How much do you charge your customers to have their backflow prevention device tested?
Okay, but what’s the real cost of testing backflow devices? How much are you actually making?
Although test prices vary, an average is around $40, nationwide.
So how do you break down how much you, as an owner, are actually making per device? You might say, well, we subtract how much we pay the employee who tests it, and find we make about 20 or 25 dollars a test. How accurate is this though? Are you potentially leaving out other hidden expenses?
Let’s set up an example to see where costs may in fact go–your business probably runs things a little differently, since no two companies are exactly the same, so take that into consideration with this model.
You know what you pay your tester hourly or per test, and you’ve undoubtedly already taken this into the equation of how much you make per cross-connection test.
We’re going to assume you have an office administrator, and that you pay them hourly to do paperwork. (If you don’t have one, consider yourself that person, and you need to ask yourself how much your time is worth.) Each test likely takes your admin around 3 to 4 minutes to record. In this example, I’m including double-entry of any backflow test reports, entering invoices, stuffing envelopes for customers and water purveyors, addressing envelopes when necessary, and recording payments of invoices. Divide what you pay hourly by 20. On average, 20 is the amount of backflow tests an admin can get through by doing all the paperwork include. Now you have your answer of how much more each test costs.
So that’s it right? The rest is my income. Nope!
If you’re paying your testers hourly, you’re also paying for their drive time, which you decide by which tests you want them to complete each day, or week.
Our customers are split between how they do their test reports; some purchase the already printed backflow test report books–which on average cost $2 per report.
Other customers print or photocopy their own off, which is substantially less, but not free. So the printed test report to the water district, as well as one to the customer with their invoice might be running you a couple pennies. Not a huge amount, but it sure adds up.
Now, let’s roll in envelopes at 15 cents each, stamps at 49 cents.
So, there’s your margin: the actual test price minus employee hourly rates, time spent doing paperwork, the printed paper and/or test books, envelopes, and stamps . It simply isn’t as straight-forward as how much you pay your employee per test. This doesn’t account for the costs of business licenses, tester certifications, or gauge renewal, but you could tie those in as well.
Okay, I get it, but if I charge my customers more, then they’re just going to find someone who will do it for cheaper.
That’s a fair assessment. What can you do to decrease your costs while having your business run smoothly?
Here are a few ideas to consider.
Initially this one will take some time, but long-term you’ll be able to cut costs if you if contact your water purveyors to see if they accept emailed versions of the test reports, rather than sending them in the mail. This is really helpful towards the due dates of backflow test reports. Instead of rushing to the post office so your customers don’t receive late notices, you’ll be able to get test reports in electronically to the water districts. It also keeps your office less cluttered.
In a similar fashion, contact your customers and see if they’d be interested in having you email their invoices to them from QuickBooks or similar. Additionally, you can email them their test results if they’d be interested.
Reduce the drive time of your testers by setting them up weekly with the tests they should accomplish, rather than daily. This way, they can plan their routes a bit more effectively and cut down on travel time and fuel. You could even have them come in to the office time a couple times a week, rather than daily, so that their starting point would differ for their testing routes, and in essence would cut the travel time back to the office with test reports every day.
Designate a block of time or specific day for your office administrator to deal with test reports and invoices so that there is less distraction time. Never just input one record at a time. Instead, wait until you have gathered an entire day or week’s worth of reports. Maybe every weekday your administrator enters all backflow test reports right after lunch. Think of it from an assembly line perspective; you or your office admin will accomplish more in a shorter period of time if all reports are recorded at once, then invoiced, then sent out. Doing a few here or there is a set-up for inefficiency.
C3 software can also help in these areas by streamlining your BFT business. We’ve found that our method of accessing everything from online is a huge time reduction for testers and admins. Since we generate the reports without ever needing to print anything off, you save time and money with less paperwork.
We’re pretty proud of the fact that we cut travel time by 11% for the average tester too, which adds approximately 1 to 2 tests per day. Allowing customers to access their invoices and backflow history electronically is a convenient way to cut costs in a technological era. They get to access their account, view and pay their bill, and look at their backflow test results without ever leaving their couch.
Being mindful of the hidden costs is the starting point to reducing them. We’d love to hear any suggestions that you use to simplify your workflow.
Let us help you increase your bottom line–give us a try. Sign up now for a free trial, or contact us at email@example.com with any questions.
At C3, we’re devoted to making technology work for your BFT business.