitive, just to keep its staff.
Equipment and Machinery
We acknowledge that all businesses have to supply equipment to their employee’s. Many office jobs, this may be just a PC per staff member. Other’s may have some additional medical equipment and the like. The type of work plumbers do, requires us to have a huge array of specialist tools that accounts to on average, between $40000 and $55000 per tradesperson. An expense far beyond the initial equipment purchasing is the ongoing maintenance cost.
Even if you have a tradesperson who treats their equipment with care and respect, the nature of our work put’s huge strain on the equipment shortening the lifespan.
Some example’s of this is
- our drain camera’s, each of which on average has an annual maintenance cost of between $3000 and $6000 or
- our jet rodders for clearing drains which require new hoses on an annual basis at a cost of $2500 and an engine rebuild every 5 years.
- An electric eel which you tend to replace your cables every year, 12 x $220 = $2640
- Our safety equipment that requires annual certification
- Press tools that join copper pipe by using excessively high pressure require servicing every 1000 presses or so
These are all just to name a few. Basically, all plumbers equipment is pushed to its limits and requires regular servicing and repairs. Even when the highest quality equipment is purchased and the plumbers take care of it as best as practical, the wear and tear of fighting a blockage that is 40 meters away from your drain entry point has its toll.
Vehicle Costs
The average plumbing van has an extreme amount of weight in it and it’s not unusual for them to consume between 14 litres and 17 litres of fuel per 100 kilometres. Compare this to the average small car these days which uses 7 litres and compile it with the fact these vehicles are driving from job to job, all day, often putting several 100’s of kilometres on the odometer per day.
Unusually High Insurance Costs
Plumbing businesses know all to well that due to the additional OHS risks we encounter, we are forced to pay significantly higher workers compensation rates than our office friends. Plumbing Businesses owners are generally paying between 3% and 5% of the total wages.
Compare this with the 0.3% that some office workers pay and you will understand this has to have a significant effect on our bottom line.
In addition to this high workers compensation, due to the extensive damage water and gas can cause if a leak occurs, our public liability insurance tends to be significantly higher than that of other service businesses with many insurers opting to not insure plumbers at all.
Summary
I can hand on heart say that I believe the vast majority of plumbers are not “rich” and whilst they may earn a fair and reasonable salary, it is in no way excessive or an unfair amount.
Most plumbing business owners are probably earning between a 5% and 15% profit margin, which in my opinion is a fairly modest amount when compared to many other industries.
I believe that when people ask the question “why are plumbers so expensive” they either are comparing our charge out rate with their employee salary hourly rate and don’t understand the costs of business or they compare us to other professionals who businesses can run far more efficiently.
