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

Flat rate pricing is the only way to go! Very simply, when you tell someone $70 an hour plus %110 on material cost, they go nuts. I hear customers respond with "Boy, I'm in the wrong business" and the like. I love the book idea! I could definitly see how customers would appreciate the fact that you have a menu of services with prices as opposed to feeling like you just whipped a price out of your a^&. How do you handle phone quotes with a book? My guess would be that you would ask very pointed questions, give them a bid that is based on the information that the customer gives you and modify the bid if need be once you get to the site. Further you would let the customer know ahead of time that a phone quote may be less than complete, but that you will be able to use a price book and some diagnostics up front to sharpen the quote upon arrival if need be. Am I on the right track?

Sparkey,

Once, you quote over the phone, that customer is gone, not to be heard of again, no mater what the price is, you have to give the quote up front, after looking at the job.

You never qoute a price over the phone.
A sample call would go something like below:

Thank you for calling A-Line Systems my name is Janet, how may I help you?

Customer: How much to have work done? or How much do you charge per hour?

At A-Line Systems we use upfront pricing. This allows us to give you a guaranteed price for a job before any work is even started.
For an investment of $39.50 we will send a licensed electrician to your home.
He(or she) will conduct a free safety evaluation of your electrical system, evaluate the job you requested and determine the price.
Everything will be put in writing and all work is guaranteed.
Nothing happens without your approval.

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A-Line

Don't get me wrong here, but that is the problem I here about the most.

Free estimates that cost $39.50?

I know it pays for travel time and fuel costs.

Who else here charges for estimates?

The other thing I here about people complaining and refering to local authorities is the use of "special Deals".

These include signing up for service contracts for "cut rate" pricing and never hearing from the contractor again?

They tell me it sounds good in the beginning, but over all, they never saved any money. The Contractor also never gets return calls for more work. A lost customer. This leaves the Contractor always looking for a new customer to survive. The catch a fish for the day theory.

How do you guys feel about this?

I couldn't operate without return calls...

One more Question for you guys,

How many of you that are doing flat rate pricing do mainly resi work?

Is that what I am missing, flat rate for resi works best?

I do mainly commercial, light industrial stuff. Very very very few resi.

I can't afford the time driving, doing estimates, talking to someone for 2-3 hours.

I often wanted to "break into" this market, but have found that in this area, the amount of available skilled people are not here.

I pass it on to my buddies who do this for a living.

Anyone else have labor issues?

Anyone find using sub contractors a better way to handle labor issues than employees?

flat rate works well in commerical and industrial HVAC.

charging for estimates is something I think you have to do. if you go out to a person home or bussiness and end up spending an hour or more there trying to sale the job you are losing money. I started charging a fee for HVAC installations and if I get the job I just deduct it from the bill. I had to do this since people are always price shopping and want you to explain **** over and over again plus they want equipment literature. So to cover my a I had to charge

There is a local plumber in my area that has been charging a $39.95 Service/trip charge for years and he is doing very well in his business. www.mikebachmanplumbing.com There are articles about him in the successful contractor magizines. www.thesuccessfulcontractor.com I've heard of some contractors successfuly charging $59 for a service/trip charge.
The tv repairman that came to my house told me on the phone that it would be a $40 trip charge and $40 diagnostic charge. Then he would give me the price for the repair.
I used to go to the customer's home and not charge anything at all to give them an estimate. This was costing too much money and time to do this for free so I started charging the service/trip fee of $39.50 the estimate is free.
I added the safety evalutaion as a tool to sell more work such as installing GFCI recpetacles where needed. It's just a quick walk through checking for the obvious and checking the loadcenter.
There is an electrical contractor in Atlanta Georgia that only does residential service work. He has 53 employees and 27 service trucks. He does $6,000,000 in sales anually. There is money to be made in this type of business you just need to learn how to do it properly. Another benefit of this type of work is that you are collecting your money daily from the customer. You don't wait 30 days or more trying to collect as you do from most GC's and industrial jobs where they need to process the invoice.

I had an appraisal done on my home. The appraiser spent less than 30 minutes at my home and the cost was $250.00 I've heard this is one of the cheaper appraisals some cost more.

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A Customer had called me this morning,He has a failed dimmer so he said ,#1 problem is the fridge has to be moved to access the switch,he has disco all the wires for Kitchen light and out side light.

He Attempted to install another dimmer and breaker would trip and also outside was slow to come on and would be dim. He also lives 45 minutes away from my shop. I quoted over the phone that he would be looking at a minimum of 200.00 for the repairs and he couldn't believe that it would cost that much to "change" a switch.

I do not feel that this was overcharging as 1 would have been at least 2.5 hours doing the job. I also think that there must have been some diy kitchen Reno's because of the location of the switch. He is now price shopping at the moment.

Thanks for the info guys......

Gives me something to think about on the resi end of things.

Happy Holidays.....

Is anything really free?
The time & expense of giving free estimates needs to be included in your overhead. Your overhead needs to be included in your prices the customer pays. So in the end the customer pays for the free estimate.

Have you ever seen the ads that say free labor with your carpet purchase? Who pays for the labor? You the customer does. It is included in the prices of the carpet they sell. So the labor really isn't free.

Free dvd player with the purchase of a big screen tv.
Purchase one pizza and get the second one free.
Free car wash with every full tank of gas.

All of these require you to purchase something to receive your free item.

Above all don't do what the most successful businesses do or you just might wake up some day and find you have become just as successful.

[This message has been edited by A-Line (edited 12-14-2004).]