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

bob, now you are learning.

realize flat rate - as a term used by the trades- is nothing more than a manual (yes, specifically a written manual) that contains the average prices for particular jobs. These prices could've been determined by actual past bidding processes or looking over a bunch of past T&M jobs.

But it's based on actual costs and historical times for given tasks.

now, if the company you work for operates in a way that someone other than the installers goes and looks at a job, formulates a price, submits it, then the installers go in a do the job, it's not far off from how we flat-raters work.

the difference is, our installers look at the job, then using our flat rate manual (which gives them a basis for their pricing) they determine how best for them to perform the task, price it accordingly (using the manual as a reference - not as an absolute) submit the price on the spot, and if approved, perform the work.

It saves us at least 1 trip and potential miscommunication between the estimator/salesman and the installer.

But there is no set price for our tasks. And our book prices are different than LK's, and everyone else out there.

No offense meant Bob, but if you notice, I only stick my nose into certain topics. They are the topics I know. So, you can respond the way you did, or you can do research, or you can realize that I have no reason to feed you BS about this topic. Doesn't do me one damn bit of good to diseminate misinformation about it. The more guys in the country that understand and use flat-rate (upfront pricing, contract pricing, predetermined pricing, already known pricing, no suprise at the end of the job pricing, no SWAG pricing, etc) the better it is for me.

So, I ask one question, why is it that when someone doesn't know about a subject, they ask a question, but if they don't like the answer from people who know the answer, they get defensive and argue with them?

LK presented it accurately. PE added to it greatly. I didn't say anything different. I simply added that any flat rate contractor I know would agree with LK's definition. But, apparently 500+ contractors are wrong. No problem. I'll get on the phone and tell them.

Good luck and have a safe day at work.

That is human nature.

You yourself fall into the same trap often.

Why is it you feel your way is the only way?

I have read many of your posts and your knowledge of the business greatly exceeds mine.

The trouble I have is this, I have never seen you even remotely suggest that your way is not the only way.

Now unless your hanging with the Bill Gates crowd it is my opinion that your views are not as perfect as you like to think.

What I do know is that with all the jobs we do we never have refer to them as 'flat rate' and the company while having ups and downs is doing quite well and takes great care of us all.

My point in this thread has not been to change anyones mind but to point out that when someone says 'You don't understand flat rate' that in reality we all don't use the term flat rate the same way.

Do some Internet searching, there is no common definition of flat rate there are dozens of different uses of those terms.

Here is one that matches my definition of Flat rate



Now is that what we do?

Do you charge the same price per unit for 5 hi hats as you would for 500 hi hats?

I doubt it.


Work safe, Bob

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

Here is an interesting quote, I don't know who said it.

"If you have to tell the world how great you are....your probably not"

Bob,

you should look harder. I've conceded that point numerous times, even you dnk.

Here is a question for you:

A few parameters- primarily residential market, customer wants to know a price up front (How much is it going to cost?) and 20 technicians in 20 trucks, each performing an average of 3 calls per day, with a job average of $450. Small "service" work.

Is it economically feasible to have estimators go to each job and price it up, then have installers come by later and perform the work? Or to have the 20 techs calling the estimator from the field and try to explain the problem over the phone and get a price?

Or does it make more sense to arm each technician with a manual that will guide them to pricing each job correctly, on the spot, and perform the work? Thus, saving the customer money, due to only having to make one trip. Saving time and increasing profit for the company.

Remember, this is primarily residential, small projects/service work, not owner operated.

But, let's make a few things clear.

Flat rate is not my system
start your research here:

this guy is basically the one who started it. www.nspgweb.com www.flatratepricing.com

here are a few more who have perfected the system www.maiosuccesssystems.com www.upfrontprice.com

here are a couple of groups who use the flat rate system everyday with success www.nexstarnetwork.com www.youresi.com www.plumberssuccess.com www.mrelectric.com www.mrrooter.com www.benfranklinplumbing.com www.mikediamondservices.com

Here are some people who have written about this topic and are much better versed than I am
Ellen Rohr - www.barebonesbiz.com
Al Levi - www.appleseedbusiness.com
Charlie Greer - www.hvacprofitboosters.com

Here are a couple of your fellow contractors who were smart enough to do something other than argue with people on message boards www.catalystservicemarketing.com www.ccesllc.com

My point is, your notion of flat rate and the industries definition of flat rate are not the same. If you want to tell guys who use a flat rate system that they are not doing what they are doing (huh? read it again, it actually describes what is happening in this thread) that is up to you.

Your company, which is quite impressive, doesn't appear to touch single family residential service. So please, accept that LK knows what he's talking about. Accept that PE Masters and Tiger (guys who do residiential and light commercial service all day everyday) know what they are talking about.

None of them, myself included, are telling you that they way your company runs it's business is wrong. It's a different animal than what they run. Hell, I've even told dnk that we do some T&M work for our commercial customers. I've also told him on numerous occasions, that I personally have never come across a situation where, if actually understood and used properly, flat rate could not be used.

Bob, as I said earlier, take a look at my posts from anywhere. You'll notice that I don't stick my nose into too many places. When I do, I can usually back up any opinions I may have. And lastly, I am not one to cater or cowtow.

Take as you like, do as you wish. I wish you and your company the best of luck.

And dnk, since you are fond of quotes, here is one for you:

"It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt." - Mark Twain

I have avoided responding to you and I have kindly asked you to avoid me. This discussion was between bob and I.




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

Why do you feel the sources you picked are more relevant than sources I can find?

Admit it, there is no official definition of flat rate.

As far as anyone inventing 'flat rate pricing' that is as much bull as Gore inventing the Internet. They may have come up with a system they call flat rate and you may accept that is the only flat rate system but I do not.

"Flat Rate" is a term used in many different ways in many different industries.

To each their own, I am certainly not suggesting anyone change their business practices.

I am trying to wake some up to the fact that the term "Flat Rate" is not the same to everyone and no matter how much you try you can not make it so.


Bob

good luck bob.

Thanks but I don't need luck, I have trade skills.

I have no interest whatsoever in running a business, way to much work. I can't imagine the pressures of having to keep all the employees working....I would never be able to sleep.

That is way I have a lot of respect for those that do step out and open a business.

Bob

you know bob, up until about 6-7 years ago, I wanted to be the best electrician I could be. I'm a very competetive person with myself. But about that time, I realized that it didn't matter if I was the best damn electrician in the world, I needed to become the best electrical contractor I could be. Once I determined that there was a difference, I saw things completely differently. I realized that I no longer wanted to be an electrician, i wanted to be a contractor.

Do me a favor, I edited my post. Please reread the beginning where I pose a question. Maybe it will make sense, let me know.

Erik

No kidding.

I am 42, my fondness for leaving work behind at quiting time far exceeds my need to be the best EC, I doubt that will change.

I work to live, I do not live to work.

Not to say I do not give 100%, I actually made a service call on last vacation as it made good sense and the people over me appreciated it.

Now was it this question?


I would call what you describe above as flat rate.

That is not the description I get from LK.

It appears to me that LKs position is anytime you give a customer a set price ahead of time that is flat rate.

I don't agree with that, perhaps I have misunderstood LKs position.

I also have a problem with the assumption that your flat rate method always saves the customer money or even that my goal is to save the customer money.

My goal in the field is to make money for the company and leave the customer satisfied / happy but not necessarily with a lower bill.

With honest, hard workers T&M will usually provide a lower bill to the client however I fully understand and agree that many people are not comfortable with T&M. Heck if I hire a plumber to work at my home I would want to know up front what the total will be.

Bob




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

In my opinion the term "Flat Rate" could be used in many ways.

For T&M if you charge $80 per hour you could say you have a "flat rate" of $80 per hour. The hourly rate doesn't change but the price does depending on how long it takes.

For unit pricing you could say you charge a "flat rate" of $80 per fixture for installation. The price doesn't change but the hourly rate does depending on how long it takes.

The difference in the two examples is that in one you give a "flat rate" per labor unit and the other you give a "flat rate" for each fixture.

The hourly flat rate price will result in a variable final price.

The per fixture price will result in a fixed final price.

In my opinion both could be considered a flat rate price.

Example: We have a flat rate price of $80 per hour or we have a flat rate price of $80 per fixture.

I believe a better term do distinquish between the two would be "Upfront Price" or "Fixed Price" not flat rate price.

Flat rate pricing is just a slang term used in the industry to give an upfront or fixed or final price to the customer before work is started.

Flat rate pricing systems are systems designed to make it easier to determine a final or fixed price, in the field, to give the customer before starting the work. (In the field Estimating System)

Maybe they should have called it an "Upfront Pricing System" instead of a "Flat Rate Pricing System".


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

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