BG condemn and disconnect boiler - advice appreciated (Thorn Apollo 15/30B)

[opps]

Because they sell produce and buy in bulk.

Service industries are different. A gas engineer working at BG doesn't even get half what they make on an install.

When it comes to doing a service... One man band will always be cheaper because much less overheads. When it comes to goods.. the big company will be cheaper because they buy in bulk.

If you are providing a service and goods, then it's a bit more complicated... But in the gas industry the labor cost is much more expensive than the actual goods.

A one man band clearly has lower overheads in absolute terms but those overheads should be much higher in relative terms. If they aren't then someone at British Gas Services should be fired.

Looking at small companies, once you reach, say 5 engineers or so, your admin costs jump sharply. One member of admin staff is no longer sufficient. All of a sudden you need admin staff to support the existing admin staff. None of the admin staff directly increase your income but they do enable to the engineers to concentrate on generating income.

Grow a little larger and then you need managers to coordinate the admin staff. Grow larger and you are looking at dedicated admin staff, eg Human Resources.

Grow even larger and you reach a sweet point where your overheads per engineer are far lower than that of the one man band. If that wasn't the case then large firms wouldn't exist.

Your attempt to explain why Tesco is cheaper than the local corner shop is flawed. Yes, Tesco have bulk buying power (an economy of scale) but they also have the (relatively) top heavy management structure that the likes of BG have.

Economies of scale are not limited to the ability to purchase items for resale at a lower cost, they include the ability to save money across the board.

The above overlooks the fact that BG are effectively offering an insurance policy rather than simply offering a "repair" service. Insurance is a numbers game, it is effectively a form of gambling. The odds are always stacked in the favour of the "house".

Sorry, I am not having a pop at you. I haven't had a day off for a few months and according am less articulate than I would hope to be (oh, and I am having a crafty lunch time pint). Nevertheless I disagree with the basic tenets of your defence of BG.

Regards Opps

 

[ollski]

Also bg homecare is currently managed by morons

 

[Dan Robinson]

Was it ever thus ?

 

[lemon_1]

A one man band clearly has lower overheads in absolute terms but those overheads should be much higher in relative terms. If they aren't then someone at British Gas Services should be fired.

Looking at small companies, once you reach, say 5 engineers or so, your admin costs jump sharply. One member of admin staff is no longer sufficient. All of a sudden you need admin staff to support the existing admin staff. None of the admin staff directly increase your income but they do enable to the engineers to concentrate on generating income.

Grow a little larger and then you need managers to coordinate the admin staff. Grow larger and you are looking at dedicated admin staff, eg Human Resources.

Grow even larger and you reach a sweet point where your overheads per engineer are far lower than that of the one man band. If that wasn't the case then large firms wouldn't exist.

Your attempt to explain why Tesco is cheaper than the local corner shop is flawed. Yes, Tesco have bulk buying power (an economy of scale) but they also have the (relatively) top heavy management structure that the likes of BG have.

Economies of scale are not limited to the ability to purchase items for resale at a lower cost, they include the ability to save money across the board.

The above overlooks the fact that BG are effectively offering an insurance policy rather than simply offering a "repair" service. Insurance is a numbers game, it is effectively a form of gambling. The odds are always stacked in the favour of the "house".

Sorry, I am not having a pop at you. I haven't had a day off for a few months and according am less articulate than I would hope to be (oh, and I am having a crafty lunch time pint). Nevertheless I disagree with the basic tenets of your defence of BG.

Regards Opps

No need for all the apologies. Especially since you are wrong ; )

In simple terms when it comes to services. (i.e. fixing boilers or installing) BG are akin to a middle man.

Mr Joe blogs (gas engineer) who works for BG has the skills for the job. If he left BG he would still have the skills to do the job and would be able to setup for himself with minimal fuss.

When BG give him a job they have to pay him + their overheads + their own profit

Recruitment agents take an extra cut of the cash for finding you work. That's effectively what BG are doing. Therefore, expect a higher price.

Other industries use the same model. IT consultancies, law firms.

A lawyer at a top law firm might be billed out at £1000 per hour, but if he went independent he would charge half that. You are still getting the same service from the firm but are paying top dollar for it

To put it bluntly, firms like this are just glorified agents.


Your local supermarket is a completely different kettle of fish. The guy stacking the shelves cannot leave and set up a shop with minimal fuss and certainly he won't be able to compete on bulk buying.

 

[ollski]

They are indeed, their local heroes nonsense is clearly set up as exactly that, finding you a local tradesman and putting a chunk on top for themselves disguising it as some sort of guarantee. They really don't want want a direct labour force and I suspect within 2 or 3 years the direct labour and the name will have disappeared.

 

[John D v2.0]

BG prices are not everything to do with their cost of business, so u can't compare with tesco. it's all about how the market values what they can provide. For people who trust the big brands and want quick cover who will throw labour etc at a problem at short notice, and are happy to pay that regardless of where in the country they are, bg provides a service that's viable in the market.
You can ask where all the money goes, but i used to ask the same why a CD cost more than a cassette tape of the same music despite cheaper production costs. Some people even use pimlico plumbers because they want that kind of service and cost isn't an issue.

 

[MTCH]

Let's not try and kid ourselves that any of the other big players would have done any different, or say someone that needs to sell x amount of boilers to keep in bed with a certain German boiler manufacturer- a long time favourite of the blue rinse brigade.