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#155287 - 12/21/04 02:20 AM Flat Rate System
Dave55 Offline
Member

Registered: 05/08/04
Posts: 666
Loc: Crystal Lake, Illinois, USA
I want to start a new thread for owners already using a flat rate system for my questions about using it. I am SO ready to give up T&M!

I'm most interested in how you handle non-professional surprises. I had a job several weeks ago replacing all the outlets in a house. Look at my pictures in the photos section "This Old House". I could have checked a few outlets and found them to be typical original builders outlets for the time period. Then after giving a fixed price realized the rewiring needed. What if the customer thinks that should be included? I'd lean toward using a contract proposal with it that spells out exactly what is included in that fixed price.

My other pressing question is about inventory. If I don't have a part on the truck that I need for the job I have to run to a supplier or hardware store. It may be a block away, or 30 minutes away. Do you keep a super inventory, or is running for supplies included in the price?

Dave

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Business, Office, Estimating, Legal:
#155288 - 12/21/04 09:54 AM Re: Flat Rate System
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
Dave,

I haven't been using flat rate for very long so maybe someone like LK can give you a better answer.
In the case you are talking about, my book that I show the customer, shows what's included in the price.
Example: Receptacle Replacement includes receptacle & plate.
This information is written on the invoice.
The invoice has a place for the customer to sign authorizing the price and the work.
After the work is completed there is another place for the customer to sign stating they are happy with the completion of the job.
If I pull out the old receptacle and find that the wiring needs to be repaired or replaced there is another task in the book for this. I would show the customer the unexpected problem and show them the price for the repair or replacement in the book. I would then write an additional invoice for this work or add it to the original invoice and have them initial it.
Unexpected problems will come up and it's probably a good idea to inform the customer of this in advance. Like with the receptacle replacement you would explain to the customer what the price includes and that if the wiring is bad you will quote them the price for that if it's needed. You can write this on the invoice if you want.

Running to the supply house for common items is included in the price. You want to have a good supply of stock on your trucks and a system to make sure your trucks are always fully stocked.
Specialty items that the customer may want you to pick up can be charged. There is a task in my flat rate book for this.
Your overhead in the service & repair business is going to be high so you need to crunch the numbers and make sure you are charging enough for the tasks in your book to cover everything.
Expect your hourly rate to be $100 or more.

[This message has been edited by A-Line (edited 12-21-2004).]

[This message has been edited by A-Line (edited 12-21-2004).]

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#155289 - 12/21/04 12:25 PM Re: Flat Rate System
Active 1 Offline
Member

Registered: 02/22/03
Posts: 684
Loc: Grayslake IL, USA
A-Line,

Can the price books take in account that EMT will be used or flex conduit fished thru walls?

How hard is it to look things up in the book with a customer there? Does it take much time?

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#155290 - 12/21/04 03:16 PM Re: Flat Rate System
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
Like LK said the $100 per hour would be on the low side. When I start doing the kind of advertising I want to do my hourly rate will need to be around $130 per hour.
That's a far cry from the going rate of $40 to $60 per hour for T&M in my area.

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#155291 - 12/21/04 08:21 PM Re: Flat Rate System
sextonelectric Offline
Junior Member

Registered: 12/21/04
Posts: 6
Loc: Arlington, WA
Can someone further explain the Flat rate to me? I hear you guys talking about books to show customers, are these books made for you or do you have them put together for you? How can I transfer my business into the flat rate?

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#155292 - 12/21/04 08:33 PM Re: Flat Rate System
A-Line Offline
Member

Registered: 07/23/04
Posts: 264
Loc: Utah, USA
Sextonelectric,

You can get a lot of information on flat rate pricing by going to this website http://www.flatratesystems.com Also go here http://www.contractingbusiness.com/news/article.cfm/newsarticleid/923

[This message has been edited by A-Line (edited 12-21-2004).]

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#155293 - 12/21/04 09:29 PM Re: Flat Rate System
Dave55 Offline
Member

Registered: 05/08/04
Posts: 666
Loc: Crystal Lake, Illinois, USA
I understand a maintenance agreement for HVAC, but what is there in electrical that you would give "prefered pricing" for?

Dave

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#155294 - 12/21/04 10:04 PM Re: Flat Rate System
sextonelectric Offline
Junior Member

Registered: 12/21/04
Posts: 6
Loc: Arlington, WA
Wouldnt books like RS Means be considered Flat rate since it does give assemblies and such?

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#155295 - 12/22/04 06:35 PM Re: Flat Rate System
Active 1 Offline
Member

Registered: 02/22/03
Posts: 684
Loc: Grayslake IL, USA
Has the flat rate prices cause you to loose much or any work because of the total amount was concidered too high (compaired to before you had the system)?

Tom

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#155296 - 12/22/04 07:29 PM Re: Flat Rate System
Dave55 Offline
Member

Registered: 05/08/04
Posts: 666
Loc: Crystal Lake, Illinois, USA
I've just purchased this system, but haven't received it yet. I'm at $80/hour now and barely making a profit. If I had an advertising budget, or was saving to replace my 9 year old truck I'd be at a loss at this rate. I may find when I put these in my budget I'll need to be over $100/hour. How many jobs or customers would I expect to loose at $100/hour? With flat rate pricing I can bid at higher rates without slapping people in the face with it. I've already been bidding at higher rates, but doing T&M at the lower rate.

Dave

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