ECN Forum Forums General Topics of the Trade Business Related Discussion Flat Rate Pricing vs. T&M

Sparky66,

In my area the going rate is between $40 & $60 per hour. I was charging $50 per hour doing T&M and was getting plenty of complaints about how much money I was making even though I was broke. When I switched to flat rate I went to $100 per hour and I'm getting fewer complaints.
Showing the customer the price in the book is very important. They seem to accept the price much better when then see it in a book. It gives them the impression that this price is standard in the industry.

I started making my own books but this was too time consuming and I decided I was better off spending my time getting and doing jobs not making books.

The software makes maintaining your books very easy. It's easy to update material prices, job prices or job times. You can add or delete tasks. Choose different ways to print out your books etc.
I didn't have $2500 laying around either but I don't think I could have told all my customers I was raising my rate from $50 per hour to $100 per hour without doing it this way. Now they get the exact price that they want and they see it in a book so they don't think I'm pulling it out of my a#*.
I've only been using it for about 3 months now but so far the results have been positive.

A line, I like the flat rate idea and I try to use it at all times, but how does the books cover finding problems in an old house that ends up being a bad splice that takes a couple hours to find? Is it a win some lose some deal?
I think T&M is only giving yourself a salary and not going to give you the added income of job profit.

Pat,

The personal shopper works for accounts that have some wealth, so they are hitting a target market, maby we should do that.

Joey,

Occasionally you will have a job that you lose money on. Your prices have to be high enough to cover the occasional job that goes bad. When I was doing T&M I was losing on all my jobs. So which is better?
If you find that you are losing money on a job too often then you need to increase your labor time in your book.
Example: If your book says a job will take 2 hours but most of the time it takes you between 3 to 4 hours then increase the book time to 4 hours. If most of the time it only takes you 3 hours and your book says 4 hours you are now getting more than T&M. With T&M the faster you complete the job the less you get paid for doing the same job.
You could set your prices high enough that you would never lose on a job but you might not be able to sell it to the customer.
Some have their prices quite high and still seem to be able to get plenty of work. I guess it just depends on how good you are at selling.

I think of it like gambling in vegas. The house doesn't win every hand but the house always wins the game.


[This message has been edited by A-Line (edited 12-19-2004).]