Flat Rate Pricing

krthomp33

In one of my other posts, a member brought up flat rate pricing. I googled it, and it does look intriguing and quite catchy. The programs that I saw out there were a bit pricey, so I was wondering, does anybody else use it or know anyone who uses it? What are your thoughts on the concept??

joasis

You mean like framing for $4 a sq/ft? That is a flat rate...I think you will find most contractors have a flat rate as a guide to estimates, but may never be revealed to a customer.

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krthomp33

I was talking about this type of system:

http://www.flatratesystems.com/

Its more like how auto shops charge for the repairs, everything is by "the book" as far as hours and material.

Grumpy

Without getting too much into it, that system looks like all it does is take what we do every day with pencil paper and perhaps excell spread sheets and bundles it together.

Double-A

Almost every business you do business with uses flat rate pricing.

Consider that you are not charged for labor and material with purchasing a new shirt, or by the pickle when ordering a hamburger.

I've used flat rate or up front pricing for years in the plumbing and in the remodeling construction business and wouldn't ever consider using a Time and Material form of pricing to a client again.

The only hourly charge we have is when we lack access to a job due to client created problems. "We'll move all of that out of your way so you can start first thing in the morning." -- not. We have to move it cause they went to work and forgot it, and we can't work on anything until its moved.

Frank Blau is considered to be the pioneer of flat rate pricing in the plumbing and HVAC fields.

My advice to you is to network with some locals (statewide or region wide) that may be using it and get their feedback. Also, consider a system that will allow you to update and print it off yourself if you decide to use a Book form.

The ones that you submit updates to are quite expensive in the long run.

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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

Grumpy

Seriously unless you are doing insurance work and want to be right on the same page with the insurance companies, I see no reason to buy a program. With any spreadsheet and your own historic data you can create your own flat rate pricing program.

Double-A

Grumpy, the stuff is not like Exactimate or other software developed for insurance contractors or adjusters.

This is developed strictly for service oriented companies doing service calls on a regular basis. Plumbing and HVAC repair, etc.

Most of the systems print a book that is actually used in front of the client to look up prices.

Repair 2 handle kitchen/lav faucet $XX.XX
Repair Single handle ball style kitchen/lav faucet $XY.XX
Repair Single handle cartridge type kitchen/lav faucet, domestic $YY.XX
Repair Single handle cartridge type kitchen/lav faucet, euro style $YY.XX

Usually there is column for "service plan" clients. If they buy a service plan, they save money on the repair, get some inspections done for free and a discount on all repairs done in the next 12-24 months.

This is a far cry from what the insurance folks deal with.

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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

domanicapital

I think knowing average per square foot prices of various items would be very helpful. You wouldn't base a firm bid on it of course, but it's always nice to pull a ballpark out of your head when talking to customers or investors.
So can someone give me an idea of per square foot pricing for an 'average' home for:
1) framing
2) basement framing
3) electrical
4) plumbing
5) roofing
6) kitchens (per square foot for the whole thing, and linear feet for cabinets, counters, etc)

mdshunk

What we're talking about in this thread relates more to service calls and small jobs, rather than full-scale new work.

I am very intrigued with flat rate for my (electrical) business, have used it before when working in the HVAC trade, but I can't justify the initial cost of "the program". I'm struggling to develop my own historical data for each unit metric, so that I can develop my own book. It takes several of the same task to develop a reliable unit cost. When I develop my own book, I intend to offer it for free, to whoever wants it, simply because the high cost of existing systems pisses me off.

Peladu

1) framing $0.50 USD sqft in Cambodia
2) basement framing $0.25 USD sqft in Cambodia
3) electrical Not yet available in all areas Cambodia
4) plumbing outhouses only in Cambodia require no plumbing
5) roofing $0.10 USD per square, bamboo, in Cambodia
6) kitchens $25.75 USD flat rate (per square foot for the whole thing, and linear feet for cabinets, counters, etc)

krthomp33

Right on MD

I am trying to base my business on primarily service work, as that is the biggest complaint that I hear from customers and people I talk to is the lack of "service" electricians in my area. Being fairly new to the owner side of things, I lack the historical data to reliably price things out. The programs are nice, but OUCH on the prices

mahlere

one of the reasons for lack of "service" electricians is 2 fold. customers who think "service electricians" should work for $55/hr, and "service electricians" who believe these customer.

break that mind-set and realize that a good flat rate system is not an expense, but rather an investment. if used properly, they will pay for themselves in short time.

Gordo

Word.

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Looks like some pros were here.

RobertWilber

Everything is T&M
I have a problem with doing $1000 job for $465
also with taking $1000 for a $465 job
I charge more to walk in the door than for the second hour
But then, a lot of calls don't need a second hour
If it is a long trip, I charge for that too
Don't like my rates?
Call me NEXT year when the guy you paid $39 an hour has had his phone disconnected. See what it costs THEN.

Can I get $120 an hour? I dunno. I haven't asked yet

Boy, I just looked at this flat rate site, and I figure, based on what they say, I should be charging $200 an hour...

mahlere

that's $200 per Billable hour, and if you are doing residential service work, you probably should be. You'll get about 4-5 billable hours in a day. So it will work out to approx. $100/hr for an 8 hour day. Or $800 - $1000 for the day +material.