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Joined: Jul 2002
Posts: 717
M
Member
quote"So when I think of flatrate I think of someone giving a bid price so they can make better money on this small job."

Bingo! That my friend is the reason we have this here great country of ours. A great capitalist system.

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Joined: Dec 2005
Posts: 44
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Member
Well, considering that I do service work and use both flat rate and contract prices - I will submit that they are very similar but different.

For example, when doing "ordinary" things - such as changing out a ceiling fan - I use flat rate. That is, I look in my price book and then tell the customer it will be $65.00 to change out one ceiling fan, and $50.00 each additional fan. I do the same thing with other "simple" work, such as running in a single circuit. My self-made book tells me how much to charge to install an Old Work box, how much to charge for a 20-A receptacle, cover plate, and wire per foot. Add them up to get the total price (and each thing is itemized on the work order/invoice for the customer to see and sign off on.)

On the other hand, I do other jobs that, if I used my flat rate system, I would charge far less for than when I use a contract price. For example, I repaired an outdoor service this past week that was damaged in a storm. My flat rate price for this repair would have been around $700.00. That's materials with markup plus $100.00/hr labor. However, because I know that most electricians in my area charge more for this work than I do for my flat rate, I went ahead and gave a "contract price" for $1,000.00. In other words, I did not itemize the prices for each individual assembly or component. I simply listed "Repair 200-A service damaged by storm" and gave a total price of $1,000.00.

Now, some might consider this to be "price gouging" or some other nasty term - even though I normally charge this price for this work (i.e. I did NOT inflate the price due to it being an insurance claim or storm damage). But in my opinion, it is simple economics. The market in my area will bear this price for this work, and thus I'll charge it. A free market always sets the price - not the contractor. I see no need to charge less for the same work just because my book would indicate that I can do the work for less.

So, "in my book" :-) there is a bit of a difference between flat rate and contract pricing. Flat rate is always based on material cost with markup plus labor. A contract price can be any price the contractor wants it to be and for any reason.

Kevin


Kevin
Joined: Jan 2003
Posts: 1,429
L
LK Offline
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Ok, i give up, everyone does have their own idea on how flat rate works.

"Flat rate is always based on material cost with markup plus labor. A contract price can be any price the contractor wants it to be and for any reason."

And flat rate, can't be any price you want it to be? The whole idea of using rate sheets, is to give you that ability to adjust your prices, the price on the sheet is only a guide, you make adjustments for job conditions, and then giver them a contract price, or flat rate, or up front, or any other name that you like.

"My self-made book tells me how much to charge to install an Old Work box, how much to charge for a 20-A receptacle, cover plate, and wire per foot. Add them up to get the total price (and each thing is itemized on the work order/invoice for the customer to see and sign off on.)"


Does you self made book, have your indexed pricing, with your overhead adjustments, does it have the sales tax adjustment, for service work, can you adjust your assembly price, with add on tasks in the field, is your material cost updated.

"and each thing is itemized on the work order/invoice for the customer"

This sounds more like T&M

Sunny,
I am not saying what you are doing is wrong, if it works for you then, that is great, this discussion is more about the term Flat Rate, and how others view it, so your input is important.

___________________________________________

"I don't think we all use them to mean the same thing."

Bob called this right, from the beginning, every does have their own view, on what flat rate is.




[This message has been edited by LK (edited 09-24-2006).]

Joined: May 2005
Posts: 706
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One of the good reasons for giving up T&M is to avoid those time-consuming itemized invoices. My invoices read something like "Recessed Lighting Installation per Service Work Order".

Dave

Joined: Dec 2004
Posts: 1,064
D
Member
Time consuming invoices?

Mine read labor, and material. 2 lines

I think it is important for these discussions to state whether this discussion is for resi work, commercial work, or industrial work, from the beginning.

Most if not all of you doing resi, seem to think T&M doesn't work, can't work and does not make money.

However, I am sure bob and a few more, will agree with me. T&M may be the only way to do some jobs. And it does make money, or we wouldn't do it.
For the record, I am referring to industrial and large commercial work.

Joined: Jan 2003
Posts: 1,429
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LK Offline
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"For the record, I am referring to industrial and large commercial work."

Most of our industrial, and commercial work is contract, bid work, unless is was a service call, or contracted services, then we use T&M.

T&M can, and does produce income, when used with the right project, such as long term building maint. contracts, some building management will want a contract price, and others will accept T&M, so it's is not a cut and dry deal.

Joined: May 2005
Posts: 706
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Member
Check the profile Dnk. Go to my website...Residential Specialists with 30 homeowner testimonials.

I meant itemized as in 7 J Boxes, 15 Cans, 15 Trims, 15 Bulbs, 50' of 1/2" emt, dimmers, breakers, etc. with individual prices. By the way, mind if I charge you hourly for the time I'm writing up this tedious invoice?

Dave

Joined: Jul 2002
Posts: 717
M
Member
Here is my observation, although I never really saw it like this until about 2 years or so ago. Do you know of any large building, hospital, airport, bridge, highway, or shopping mall that was built using T+M for a basis of payment? What do you think the owners of those projects would say if the contractors came to them and said that building those above items contained too many unknowns and variables, such that it was too risky to build those projects unless they paid T+M. Heck no, they bid them and build the risk into the bid. And small jobs aren't really any different. We just need to START providing for those contingency's in all our bids, and not fall all over each other trying to lower the bids to beat the other guy's bid. Big jobs have good profit built in for the company, small jobs should too.

Joined: Nov 2005
Posts: 507
M
Member
Please do a search on the term "flat rate" in regards to residential and light commercial service work (all trades)

LK's definition of (paraphrasing) flat rate being the same as contract pricing, is the accepted industry standard. Of the 500+ contractors that I know who use flat rate, that is the definition they would all give you.

So, no offense to anyone, but whether you agree with that definition or not is quite irrelevant. It's like saying "I don't agree that a plain pizza is generally dough, cheese and tomato sauce"

There will always be variations, but any contractor who uses flat rate pricing will generally follow the principles LK set forward.

PE did a good job of explaining the real benefit to a flat rate manual (employees)

macmike makes a great point with his last post.

call it what you want, but more and more customers simply want to know what things will cost before you do them. however you figure out that price is up to you.

Joined: Jan 2003
Posts: 4,391
I
iwire Offline OP
Moderator
OK I must be wrong because mahlere said so and he is never wrong....just ask him. [Linked Image]

I will tell the owners of the company I work for that we are no longer electrical contractors.

We are now electrical flat raters.

We do give the cutomer a set price, I would not say we arive at that price by 'flat rate'

Bob


[This message has been edited by iwire (edited 09-25-2006).]


Bob Badger
Construction & Maintenance Electrician
Massachusetts
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