What is Flat Rate Pricing?
Are you new to the concept of flat rate pricing or using flat rate price books in your service department? No problem. We can help. We have been educating field service contractors about flat rate pricing since 1996. That’s longer than any other flat rate company that we know of.
Flat rate pricing is simply offering your client a firm, upfront price before you do the work. This is what you are already doing whenever you write a sales proposal, sell a service agreement, or offer to perform a “clean & check” for a set price.
Flat rate pricing is NOT new. It has been around for many years. Flat rate pricing has been in use successfully by many other industries. In fact, many companies flat rate without calling flat rate pricing. Think of a menu at a restaurant. Most industries use flat rate pricing. The automotive industry has been using it since the early 1950s.
The top dogs in this industry know the only way to make good money in service is with flat rate pricing. Industry experts overwhelmingly recommend flat rate pricing. Tens of thousands of users cannot be wrong. Flat rate pricing makes you more money, reduces invoice haggling, and improves morale!
Top Ten Reasons You Must Use Flat Rate Pricing
- Flat rate pricing generally allows you to charge more because you are not itemizing your invoice.
- T&M invites unfair and uneducated criticism of your labor charges that you can’t justify. Consumers will always compare your hourly rate to their hourly pay. You’ll never be able to justify reasonable labor rates.
- Customers complain less because they know the price before the work begins. No sticker shock. Customers approve everything. Customers also appreciate knowing they’re paying the same price for the same repair as everyone else.
- Collections are easier because prices and payment are discussed in advance.
- Technicians prefer it. A nationally standardized flat rate price book is authoritative and easier to explain. The price is “not their fault”.
- You will see fewer invoice errors because technicians copy the descriptions and prices right out of the book.
- Labor times are based on the “average technician”. Your company will benefit from fast efficient work.
- It’s easier to sell equipment against high repair costs because the customer can see the price of new versus the price of a repair.
- Maintenance agreements are easier to sell because the customer can see the discount they would get on the repair if they owned one.
- Experts overwhelmingly recommend flat rate pricing. The nation’s big franchises use it.
The Serious Problem with Time and Materials
- Time and material pricing is very difficult to explain so customers get confused. The confused mind usually says no . . . says no to options, says no to upgrades, and says no to equipment replacements.
- With time and materials, you tell the customer what the repair will cost after the work is 100% complete. Is that fair?
- Callers will always compare your Hourly Rate to their Hourly Pay. This means that you can only charge so much before you are seen as a “rip-off” (even when you aren’t making money). How can you possibly justify your labor rate to an uneducated caller?
- The faster you and your technicians get the less labor time you bill out on each service call. There’s no reason to become fast; it only costs you money.
What Do You Do Differently When You Flat Rate?
There is not much that is different for the technician. Flat rate pricing is easier than time and material pricing. You carry a book that has the price of all common repairs; things you do 85% of the time (a miscellaneous section covers the rest).
You charge a reasonable fee (like perhaps $69.00) to travel to their home or business. You then take your time and look over the problem. It’s great because the customer isn’t hassling you for not walking or talking fast enough. You quote from the book so there is no argument over what time you supposedly got there. The customer knows that everyone pays the same price because it’s in writing.
The customer will either say yes or no. They usually say yes! If they say yes you get to work, if they say no, you politely thank them and leave. It’s that simple!
Everyone Wins with Flat Rate Pricing
- More money! Raise your prices. This will increase profit and you deserve it.
- Reduce complaints. Customers authorize the work.
- Offer higher pay and better benefits. Helps you get and keep great people.
- Offer a guaranteed price. Your customers will love your no risk pricing.
- No haggling over invoices. Few would argue over a guaranteed price!
- Technicians love it. Copy repair descriptions and pricing right out of a book!
- Few mathematical errors and fewer misspelled words.
- Start benefiting from fast efficient technicians.
- Increase the effectiveness of online ads and other marketing. You will catch more “telephone” shoppers.
Common Mistakes Contractors Make with Flat Rate Pricing
Please be sure to read my article “Common Flat Rate Pricing Mistakes and How to Fix Them“. I have directly (onsite with them) helped hundreds of HVAC, electrical, and plumbing contracting companies implement flat rate pricing and use their flat rate books.
Final Thoughts on Flat Rate Pricing
Regardless of who you are, you are using flat rate pricing now! Every time you write a sales proposal you are flat rating. Every time your customers ask “how much” your techs are giving out flat rate prices. The trouble is that your techs are guessing and ball parking and they’re not doing a very good job at it. That’s one reason they hate dealing with money.
Using a flat rate book from Aptora, you will provide your technicians with a simple, easy to follow, professionally written book, that includes a price for everything they do. Your technician simply looks up a task and quotes prices right from the book. The customer has an opportunity to ask questions, hear their options, and approve all work before it happens. There is no risk.
Your customer will pay more because you’re offering them an absolute guaranteed no risk price. You avoid arguments over what time you showed up or when you left. You avoid unfair comparisons about your rates because you no longer disclose your hourly rate to the whole world.
Created by James R. Leichter
You can be assured that your books are accurate because we know what we are talking about. We are owned and operated by someone like you. James R. Leichter is an accomplished service technician turned businessman. He knows what you go through every day because he has been there. We have been selling this flat rate program, under the same name, since 1996.
About the Author, James R. Leichter
The Most Trusted Voice in the HVAC industry
James is a successful entrepreneur and master mechanic widely referred to as Mr. HVAC. His accomplishments include being the CEO and founder of Aptora, the President of RA Tax and Accounting, the founder of MrHVAC.com, and a partner with Pro-American Investments. He is also the creator of Flat Rate Plus®, which is hosted on this flatratesoftware.com website.
James is well known for his burning passion to help contractors and it shows in his unique speaking style. His articles have been widely published by the industry’s most popular magazines. His videos have had over one million views. James has hosted management workshops all around the United States and has conducted onsite consulting with hundreds of contractors.