ECN Forum
Posted By: Jim M Flat rate problems - 09/06/08 01:14 AM
I read this in the paper the other day and am posting it here just to start a discussion.

Beware of price-gouging local plumbers.

Evidently price gouging by many local plumbers is so common that it has become an accepted practice.

As I relate my experience to friends and associates, most of them top my story with one of their own.

I was astounded recently when I had to pay $303 for a pressure switch for my water pump. I have it on good professional authority the the switch cost about $45 wholesale.

The $303 was on top of the $79 service cahrge just for showing up. Actually I thought the service charge was somewhat reasonable, especially since my call to the plumber was after normal business hours. We had no water at all.

But the next charge really caught me off guard. The plumber said, if he checked to make sure the switch was the cause of the problem and I decided I didn't want to pay the inflated price, I would be charged a $100 diagnostic fee.

So, there I was at 8 pm Friday, with no water in a house and out of town guests about to arrive for thr weekend.

So what do you do? Politely tell the pleasent plumbe to get lost and pay $179 for doing nothing? Feeling trapped, I signed the papers and let him go ahead and install what must have been a gold palted switch. Bottom line: After paying $382 ransom. we finally had water.

As I said there are many other stories similar to this one, some much worse.

We are all victims and feel a bit helpless to do anything about it. I have expressed my concerns in writing to the plumbing company and filed a complaint to the BBB in hopes of curtailing such unethical, immoral and possibly illegal business practices in the future.

Posted By: twh Re: Flat rate problems - 09/06/08 01:50 AM
It isn't just plumbers.

One of my customers told me about a carpenter who doubled his quoted price because "the job turned out really well."

A refrigeration mechanic on a maintenance contract told a customer that her air conditioner was about to fail and she needed a new one. It even quit working right after he left. She was suspicious and had it checked and another refrigeration mechanic and an electrician. We turned the switch back on.

My ex took her new car back to the dealer because it occasionally stalled on the highway. They told her that it was supposed to do that. A different dealer replaced the fuel pump.

Electricians do it too. Dishonesty isn't limited to certain trades.

Maybe we need a feedback system like ebay.
Posted By: sparkyinak Re: Flat rate problems - 09/06/08 02:11 AM
Originally Posted by twh
Maybe we need a feedback system like ebay.
There are several websites out there. I heard one on public radio but I can not think of it. I do not know personally any reputable sites though.
Posted By: renosteinke Re: Flat rate problems - 09/06/08 04:16 AM
I can't really say that I can find anything 'wrong' with someone charging higher rates than another.

"Flat rate" isn't about a price being high or low; all a 'flat rate' means is that the job will be accomplished for the same price, no matter what. That is, you'll charge a set price, without regard for how long, what parts, or what complications you encounter. It's the end result that counts ... job done, a set amount is due.

Customer service is another animal completely. The customer has to pay for a lot of invisible things ... like the hours you're not working, and the support you need to be able to operate outside 'normal' hours. The customer has also sacrificed the main leverage he might have: steady, repeat business, with a proven prompt payment record.

One thing most often overlooked by the customer is that those truly good at what they do make it look easy.

So you come out at the most inconvenient time, quickly find the problem, fix it promptly because you have the necessary parts on the truck ... all on the chance that you'll actually get paid when you're done.

That the customer sees you on site, actually working for 30 minutes, then leads to this line of thought on the customers' part: "Let's see, he worked 1/2 hour, I get paid $20/ hr, the parts cost $5 at Home Depot .... so the bill should be $15."

It just isn't right for such competence to be punished. Yet, somehow the customer thinks that the guy who spent three hours chasing false trails is somehow worthy of six times the pay. After all, the dolt was there six times as long!

Now, the matters of charging for unnecessary work, or work that is not performed, are something entirely different.

Different 'flat rate guides' are nothing more than attempts to distribute your expenses over the customers who use certain services. For example, a higher rate when using the scaffold than when using a ladder may seem silly - except that scaffolds cost money, and the job gets done a lot faster.

If I have any problem with these schedules at all, it is that the customer has NO need to know how you arrived at your price. The last thing you need is for him to start dissecting your methodology. The focus should be on the end result alone.
Posted By: Trumpy Re: Flat rate problems - 09/06/08 05:58 AM
This isn't about Flat rate or about price gouging.

There are Forums full of people that have called tradesmen after hours and then later whine about how they think they have been wronged, why this is I'm not sure.

Fine, if you think you can do better, be my guest, I'd like my evenings to myself as well as my weekends.
Actually, I think that price was far too low, given the customer.

If they knew the pressure switch cost that much, why did they not go out and buy one and fit it, oh sorry I forgot, they lack manual skills.

Tradesmen are hired for (get this)their expertise not their time, when idiots that hire them realise this, the better off we will all be.

I like the "8pm Friday night and we had guests coming" bit, well maybe the plumber did as well.
Posted By: twh Re: Flat rate problems - 09/06/08 01:29 PM
Actually, I think that price was far too low, given the customer.
Posted By: Zapped Re: Flat rate problems - 09/06/08 04:11 PM
I once had a lawyer complain about my $150 bill for coming out at 10pm and finding and correcting a short in a light fixture that was knocking down half the lighting in his house. He couldn't wait until the next morning, and I told him up front what the minimum charge would be, which was $150.

This same idiot charges people $350 an hour, even if the phone call he just billed at 1 hour only took him 5 minutes.

I don't like the idea of getting hosed by a tradesman (or lawyer) any more than the next guy, but I've gotta agree with Trumpy on this one - expecting someone to be on call 24/7 and run out to your house like a paramedic when a problem arises, then griping about the price, is a very selfish and narrow view of the world and the value of other peoples time.

I'm sure that guy would much rather be at home or out having a life than running around for your benefit only.
Posted By: LK Re: Flat rate problems - 09/06/08 04:33 PM
Yes, that price was low for the service he received, customers, do not understand the real costs of doing business, they usually compare their hourly pay to other services, missing the largest part of the expensives, the service overhead and operating costs, that guy was lucky if he made $15 out of that $300.
Posted By: electure Re: Flat rate problems - 09/06/08 05:31 PM
For off hours 24/7 service the last service company I worked for had as their policy:

1) Established customers only.
2) 4 hour minimum charge.
3) 1-1/2 times regular rate.

This resulted in a minimum labor charge only for $540

I think he charged low

Posted By: LK Re: Flat rate problems - 09/06/08 05:50 PM
After he paid his overtime labor burden, and after hours operating expenses, he most likely lost money, and din't realize it.

A local high rise complex maint super was telling me just about all the service contractors charge a min $300 just to look at the problem, then get $200 to 300 an hour per man, he said the electrical contractors are just about the only group they can play with and jerk around, they will jump every hoop just to secure a crumb of work.
Posted By: A-Line Re: Flat rate problems - 09/06/08 05:57 PM
So, there I was at 8 pm Friday, with no water in a house and out of town guests about to arrive for thr weekend.

So what do you do? Politely tell the pleasent plumbe to get lost and pay $179 for doing nothing? Feeling trapped, I signed the papers and let him go ahead and install what must have been a gold palted switch. Bottom line: After paying $382 ransom. we finally had water.

Spending a 1/2 hour driving out to the customer's home at 8:00pm on a friday night, spending an hour at the customer's home talking with the customer and diagnosing the problem, giving the customer a price for the repair and then another 1/2 hour driving back is considered doing nothing?

$179 is cheap for this service in my opinion.

How much do you suppose a doctor would charge you if you wanted him to come out to your home on a friday night at 8:00pm to diagnose an illness you had?

Would it be considered that he did nothing if he came out and made the diagnosis and found you needed surgery, gave you a price for the cost of the surgery and just because you felt it was to much you opted not to have it done?

The customer got their water service restored on a friday night at 8:00pm for $382. I would consider that a bargain.

Posted By: A-Line Re: Flat rate problems - 09/06/08 06:18 PM
I'm not sure I would consider this just a flat rate problem.

Would the customer have felt any better about it if they were qouted an after hours hourly rate, then after the plumber came out did the diagnosis and made the repairs they were handed the bill after the repairs were done for the same amount?

At least with the flat rate the customer was quoted the exact price before the repairs were made. With the T&M hourly rate charge the customer doesn't know the price until after the repair is made and they're given the invoice.

If the customer didn't want to pay the $100 for the diagnostics they could have just paid the $79 for the plumber to do nothing. That is if you consider driving out to the customer's home at 8:00pm on a friday night as doing nothing.

Posted By: NORCAL Re: Flat rate problems - 09/08/08 01:37 AM
I am not a fan of flat rate, from a biz standpoint it makes sense, but will avoid calling a contractor who is flat rate that being said, the orig. post did say it was after hours and the price for that was not out of line, perhaps they could have waited untill the next business day grinand shopped for a better price. If someone is called out at a odd hour they need to be paid for it, as they prob. had better things to do....... whistle
Posted By: Tiger Re: Flat rate problems - 09/10/08 04:43 PM
If I had guests on a Friday evening I'd gladly pay a pro $400 to get my water running. I usually figure $200 minimum for any trade after hours. I think $350-400 is very typical for a small after-hours repair. Anyone who quotes material wholesale prices has very unreal expectations.
Posted By: kinetic Re: Flat rate problems - 09/17/08 05:37 PM
twh - Having the right tools and the right parts to get the job done costs alot of money. I dont know alot about the part in question but for me to fully stock a truck and have at hand all the material to do a job no matter the time or place is worth something. Home Depot doesnt carry half of what I need......especially at 8pm at night on a Friday so the parts better be on the truck or the job isnt going to get completed. He needed the job done ASAP and that isnt the plumbers problem. The plumbing company took the time and expense to be prepared for the job plus they let him know before he paid what his costs where going to be.

The part in question supposedly costs $45 wholesale. Add tax, the fact that the plumber needs to warranty the part for a year, and the idea of delivering the part to his door the same day at 8pm on a Friday night, plus labor, and other costs. I could go on and on....

No one likes to pay unexpected bills but the fact is the writer needed the work performed ASAP and at an odd hour of the day. He didnt mention anything about the work not be done correctly or having any issues other than paying more than what he thought it should cost. He should do a little research before he complains next time.....or just wait until Monday to have the work performed during regular business hours.
Posted By: twh Re: Flat rate problems - 09/17/08 11:34 PM
It doesn't matter how much you charge, as long as you are up-front about it. Telling the customer that there is a surprise diagnostic fee is going to be upsetting, as is a 300 percent mark-up on material.

I get the same complaints as the rest of you do, but I always try to put myself in the customer's position. For example, what if a mechanic quoted $100 to replace a tire, then charged $300 for a $100 tire. I'd be pissed, wouldn't you?
Posted By: WireNuts29 Re: Flat rate problems - 09/29/08 10:35 PM
If you had that $100 tire insatlled at 8 pm on a friday night, cause you lacked the skills to do it yourself, and the price was explained to you what would your gripe be. If the "customer's" work called him in at 8pm on friday to shuffle some papers around, im pretty sure he'd want to get paid a different pay than the normal 9-5 gig. People totally undervalue the trade people whom they allow to work on their most expensive possesion, yet if you caused a fire or the plumber causes a leak, they sure as hell won't be willing to bargain with the insurance company, if they were smart enough to have the properly licensed and insured pro do the job. I have a small personal story which relates to the original post. while on call one week I got a call from a rite aid pharmacy, who our company typically does a bit of service work for. I explained to the manager the pricing policy, a minimum 4 hours of double time for the after hours call. But the manager insisted I come because his outside lightng hadn't worked the last 2 days. So I drive 45 minutes to the store which is lit up completely. The manager never looked outside that night apparently. So just for good measure I checked all breakers, contactors etc. I felt bad charging the store 4 hrs double...however Due to their lack of common sense I wasted the better part of my evening.
Posted By: EV607797 Re: Flat rate problems - 09/30/08 12:28 AM
I've been down the same road as a consumer. A couple of years ago, my deep-well water pump (285 feet) failed. I knew how to do the regular above-ground testing and was praying that it was a fault in the cable feeding it. I'd have thrown a cable above-ground as a temporary feed and been the hero to my wife. No such luck.......No continuity at the well head. This was on the night before Thanksgiving.

I have a buddy who is a plumber and he offered to come over and help, but he didn't have the pump in stock. I checked with several big-box stores and sure enough, Lowe's had one for $379.00 but it wasn't the right horsepower (too small). I came very close to going that route and dragging my buddy out to help me drag that thing up out of the ground. I should note that it failed at about 5:00 PM, so by the time I got the pump across town, got my friend to come over, winched the thing out, it would have easily been midnight at best before we got done.

I took the more logical route and decided to call a pro. The biggest ad in the phone book resulted in a prompt answer and a professional quote being given: $2,100.00 including installation. I was desperate, so I said that they should come on over. A half-hour later, I received a call from their on-call technician who informed me that they aren't really servicing my area yet; that the Yellow Pages ad came out before they had trucks in my area. I say false advertising, but nevertheless I am back to square one. There was no time to argue.

My wife and I keep dialing every other plumbing or well company we could find in the phone book. We left messages on answering machines all over town, even at places that claimed to have 24 hour service. None ever responded (bad business move by the way). Just when we had just about given up hope, my plumber buddy called me and asked if I had found anyone yet. Of course I told him that I hadn't. He gave me the name and number of a plumber who doesn't advertise since 100% of his business is word-of-mouth. I called the guy, explained my situation and he offered to come over that night. Without even asking the cost, I told him that I couldn't afford it.

He then gave me an idea: How about running a garden hose to my neighbor's house connected to their hose bib, then at my house connect it to my hose bib using a washing machine hose to make the male-male transition? That would give me enough water to get through the night. He assured me that he'd be over with the 1 HP pump that I needed at 6:00 AM the next day (Thanksgiving day).

Sure enough, he showed up before sunrise and began winching the old pump out before we awoke. By the time I managed to get some clothes on and make it outside, he and his helper had pulled it up with what seemed like a mile of pipe spread out all over the yard. While he had already started affixing the pump to the end of the pipe, his helper was wiping the pipe down and inspecting it for scrapes or pinholes. He was also replacing the cable feeding the pump, although there didn't seem to be anything wrong with it.

I questioned him as to why he replaced the cable too, and his response was that "I want to make sure that it's right the first time. If I have to include the pipe, I'll replace that too". Of course, all I can think of is dollar signs since I have plenty of 10/2 UF in my basement. At this point, I figure that I am his hostage and that I need water, so beggars can't be choosers. I just go ahead and leave him alone while I go inside and check my bank account balance. No doubt, this is going to be expensive for sure.

Two hours later, he's done, the yard is cleaned up, his helper is outside raking the grass where they drove the truck and rolling up our temporary hose while the boss is in the truck preparing the bill. The doorbell rings and with wobbling knees, I answer it. He comes in and we sit down at the kitchen table. He prepared a computer-printed invoice that outlined every aspect of the job. No charge for the advice given the night before. No charge for the pipe inspection. No charge for the replacement of almost 300 feet of 10/2 UF. Cost for pump and materials: $495.00. Cost for labor (two men on a holiday): $600.00.

His invoice terms even allowed A) Cash or check; B) Credit card; C) Financing (approved on-site); or D) NET 30 days. I was only too happy to write the guy a check for $1,500.00 with the extra being out of appreciation for his having put aside his personal holiday to help someone else during theirs. He refused to accept the tip, but allowed me to direct that his helper receives it.

Now I understand why this guy doesn't have to advertise. I later found out that he's the owner of one of the largest plumbing contractors in my area, but just likes to help people out on the holidays. What a guy. He later told me that had it been any other Wednesday night, I would have easily have paid over $2,000.00.

I've now started "putting out the fire" by offering a temporary solution so that the customer can get by until the next day. Usually, once they have made contact and feel comfortable, they can wait until tomorrow. We don't have to drag someone away from their family, and we are assured of the job in the morning. The customers stop dialing once someone puts their mind at ease. Half the time, it's a tripped GFI or breaker anyway.

No real moral to the story, but I did learn that the next time that I receive one of these types of calls, I might approach them with a different mindset. Instead of looking to get rich at the expense of someone else's misfortune, maybe I should look at it from the angle that what goes around comes around.

Posted By: Wireless Re: Flat rate problems - 10/03/08 05:39 AM
I almost always will try to advise a temporary fix over the phone. I have no problem with them saving money by not having me do the job, but if I come out there I expect to get what I ask for with no complaints.
Posted By: Service Doc Re: Flat rate problems - 11/17/08 09:20 PM
Hi Jim,

I work with contractors for a living and assist them in better understanding their true cost of doing business and in turn, what they need to charge to make a decent profit. The number one issue I see with most new customers is UNDER CHARGING! Most of them will have a low hourly rate and mark up materials. However, the vast majority do not account for the overhead which includes insurance, bank charges, tool replacement, equipment purchases and also, the biggy, unproductive time (driving, chatting, supply house, callback labor to name a few). The average breakeven per productive hour (pure task time only) is between $175 and $225 (based on a 4 hour productive day). The reason that we break it down to productive time only is to allow Flat Rate Pricing which provides the same price for a chatty customer who lives across town or the near mute customer who lives accross the streets. By breaking down to a 4 hour day (the average productive time for a service contractor), we rely and bill based on task time only allowing us to charge the same price for a certain job regardless of geographical area or customer "chattiness".

Getting charged $303.00 for an after hours call with a $45 part is in many situations, par for the course. This contractor probably accounts for all overhead costs from credit card charges to loan interest, from uniforms to sick days, callback labor and warranty, and I could go on and on. Most contractors that originally call us complain that they work long hours, weekends, etc. but by year's end, that have very little to show for it. Most of them have an eye opening experience when they see just how many incurred expenses they fail to account for. By the time we are done with them, they are charging a higher rate based on a 4 productive hour day. Being in a flat rate environment, the hourly rate is not shared with the customer, instead, a price for the job is provided. In the event the customer wants a breakdown, they send a letter that breaks down the total amount of every expense incurred for that specific call, educating the customer on the expenses required to provide such a professional service and basing it on task time only, so although they were on site for 2 hours, the rate applied is for 1 hour only.

Many of our customer's compete with other contractors that charge sometimes less than half of what they do and to do combat this, I suggest they provide the customer with more than just a price when quoting them. This way, they can compare apples with apples and although the other guy may be cheaper, he may not carry insurance, may not provide fast turnaround or a multitude of other advantages that someone that charges near to nothing cannot provide.

So take it from me, if you choose to trust this particular "stranger", odds are you are selling yourself short as opposed to that plumber ripping you off.

I hope this helped!

Posted By: ICEBRUSH Re: Flat rate problems - 11/23/08 11:58 PM
Most good flat rate compaines that sell there products our based on what your cost are.
Regardless, if your a T&M company or a flat rate company, you have to know your true cost and breakeven point then go from there.
Posted By: dougwells Re: Flat rate problems - 11/24/08 12:24 AM
I used to think well if i work for somebody @ 20.00/hour wow if I went for myself and charged 42/ hour Thats double of working for the Man > smile.
It took me 2 years after getting on the net hearing all the responses that you have to know YOUR cost of business , not the going rate or what the other guy charges.

costs are not the same for each company.It took me 2 years to believe the guys that i needed a cost analysis.
When i finally did a break even and watched it for a couple years
I was shocked that my costs ran from 140-200 per hour.What an eye opener.

So Flat rate was the only option I could find to help me with these costs.
Posted By: ICEBRUSH Re: Flat rate problems - 11/24/08 04:36 AM
Doug, I went 8 months wondering what I was doing wrong, even when people talked with me about knowing my cost I didn't understand. I finally got it when I read 2 books. Where did the money go, and How Much should I charge.
These books have changed my hole look on my business and I recommend these books to anybody who needs help understanding business or starting a business.
Posted By: dougwells Re: Flat rate problems - 11/24/08 05:20 AM
I have read Ellen rohr and the emyth contractor i also have many articles from frank blau that i have read. I am trying to find the time to read how to win and influence friends soon.

I should get the booK Where did the money go but i have a pretty good idea where that went smile
Posted By: Tiger Re: Flat rate problems - 11/29/08 02:30 AM
I had a call last week. One hour round trip travel, she was 30 minutes late for the appointment & we spent an hour talking about her electrical problems/repairs (2.5 hours total). There's a UF wire between the house & garage above ground in 2 places. I quote conduit underground, but she doesn't want it underground (the squirrels will eat it). I quote it overhead, but she doesn't want it overhead (the squirrels will eat it). Besides, the last guy only charged $350 (and it only lasted 18 months & is above ground).

Now she's going to complain to the BBB about the $75 service charge which she agreed to on the phone & in a signed contract. I don't even want to calculate how much money I lost at $75 for 2.5 hours plus the time to deal with the only BBB complaint I've ever had.

If it weren't so rare I'd work for someone else.
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