Part's markup?


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Old 01-29-10, 01:07 PM
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Part's markup?

On 1/11/10 I had noticed my oil furnace heat was not kicking on, I did a couple of the DIY suggestions but it just wouldn't kick on. I'm 24 and a first time home buyer, I purchased this house last Feb and this was my first issue with my furnace so I was nervous to do more harm than good so I called my oil supplier who also does my annual cleaning.

They came next day to service and the bill was $295.31, the invoice stated $120 was just for the service(labor) and other $175.31 was for the parts used. The items listed was not itemized, only stated $175.31 for parts. He told me he had to replace two components, the Igniter and Nozzle stating that the igniter fried the nozzle because it was shorting out, I found that strange because I just had the nozzle replaced during my yearly service in November.

He left the material packaging so I did some research...the Igniter he used was Carlin Combustion Technology 4100-S0-BK1, the most expensive place I found it online for was $35.00 retail. The nozzle was a generic brand and had no model number and I could not find a price, but it seems like most nozzles are around $10 and under, so at most the parts should have cost me $45, yet I was charged $175.31.

So that roughly %270 markup, is that normal in the heating repair industry? Did I get had and should use another company? Should I complain?
 
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Old 01-29-10, 01:47 PM
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How long was he there????
 
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Old 01-29-10, 01:53 PM
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Originally Posted by Tolyn Ironhand
How long was he there????
He was here for just under 50 minutes.
 
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Old 01-29-10, 02:10 PM
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When I was doing my furnace repair business, my parts markups were substantial. But it was a bargain for customers if I had the part with me.


If I didn't it often meant they had no heat until I could shop for and get the part, then return and install it. When I had to do that, it might involve an hour or more of time to find and get the part, and then more time to return and install the part. That might take a day, a few days or several weeks, depending on part availability.

Because it was a gigantic nuisance to go through that, I carried as much in the way of parts with me as I could. That involved a substantial investment in what might often be slow moving parts.

2 1/2 years after closing my repair business, I still have a roomful of old inventory with little way to get even my purchase price back out.

A pilot orifice that cost me $5 I might sell for $15. A pilot generator that cost $15 I sold for $65. A slower moving part that cost me $50 I typically marked up $100, or even more.


I charged what I was comfortable charging, which could be a lot less than quite a few other outfits that I thought were greedy by comparison.


I gave a lot of thought to what people should look for when buying services. In the end, I decided two things were most important:

1) (the most important) Honesty.

2) Competence


If you have an honest and competent guy, you aren't going to get the cheapest service around. Neither are you going to be unreasonably gouged.

At least as important, you aren't going to be charged for replacing parts you didn't need, and your chance of getting the problem properly fixed are high.


Consider this: If you look through this board, you will find LOTS of posts by people who couldn't get their equipment fixed even after repeated service calls by service agencies, often replacing multiple parts at fancy prices.


I'm not an oil furnace Xpert, but I don't find the bill you were presented with offensive. You got a problem corrected the first time out, with what sounds like a minimum of parts replaced. My inclination is to say that you were dealing with an honest and competent repair service.

Of course, you are free to shop around for someone else. But will they be better -----or worse? There is a significant possibility that they could be worse, perhaps a lot worse.


I look forward with interest to the comments others may make.
 
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Old 01-29-10, 04:12 PM
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Not too bad for a dead furnace repair

Originally Posted by stefanod
On 1/11/10 I had noticed my oil furnace heat was not kicking on, I did a couple of the DIY suggestions but it just wouldn't kick on....

So that roughly %270 markup, is that normal in the heating repair industry? Did I get had and should use another company? Should I complain?
Furnaces are pretty simple devices from a control point of view: a couple of commands, 2 or 3 actuators, a few permissive sensor contacts. Each individual thermal or pressure sensor, and motor, is a commodity product in the HVAC marketplace; Google finds you $12 dollar equivalents in seconds. Then when the itemized bill is presented, sticker shock sets in: $65 for a "flame rollout sensor" (a thermostat, should be 15 dollars tops)!

I think the way to look at these things is that the service technician made a house call, diagnosed your problem, delivered and installed the part, and verified it was working. Then it is not so bad.

I think your parts markup was OK, considering that it fixed the problem on the first try. I would call the service place, and ask the manager about the charge for the nozzle, it should have been under warranty from the annual service. But they will try to weasel out of it.

To feel better, you could Google "Maytag washer problem", and get thousands of complaints from people who paid enormous amounts of money to get their washing machines fixed. And they are even simpler than furnaces.

I feel your pain, though. I had a service tech charge me $700 for a furnace control board that lists on Amazon for $196. I'm still fighting on that one.

It's a good idea to get smart on home appliance repair, and get in a supply of needed parts before disaster strikes.

HTH.
 
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Old 01-29-10, 04:16 PM
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Originally Posted by SeattlePioneer
2 1/2 years after closing my repair business, I still have a roomful of old inventory with little way to get even my purchase price back out.
I suggest an eBay store my friend.

SeattlePioneer <---------- a wise man speak the truth.

You are also paying the service guy for his knowledge, much like a Dr.
Would you have felt better if the bill was $50 for parts and $250 for labor?
 
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Old 01-29-10, 04:21 PM
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It doesn't matter what the parts cost, what you are paying the tech for is the knowledge to know which part to put in.

As a contractor I have overhead that must be paid, where do you think it comes from?

When you go to the dentist and he puts a filling in your tooth and charges you $400 and uses $10 worth of supplies, what kind of mark up is that?

I am in the money making business, and the way I make money is by building or fixing things.

Dentists are in the money making business too, they make their money by fixing your teeth.
 
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Old 01-29-10, 05:45 PM
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Markup

I, in opposition to my peers here, find the markup to be grossly excessive. For most ignitors I charge $60-70 which is aprox. double what I pay for them. For a nozzle, I get $7.50, slightly more than double what I pay. If the nozzle was changed, so should have been the filter & pump screen in most cases. My bill for ignitor, nozzle, filter (most commonly used one), pump screen, & the service call (during business hours) would have been $162.50 total. I must admit, I don't find the labor to be unusually high for Boston. I suspect you were dealing with a flat rate company. The $120 was likely for the service call or sometimes called a diagnostic fee then they charge X dollars for an ignitor (installed), Y dollars for a nozzle (installed), etc. Each of the "installed" prices figure the service person it there just to do that particular job. If a number of parts are installed, the customer can end up paying essentially for 4 hours labor when the servicer was only there for an hour.
 
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Old 01-29-10, 05:51 PM
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Originally Posted by Grady
I, in opposition to my peers here, find the markup to be grossly excessive. For most ignitors I charge $60-70 which is aprox. double what I pay for them. For a nozzle, I get $7.50, slightly more than double what I pay. If the nozzle was changed, so should have been the filter & pump screen in most cases. My bill for ignitor, nozzle, filter (most commonly used one), pump screen, & the service call (during business hours) would have been $162.50 total.
As a contractor you are free to charge whatever you want to.

I think your prices are too low.

I charge $85 for a service call $120 an hour, with a 1 hour minimum, plus parts, my parts are marked up quite a bit.

So my minimum charge to show up is $205, even if all I do is blow out a condensation drain line, or reset a firestat.

I am definately not the cheapest and I am not the most expensive either.
 
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Old 01-29-10, 06:02 PM
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Labor rates

My prices are in line with others (except the flat rate thieves) in the area. Don't know what wages are in your area but around here, a residential tech with certifications (gas, oil, H/P, A/C) and 10 years experience MIGHT be able to get $20/hr + a truck to take home & 2-3 weeks vacation.
 
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Old 01-29-10, 06:05 PM
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Don't some dentists, if not most today, have a listing of what cavities cost to fill, root canals, etc., (barring complications) so then the person at least has some idea?

With furnace repair outfits charging all over the board on their markups, the customer has no idea what kind of bill they might get if the outfit is there for an hour or two. They can't go by the labor cost because that is only the part of it.

I guess then the only thing the customer can do is ask the outfit in advance that if parts are needed, if they charge a certain percentage markup on all parts, and what t hwat percentage is, and if that percentage holds the same whether it is a $7 part or a $300 part. Or if lower priced parts have higher markups.

If you can't ask and can't find out anything......well, who needs surprise bills. That just leads to potential possbily unchallengeable rip-offs, by it's very nature.

Although I do wholeheartedly agree with SP over the reasons for having a markup. And sometimes a customer needs to be schooled on this, because they often overlook the total picture.
 
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Old 01-29-10, 06:12 PM
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Originally Posted by Grady
My prices are in line with others (except the flat rate thieves) in the area. Don't know what wages are in your area but around here, a residential tech with certifications (gas, oil, H/P, A/C) and 10 years experience MIGHT be able to get $20/hr + a truck to take home & 2-3 weeks vacation.
I base my prices on what I pay some of my subs, I have a client that hired a sign company that charges $125 an hour per man, they don't even have a license (one is required though).

I figure since I have 3 state certified contractors licenses (Building, HVAC, Plumbing), I am worth more than what I charge.

I make most of my money off of parts, but on many items I just quote them a price and don't break it down.
 
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Old 01-29-10, 06:20 PM
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Originally Posted by bgbill
I make most of my money off of parts, but on many items I just quote them a price and don't break it down.


Pricing ---- for many small businesses, it's not a science it's an art form.



When I sold my furnace repair business 2 1/2 years ago, I was making a labor charge of $95 for an hour or less. The first thing the guy I sold it to do was to up that to $95 for a half hour or less.

I expect people were just as happy. He is an honest and competent guy ---- and easier to get along with than me. I didn't tolerate fools very well.
 
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Old 01-29-10, 06:22 PM
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Originally Posted by ecman51`
Don't some dentists, if not most today, have a listing of what cavities cost to fill, root canals, etc., (barring complications) so then the person at least has some idea?

With furnace repair outfits charging all over the board on their markups, the customer has no idea what kind of bill they might get if the outfit is there for an hour or two. They can't go by the labor cost because that is only the part of it.

I guess then the only thing the customer can do is ask the outfit in advance that if parts are needed, if they charge a certain percentage markup on all parts, and what t hwat percentage is, and if that percentage holds the same whether it is a $7 part or a $300 part. Or if lower priced parts have higher markups.

If you can't ask and can't find out anything......well, who needs surprise bills. That just leads to potential possbily unchallengeable rip-offs, by it's very nature.

Although I do wholeheartedly agree with SP over the reasons for having a markup. And sometimes a customer needs to be schooled on this, because they often overlook the total picture.
I have never seen a posted listing of what a Doctor or a Dentist charges, I go in, get the exam and they quote me on the work, then I decide if I want to get the work done, I don't research on the internet to see how much the material costs that they used for my filling or a crown.

You call a tech to look at your furnace, they look at it, tell you how much it is going to cost and you decide whether or not you want it fixed.

What is the difference?

Why is it acceptable to pay a dentist $400 for a filling or $1800for a crown, when they have a few dollars in materials?

A client of mine's neighbor was sold a blower fan motor for just under $1200 installed, the motor and cap would cost about $75, he happily paid it because he was sweating and wanted it fixed now, so he hired the 1st guy that he called and showed up.

I don't charge a fixed percentage mark up on all parts, some have quite a bit of mark up, some have less, the lower the cost of the part, the higher the percentage of mark up.
 
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Old 01-29-10, 06:26 PM
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Fools

Originally Posted by SeattlePioneer

I expect people were just as happy. He is an honest and competent guy ---- and easier to get along with than me. I didn't tolerate fools very well.
I know from where you are coming S/P. I deal far better with things than I do people. All things understand hammer & I am fluent in that language. I don't think some people would understand hammer, too danged stupid.
 
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Old 01-29-10, 07:18 PM
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It's difficult for most people to understand how things like retirement plans, truck, food, housing & all the associated costs of doing business are paid for. Those same people may work for a utility, IBM, phone co, gov office, all of them have retirement plans, sick time & vac days. Gee, who pays for those folks?
 
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Old 01-29-10, 07:56 PM
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Originally Posted by Grady
All things understand hammer & I am fluent in that language.


Heh, heh! I don't think I've thought of it in quite those terms, but that tends to be my natural inclination if I don't watch myself!
 
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If you not want his knowledge, just refuse the parts and tell to leave until when you get the parts off the internet.

If you call him again, he may refuse to come out for just a service call, which is usually about $100. You can also call another company and hope they come out and tell them you know what is wrong and have your own parts.

You could also take ultimate chance and get a book on furnaces, diagnose the problem and determine what was needed. Then go to Walmart and see if they had them. After that go to a real parts store and try to buy them. Without have a regular account you will pay a premium because if the time to service a DIYer. They also noy acccept any returns if you guess wrong.

Just hope what you ordered (and received in a week from Ebay or others) is the necessary parts since if he did not do the work you would not be able to pick through the scraps and determine what was needed and how to fix and install and them compare prices after you were comfortable with a good system while you did the hindsight research from a different perspective.

Somehow the truck, travel time, parts inventory and cost of holding the parts inventory have to be paid for by someone.

What you paid in the end was reasonable. - You wanted a system that would work and keep you warm.

Dick
 
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Old 01-30-10, 04:56 AM
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Don't get me started on the cost of doing business. I think my overhead last year was about 60% and that was a good year; it generally runs a little higher (like this year which will include a tranny replacement). And people still wonder why they can't get their car towed for $20.
 
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Old 01-30-10, 09:01 AM
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Originally Posted by bgbill;1686675I
make most of my money off of parts, but on many items I just quote them a price and don't break it down.
That seerms fair. It at least is a way that you inform a customer, in advance, of what they can expect the charges to be.

Either the customer can agree to have them commence with the work, or shop around. No surprises.
 
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Old 01-30-10, 09:05 AM
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Originally Posted by SeattlePioneer
The first thing the guy I sold it(furnace repair business) to do was to up that to $95 for a half hour or less.
(My bold added to quote)

I wonder why he did not want all those parts that you sometimes say you have left and will sell people?
 
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Old 01-30-10, 09:14 AM
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Originally Posted by bgbill
Why is it acceptable to pay a dentist $400 for a filling or $1800for a crown, when they have a few dollars in materials?
Why not? Long college education, office equipment, building/taxes, inventory, hired help, etc. And they told the person up front. No surprise. The customer can go elsewhere if they want.

A client of mine's neighbor was sold a blower fan motor for just under $1200 installed, the motor and cap would cost about $75, he happily paid it because he was sweating and wanted it fixed now, so he hired the 1st guy that he called and showed up.
Where is this at?, so I can move there and get in on some of this action? Seriously though - what a sin IMO. Old ladies I bet, really get gouged - especially.

I don't charge a fixed percentage mark up on all parts, some have quite a bit of mark up, some have less, the lower the cost of the part, the higher the percentage of mark up.
That makes sense, to me. The logic is if you had to run to the store to buy the part, if you did not have it in your inventory, the lower priced part would cost you more to buy, pecentage wise, when adding in your time and travel.
 
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Old 01-30-10, 09:19 AM
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Originally Posted by the_tow_guy
Don't get me started on the cost of doing business. I think my overhead last year was about 60% and that was a good year; it generally runs a little higher (like this year which will include a tranny replacement). And people still wonder why they can't get their car towed for $20.
Snowplowers go through the same thing. Some people, who do not think all that deeply about running a private business, wonder why, since a snow plow can plow their drive in 10 minutes, don't just charge say $10. Or the professional yard maintenance companies who cut the grass with those 60 inch cut mowers in a matter of minutes -and maybe even jump from one property to the next for say the same property owner.
 
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Old 01-30-10, 09:29 AM
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Originally Posted by ecman51`
Why not? Long college education, office equipment, building/taxes, inventory, hired help, etc. And they told the person up front. No surprise. The customer can go elsewhere if they want.

As a contractor I have years of experience, not to mention the process of taking tests to get licensed, I have overhead as well, while a dentist was in school learning his trade, I was in the field learning mine.

Why do some people thinks a tradesman shouldn't make a good living?




Where is this at?, so I can move there and get in on some of this action? Seriously though - what a sin IMO. Old ladies I bet, really get gouged - especially.

The Job was in Odessa Florida, not an old lady, just a big fat guy that didn't like to sweat.

That makes sense, to me. The logic is if you had to run to the store to buy the part, if you did not have it in your inventory, the lower priced part would cost you more to buy, pecentage wise, when adding in your time and travel.
As a contractor I have years of experience, not to mention the process of taking tests to get licensed, I have overhead as well, while a dentist was in school learning his trade, I was in the field learning mine.

Why do some people thinks a tradesman shouldn't make a good living?



The Job was in Odessa Florida, not an old lady, just a big fat guy that didn't like to sweat, I told my friend I would have done it for $600 but the guy was too impatient.
 
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Old 01-30-10, 11:46 AM
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Originally Posted by bgbill
The Job was in Odessa Florida, not an old lady, just a big fat guy that didn't like to sweat, I told my friend I would have done it for $600 but the guy was too impatient.
That's one of those jobs which go back to the old saying: "You can have it good, fast, cheap. Pick two."
 
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Old 01-30-10, 12:44 PM
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Originally Posted by bgbill

Why do some people thinks a tradesman shouldn't make a good living?
Isn't there this mindset that if you don't go to college, that at least you can swing a hammer? Something along those lines? Making those in the trades - especially employees - in those fields, seem like some sub-class? - compared to say professionals, doctors, lawyers, technicians and engineers? Where the ones who probably do get a lot more respect in the trades, are those who have started companies, with buildings, fleets of vehicles and employees, where then the impression is different? That's my take on it anyway.

Of course I agree with you - that good, honest and intelligent tradespeople, are worth at least probably every cent they get.
 
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Old 01-30-10, 02:30 PM
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Originally Posted by ecman51`
Isn't there this mindset that if you don't go to college, that at least you can swing a hammer? Something along those lines? Making those in the trades - especially employees - in those fields, seem like some sub-class? - compared to say professionals, doctors, lawyers, technicians and engineers? Where the ones who probably do get a lot more respect in the trades, are those who have started companies, with buildings, fleets of vehicles and employees, where then the impression is different? That's my take on it anyway.

Of course I agree with you - that good, honest and intelligent tradespeople, are worth at least probably every cent they get.
I am a professional, I am not just a tradesman, I am also a business owner.

I know some college educated people that are dumber than a hammer, but they have a college degree and when their job gets shipped oversaes, they are out of luck.

It is pretty hard to export what I do.
 
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Old 01-30-10, 02:49 PM
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Originally Posted by ecman51`

I wonder why he did not want all those parts that you sometimes say you have left and will sell people?


I wound up specializing in doing repairs on gas fireplaces and such. He bought my inventory of parts for that business, but I made no effort to saddle him with parts for general furnace repair.
 
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Old 01-30-10, 03:47 PM
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Oh, okay.

Those gas fireplaces they have today are so nice. They really simulate the real thing. One guy I work for has a standard looking fireplace(gas) with the quite real looking fake logs with the vermiculite? chunks that glow, to add to the effect of real wood embers below the logs. I had to work on it one day for him. I had to turn it on - I kid you not. They think I'm so talented.
 
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Old 01-30-10, 05:12 PM
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Actually, the day is coming when gas fireplaces will not be imitations of smoldering wood fires, but artistic displays of how fire can be used to please, entertain and amuse.

Think of the way water jets are used to create pleasing effects in Las Vegas and think how flames might be used for some similar kinds of effect.
 
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Old 01-31-10, 09:31 AM
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My experience has been, the least experienced (lack of knowledge), hack type, seem to overcharge. I've done hundreds of followup calls behind these guys.
 
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Old 01-31-10, 02:18 PM
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Originally Posted by SeattlePioneer
Actually, the day is coming when gas fireplaces will not be imitations of smoldering wood fires, but artistic displays of how fire can be used to please, entertain and amuse.

Think of the way water jets are used to create pleasing effects in Las Vegas and think how flames might be used for some similar kinds of effect.
Huh. Like maybe they will take the place of those fad mesmerizing, mentally soothing bubbling brook water fall things that you can put on your coffee table? Have you read anything about that which you are saying? I'd like to check that out if there is such a thing.

I know that with funny cars and top fuelers, intentional? or not, multi-colored flames will shoot out the exhaust at night. Awesome.
 
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Old 01-31-10, 02:22 PM
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Originally Posted by mbk3
My experience has been, the least experienced (lack of knowledge), hack type, seem to overcharge. I've done hundreds of followup calls behind these guys.
Must have been a "hack" then that charged my ex-boss to pay almost $900 to fix an oil burner that only held up for like a week! I ended up solving the cause and rectifying the immediate problem for like $25.
 
 

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