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Mutiny!

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We would call that a not to exceed quoted price. We held the meeting for an hour and one half this morning. We were told by our consultant after voicing our concerns that flat-rate in the Milwaukee area is indeed poisoned by the fact that several firms used the system to charge excessively.

We discussed options and will customize a system that is tailored to our customer base and will use a well quoted not to exceed pricing system.

This will take time and when complete will be far better than a generic system that does not know all of our variables. This inhouse roundtable discussion was extremely open to ideas and solutions. I am very confident that our system when completed will be one of the best in the industry. This is our goal and we have a very good track record of achieving all our goals.

I am satisfied with the way all of us contributed in a civil manner. The end result will now be several months away. I will let you all know the basics when we finish this change.

Comments

  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Mutiny!

    With the high increases in gasoline prices, steel prices and of course labor costs (wages and benefits) our firm is toying with a modified upfront pricing system. This of course used to be called flat-rate but due to flat-rate's bad reputation (especially here in Milwaukee) we now have different names.

    While this system has lots of pluses it has caused near mutiny at our firm. We employ about 35 field personel and about 1/3 threaten to quit if we implement anything that even slightly resembles flat-rate.

    Understand that there are two firms in the Milwaukee Metro area who have used extreme pricing that has resulted in TV stings and even lawsuits.Our guys want nothing to do with that kind of label.

    I forsee a compromise that will customise a more modern pricing system to our very large and faithful customer base.We crunch numbers well here,we could improve on inventory control and improve a little on expediting.

    While I am certain all companies are different I think the size of our firm is going to make this a tough sell!
    The firm was built on word of mouth type advertising and lot's of community involvement and goodwill.

    While I have had some major differences with the two high priced flat-raters (as some of you may know) I am not adverse to upgrades that will make us a better company.

    Tomorrow is input day and quite frankly I am not up to fighting this battle again. Any experiences regarding converting to upfront(or flat-rate) pricing.

    Thanks in advance!!!

    Rich K.
  • Ross_7
    Ross_7 Member Posts: 577
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    I can understand..

    Where you are coming from. Everyone wants to have a sucessful business, and make money. Sometimes, though you & your company, or anybody's company has to look at the big picture of things. I once worked for a company who tried to go with flat rate pricing and it didn't go over to well. I, as a service tech, liked the time & materials approach. There are going to be a lot of people chiming in about this subject, I'm sure. Telling you about how great Flat rate pricing is & how much money you're going to make by doing it,& etc, etc. I live in an economically depressed area & I couldn't charge people $300.00 for a bunch of items,listed in the flat rate book on a bill, that normally was done as a scheduled routine maintenance for Fall start-up. Of which, I usually charged an hour's worth of labor plus whatever parts were used. I know that we are not in the charity business, but it beats the hell of standing there in a villian costume tying some widow to the railroad tracks, at the sake of turning a profit. I know that I will have a bunch of people on this website beating me up about my views & my opinion on this subject. However, that's price you pay expressing your opinion.
  • [Deleted User]
    Options
    A tough row to hoe....

    Rich,

    Ask yoyur fellow employees if they like making a decent living. Ask them how much they value the health/dental benefits. Ask how much they like the retiremnt benefits. Oh, they don't get that now? (or maybe they do...) If the company is profitable, then they WILL get those benefits. And the company doesn't have to charge $300.00 per hour to get it either. The company does however have to charge enough to cover their direct/indirect costs of operation, including future expansion, and a reasonable profit margin to make it worth the exposures that the owners are taking in the form of risks.

    Up front pricing is commonly used to hide the hourly charges associated with operating a large, profitable business, and I know you have had a go around with an industry icon, and you were not to favorable to his ways of doing business, and that is your perrogative.

    However, properly and fairly done, up front pricing actually makes it much easier for the technicans to do business. You determine the tasks, open the book, let the consumer make decisions as to best, better or good, and go forward from there. One of the most important aspects o fthis type of business is determing method of payment PRIOR to starting the work. "Will you be paying me with cash, credit card or check when I am done Mrs Smith?" It creates and maintains cash flow.

    It has been my experience, that if not all employees are in favor of the transition, then they must be let go. It's either all or nothing. There can not be any old school stragglers, holding back the rest of the crew. Generally speaking, once everyone understands the methodology, and the fact that they stand to benefit the most from the profits, then the smart people will get on board with the program, and the stragglers will continue to suffer, always wondering if they made the right decision.

    It's just business, and being in business means making a profit. If you're not into making a profit, then get out of business and consider going to work for someone else who is profitable. I did.

    It's a tough row to hoe, and it's not for everyone.

    Good luck in your endeavors, and keep us posted as to your progress.

    ME
  • Ross_7
    Ross_7 Member Posts: 577
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    Profit

    I've worked both sides of the fence, both non-union & union shops. My bosses from both shops never seemed to be hurting financially. In my area, most of the non-union shops do not pay their techs anywhere near $20.00/hr with little or no benefits, but still charge the same rate, if not more than, the union shops.Usually, it's substantially more. My boss at the union shop, always had our benfits paid in full, and we received a fair wage. These are just examples, and I don't want to turn this discussion into a labor dispute. Again, JMHO. Peace.

    Ross
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Many Truisms

    > I think there are some good to this and yet there

    > are some drawbacks. I am going to play both ends;

    > so guys keep an open mind ok. First I want to say

    > as a whole we are the least paid professions for

    > what we have to do and the cost of business

    > today. Most of us are small to moderate size

    > companies. Very hard to compete with the coperate

    > world. I am sure most people agree that they

    > want and need health insurance. Average cost

    > today for a family is about $ 1200.00 to $

    > 2000.00 a month. Most big companies pick up 50%

    > to 80 % for the employee. Now Lets start to break

    > this down.

    >

    > .01 most companies run between 25%

    > to 50% overhead

    >

    > .02 most companies range in

    > size from 5-25 folks

    >

    > .03 in rural areas size

    > ranges from 2-5 folks (there are exceptions

    > to everything guys)

    >

    > .04 most companies are

    > charging between $125-$150 for a call some

    > more some less

    >

    > Just a seniro guys

    > Servicall to Ms. Smith house, ac went out needs a

    > new 2 pole contactor. Total cost for call and

    > part will range from 150.00 - 300.00. we will say

    > for gigles the call was $ 200.00. and the company

    > has a 25% overhead and pays the tech 20.00 an

    > hour. Takes the tech 30 minutes driving time, 30

    > minutes for repairs.

    >

    > $200.00 less 25 %

    > leaves $150.00 now minus tech what it cost u it

    > ranges about 35.00 to 40.00. Leaves you about $

    > 110.00 now take out truck cost ( 15 mile one way,

    > but u gotta get him back so we will say 30 miles

    > travel all together), leaves you about $ 75.00

    > now take out part cost now u are about down to $

    > 50.00 profit.

    >

    > Now if you provide him or

    > her with health insurance, remember average cost

    > about $ 1600.00 a month roughly $ 50.00 dollars

    > a day. Now the first call he or she does everyday

    > there is no profit.

    >

    > I own and operate a 5

    > man service company. We have gone to upfront

    > pricing, but still do time and material mostly on

    > the commerical accounts. Now I have the luxury of

    > living in a small size county, where I know most

    > everybody. No little ole widow lady is not gonna

    > pay the same price as the folks living on the

    > golf course or the lakes and my guys are reminded

    > of this everyday.

    >

    > You go the the dentist,

    > he gives you a upfront cost for pulling a tooth.

    > You go the bodyshop and he gives you an upfront

    > price. You go get your oil changed and you are

    > given a upfront price. You go to the gas station

    > and you know what the price is before pumping the

    > gas yourself lol. You go to the grocery store and

    > the food is priced before you ever take it of the

    > shelf. They even have stores with these new

    > things that price the groceries before you even

    > get to the check out lol.

    >

    > In 1986 a

    > bought a brand new van for $ 7100.00 today that

    > same van will cost you about $ 24,000.00. Gas was

    > about $ 1.20 now its about $ 2.50 some place alot

    > more. Copper and steel went up over 100% last

    > year did your prices go up that much. Now I know

    > some folks are gonna jump up and down about this

    > topic, thats ok we do live in a country that has

    > freedom of speech.

    >

    > Just my 2 cents from

    > zudzoo corner

    >

    >

    >

    > Peace Be With You

    >

    > David

    > C. Broome

    >

    > P.S. Ken please don't hurl to many

    > things at me lol

    >

    >

    >

    >

    >

    >

    >

    >

    >

    >

    >

    > _A

    > HREF="http://www.heatinghelp.com/getListed.cfm?id=

    > 390&Step=30"_To Learn More About This

    > Professional, Click Here to Visit Their Ad in

    > "Find A Professional"_/A_



    Much of what you proonents say is true an I have haggled over the pros and cons. The problem is what was taught by the Guru was not prcticed by the Garu.

    Frank could not make it as a mechanical contractor he felt the exercise was not worth the return. Instead he and others found very clever ways to repakage themselves and elevate the status of the profession.There is nothing wrong with this.

    I come from a bid and spec background where we bid competitively and were very sucessful at it. I left that environment because I was living out of a suitcase. Working on the road four days a week, coming back and doing troublshooting on Fridays and sometimes Saturdays.

    This was a very sucessful company but I put value on my family life (we have five children) and walked away from it. I do not regret that decision as I have worked for some fine firms since while being home every night.

    I am involved with my kids, my grandkids, my church and am active in our little community.

    There are many similar tradesmen in the firm we currently work for that lead similar lives and are content. We have excellent pay, benefits and the company is also very profitable. In other words it is not broke and does not need to be fixed.

    We are not in need of a better way like some firms are.The problem is solely the fact that our average hourly rate is easing up yo the century mark and the owners feel that is a number that stands out and will chase away customers.

    Like I stated I think we need a custom overhaul versus a generic store bought system! (Not Frank's by the way)

    I respect alot of what Frank has done,what Ellen Rohr has done and what Randy Hilton is doing. I have the utmost respect for Dan Holohan and other contributors here. Hot Rod comes to mind (Ellen's husband) he is such a specialist and so knowledgeable he could probaly get $500.00/hr. Dan has a gift that happens to bring fun to learning and participating. Dan should be rewarded accordingly and most likely is.

    The get rid of idea is not an option! Out techs are some of the finest in the State of Wisconsin. Retaining employess is far more a problem then tweaking our billing system.Remember we are a highly licensed profession (plumbing) in this state with a severe shortage of quality credentialed tradesmen.

    I will keep you posted as to how it goes. I have a major problem with the deceptive part of flat rate systems and I do not put money in front of ethics and decency!

    Call me a rare bird if you like but that is part of my value system.
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Many Truisms

    Much of what you proponents say is true as I have haggled over the pros and cons. The problem is what was taught by the Guru was not practiced by the Guru.

    The "Guru" could not make it as a mechanical contractor he felt the exercise was not worth the return. Instead he and others found very clever ways to repackage themselves and elevate the status of the profession.There is nothing wrong with this.

    I come from a bid and spec background where we bid competitively and were very sucessful at it. I left that environment because I was living out of a suitcase. Working on the road four days a week, coming back and doing troublshooting on Fridays and sometimes Saturdays.

    This was a very sucessful company but I put value on my family life (we have five children) and walked away from it. I do not regret that decision as I have worked for some fine firms since then while being home every night.

    I am involved with my kids, my grandkids, my church and am active in our little community.

    There are many similar tradesmen in the firm I currently work for that lead similar lives and are content. We have excellent pay, benefits and the company is also very profitable. In other words it is not broke and does not need to be fixed.

    We are not in need of a better way like some firms are.The problem is solely the fact that our average hourly rate is easing up yo the century mark and the owners feel that is a number that stands out and will chase away customers.

    Like I stated I think we need a custom overhaul versus a generic store bought system! (Not the "Guru's"s by the way)

    I respect alot of what Frank Blau has done,what Ellen Rohr has done and what Randy Hilton is doing. I have the utmost respect for Dan Holohan and other contributors here. Hot Rod comes to mind (Ellen's husband) he is such a specialist and so knowledgeable he could probaly get $500.00/hr. Dan has a gift that happens to bring fun to learning and participating. Dan should be rewarded accordingly and most likely is.

    The get rid of idea is not an option! Out techs are some of the finest in the State of Wisconsin. Retaining employess is far more a problem then tweaking our billing system.Remember we are a highly licensed profession (plumbing) in this state with a severe shortage of quality credentialed tradesmen.

    I will keep you posted as to how it goes. I have a major problem with the deceptive part of flat rate systems and I do not put money in front of ethics and decency!

    Call me a rare bird if you like but that is part of my value system.

    Rich K.
  • mtfallsmikey
    mtfallsmikey Member Posts: 765
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    I wish you luck

    I would like to think your techs would be better off with flat rate, but I guess that they are figuring that they will be doing "piecework" like some of their brethren do. I had flat rates on some of my repetitive work, like HWH, pressure tank, faucet changeouts before I got out of the biz in '98 without too much adverse reaction from customers,as well as being the first contractor in my area to accept all major credit cards, but I also got out of the biz because I, like other contractors in my area, could not charge as much as I needed to because of low-ball competition who did not know what or how to charge, or what their true overhead really is...they established the "going" rate for the rest of us, but yet I and others like me often straightened out their shoddy work. I'm sure you would hate to let these guys go, but it's YOUR business and your call...you have to look out for yourself.
  • Perry_3
    Perry_3 Member Posts: 498
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    A possible compromise...

    I just ordered some custom built furnature; which is not cheap.

    In the process of determining who I would work with I looked at 3 different craftsmen.

    The one I settled on uses a variation of flat rate that takes into account some of the variables (whom I also believe will do the best job as well).

    He qoted each piece of furnature as a Maximum price (your flat rate); but then will lower the charge if the job goes much faster than normal.

    I was told for that for smaller - standard - individual items that his quotes are almost always right on.and there are rarely any changes in cost; and for larger orders with multiple pieces that he sometimes has considerable manhour savings once he gets into production mode.

    So maybe a mixed mode with basic routine items flat rated; with a fall back to T&M for other items.

    Perry
  • [Deleted User]
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    Might as well stay T&M then...

    One of the premises of FR, or UFP is that if the technicians get the job done quicker than expected, then there is more profit in the job. Some times you win, some times you lose.

    Just guessing here, but I'm thinking your hourly charge (direct cost plus overhead) is probably somewhere over the triple digit mark per hour. If not, I'd be VERY suprised.

    And if so, then what are the benefits of going to this modified UFP system if you are going to go with the GMP (Guaranteed Maximum Price) structure. Might be more of a marketing tool than anything. The customer can still figure out what you are charging them per hour. Especially when it doesn't involve any materials (drain cleaning, etc..)


    Also, as it pertains to the employees in the field, I'm guessing that they are on an hourly basis, regardless of what the company estimates the job to take manpower wise, and if they are told that they will be paid based on what the "book" says, then I'm guessing that they are bristling against that proposition. But that proposition can work both ways. If the book says it should take 3 hours to do a given task, and they get it done in 1.5 hours, they get paid for the 3 hours the book called out. That is incentive for them to figure out how to work smarter, and not harder.

    In some cases, the guys work for 4 hours, and get paid for 8, or work 8 hours and get paid for 12 to 16.

    ME
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Mark

    We are so lean and efficient that we are profitable at a rate slightly less than the century mark. We do not have to advertise like many service providers as probaly 90% are repeat customers, 5% referrals and 5% new customers via co-op type advertising.

    You are right to a degree because we don't really need to go flat rate. We like the idea of giving the price before the work is performed in order to avoid questions after. This and the fact that our very competitive # is just getting to the $100.00 mark.

    We don't just do service we do remodels. installs, well work, softeners etc. I am going to take on the job to set up modules with a list of variables (that will be updated)
    We will monitor this by doing complete cost accounting.

    We have a very dedicated group of not only mechanics but office personel. Our plumbers are union (our union has about 6 job categories) and an excellent training program.
    Our sheet metal division is open shop yet they receive great in-house training and access to training. The sheet metal division is paid comparatively to us (the plumbers)

    After yesterday we know how we are going to approach this and will modify a format to serve our firm. We have a problem with some of the deceptive practices that have been used by some of the others who are flat-rate.

    This firm has four former employess of the Guru including myself.We can testify to the way he teaches versus the way he practices his flat rate scheme.

    Most of you only hear the good parts and most likely implement them in a fair fashion. Our firm will not in any way take on a system that associates us with the reputation(s) of the two companies that have poisoned flat-rate in the Milwaukee market.

    Our situation is unique due to our proximity to the originator(s) of flat-rate. We have seen at least 8 firms fail when they converted to flat-rate.We will not even go near that.

    Enough said I have a great deal to do to get this tailored. The end result will be the way we want to go.


    Rich K.



  • mtfallsmikey
    mtfallsmikey Member Posts: 765
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    An example

    My assistant chief engineer, who shares a townhouse with 2 others, and is renting, had a clogged sewer main yesterday. He called a very well known nationally franchised plumbing repair company, who responded within 2 hrs., opened the sewer, approx 1 hr+ on the job, charge was $535.00. The CSR and the service tech were very adamant about the method of payment and the go-ahead from the property owner (and rightfully so!). This is in the D.C. Metro area, and most service companies are north of $100/hr. Would this be considered a ripoff? Not in my mind, because you never know how long it will take to do this! I'm sure the job was nowhere near the max of the flat rate charge. It could have taken 4 hrs. to do the job. They were charged a diagnostic first, then quoted the price to do the job. At least they knew what it would cost up front
  • joel_19
    joel_19 Member Posts: 931
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    F.R.

    The real debate here shouldn't be wether F.R. is good or bad that's been hashed out a zillion times. The real question is Mutiny!! We switched ourselves and had the same fears everybody does (We're all scared Sarge!),but it was by far the best thing we've ever done service wise and we'll never go back. More importantly to you is the techs never want to go back.

    I would question why they want to Mutiny? If this was explained properly everybody but your slow hack tech should want to jump on board. No more arguing with the customer about how long it took etc.

    Sure there could be some notable bad examples in your area but these are bad companies not a bad system. Those companies would have tried to rip off the customer be it with T+M or with F.R. and probably would have failed either way. Alot of companies hear F.R. will solve their problems and they quickly switch and then they fail. Problem is they jumped in thinking it was the miracle cure and here's the key, THEY where alraedy failing anyhow!!!

    if your aware of those companies that went belly up then your techs are too. Some of the mutiny may be "Ohhhh no XYZ HvAC did that i'm gonna loose my job". Find the fears and remove them and you'll be fine.

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  • hr
    hr Member Posts: 6,106
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    If in fact you are lean,

    efficient, and profitable... then why change anything??

    It seems to me Rich, that the only side of the mechanical business that you haven't experienced is the OWNER.

    Listen to those that own and manage the $$ on a daily basis and you will better understand "what it takes"

    Just because others in you area so call abuse upfront pricing, doesn't mean you have to.

    The bottom line to all this is what my wife calls KFP Know Financial Position.

    Until your company has a handle on that position, changing pricing schemes may be an exercise in futility. Or mutiny as you call it :)

    But I'm pretty sure you know all this already.

    hot rod

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  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Hot Rod

    I owned 20% and was president of "Tri-State Mechanical" in Ashland, WI for seven years.I left due to workaholic tendencies that are prevalent in our family and were simply not healthy for family relationships or my health.

    I do understand the cost of doing business, cost accounting and crunching numbers. Due to being in different management positions over the years I am used by this firm as a consultant of sorts to the owners. As with this forum I am not adverse to sharing.

    Most of us were mechanics first and moved on to the business side to adjust as we grow.I prefer field work at this time (as long as I am healthy) yet with my experience I have often been used for expediting, plumbing design,estimating and inventory management.

    Your right nothing is really broke at this firm, this point I have stated to the owners. Crossing the $100.00 threshold is what prompted this exercise. We know have to decide how to handle this.

    Thanks, Hot Rod I know that Ellen and you are very on top of the business side of things also. I bought Ellen's book at Dan's seminar last year "How Much to Charge" and have bought a second for my sons who are in the siding/roofing business.

    I will start putting together a system for this firm after Labor Day.

    Take care and take a break for the "Holiday"

    Make peace our passion!

    P.S. I am ready after five years to bury the hatchet with Frank, he has contributed a great deal to the industry (despite our obvious differences)

    Rich
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Joel

    Very good post. We have petty much gone over all the issues and you have summerized them in your post about as good as anyone.However,I have several questions for you:

    1.Are you strictly service and repair?

    2.Are you both plumbing and heating (hvac/wet heat)?

    3.Do you have to bid competitively and do you use the same hourly rate for bids?

    4.How big is your firm manpower wise?

    Thanks!

    Make peace our Passion

    Rich
  • joel_19
    joel_19 Member Posts: 931
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    answers

    Thank you,here you go

    1. We are a resedential HVAC contracting firm. We do both install and service. The biggest piece of the pie for us is replacement/rehab work. New construction (custom only) is a small slice. Service is a small but growing slice esp. since our market is changing.

    2. We will provide any service that will improve your indoor comfort, Steam,radiant,furnasties,A/C,IAQ,you name it. We do not do traditional plumbing as I feel this is a completly seperate trade.

    3A. We all must bid competitivly,however that depends on how you define that word competitive. We may at times be more exspensive,however we are competitive because we are bringing much higher value to the job. As far as being competitive by chasing the price of the Jimbo's and Bubba's,well no we don't and we aren't.

    3b. No!!!! It is more exspensive to provide service work than install work so it must be priced higher. If it's not than your either over pricing your install work or under pricing your service work. The consultant you hired should have gone over this??? If you have Ellen's books i believe she covers this. Really creative firms will actually run dual overhead to further break things down. Most important for you to get this right!!!

    4. We are a small firm with 12 full time 2 part. 3 of which are office staff. We are too light inside and need to fix that.

    Your welcome



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  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Joel

    It souinds like you are doing things exactly as I would. Service is indeed a different animal and you should have a two tier price structure. Your size sounds ideal (easier to control etc.)
  • heatboy
    heatboy Member Posts: 1,468
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    As I see it........

    .....the main advantage to flat rate, up front pricing, or whatever the term du jour is currently, is the fact that your more proficient and higher paid techs will actually make more money for the company because they produce more than the slower, possibly newer, techs.

    Service and contracting will always have different pricing, with service naturally, costing more. But within those two sides there will be various rates. 1st hour charges for local, semi-local and long distance clients. Planned serviced vs. gotta have it now rates.

    If you know your costs it doesn't matter how you charge. Either way you will be most assuredly above $100.00. If you can defend your needed dollar per hour, you should have no issue with telling your clients what your rates are. I know I don't.

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    There was an error rendering this rich post.

  • Mitch_5
    Mitch_5 Member Posts: 102
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    Not to start but just a question of what breaks the up front

    apart. No little old widow lady compare say a young couple with two young children starting out. Who has less money, my little old widow gets one mill when I kick. Does the dentist charge different people less or do people that make more get a better dentist than the poor. It cost you to do a job what it costs. If the people living on the golf course find you split your billing what are they going to say.

    Just a thought.

    Mitch S.

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  • Weezbo
    Weezbo Member Posts: 6,232
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    unless you own X-ray glasses...

    there is no way to know what is hidden within a concrete slab that you have yet to look at in the physical, a tipped fitting or a cracked sewer pipe that was a result of settling of a homes foundation would be a very different sort of thing to flat rate....

    sewer jets pumps and steamer hoses that allow flow might require a machine type scope to purvey the line...long time ago i did some work with a real good dude who wanted to go "with' the flat rate thing...there are variables lets say that might not be in the book, to remotely suggest what cutting the concrete , jack hammering it out, on and on.... replacing the radiant heat in that area, the terrazzo, handcrafted kitchen cabinets ,granite counter tops etc , just might cost.

    first get a visual before telling people things over the telephone as what is what . or there might just be some very disappointed people in your community..

    that is an example not a rule ...still, undertaking something sight unseen or even responding to something as "simple routine" , to me, is the wrong way Charlie method of a fair man. on new construction , the photo graph of the insulated properly ventilated home ,that is basically a synergy of efforts with best building practises, might LOOK the same over a phone...buh i think that there would be some significant differences in the ways and means of ones approach to the service of a home.

    i have seen some things that astound me from time to time. it is down right scary ...often in those instances i am looking at the pictures and going 'HOW is that Possible?'

    when i see these pictures or go to buildings that have similar "Arrangements of materials", 'Sawzall!'.. is not Even the first thing that comes to mind. the homeowners safety and 'get the kids out' really ,is where i am coming from.what all that might end up costing by people responding or reacting off flat rate pricing is something of a variable that i would think is not Factored into the number....

    Flatrate that fixed x things and blew right past other problems would be small solace to the inhabitants of a home where the furnace was turned on by the landlord killing half the family overnight...i am becoming more reluctant to help people at all because they seem to think all this work we do should be free and the materials probably ought to be given to them for the inconvenience that they experienced while you helped them.

    oops i'm being negative again... sorry.
  • Paul_11
    Paul_11 Member Posts: 210
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    prece only what you can see.

    We use the flat rate system and we would never give a quote over the phone. We always have a tech go out and look at the problem before giving a quote.

    Can't see the problem, you say, fine only quote what you can see.

    If we need to break up the concrete we only give a price to do that, and we make assumptions like concrete is only 4" thick and every additional 1" thick is X amount of dollars per square foot.

    Open the ceiling, the same thing.

    Creating a flat rate book takes a lot of time, and being able to change it when you want to and print new sections is critical for it to work well.

    You always have to use you own financial numbers, and knowing your costs of doing business is key no matter how you bill.

    I personally am glad we went flat rate in 1998 and wished I had done so sooner. I followed the debate in PM and other mags, for years before I decided to switch.

    I bought Frank's flat rate books, and it helped me get started. I thank him for his encouragement to switch.

    I since have switched to a complete software package called ERGOS which has a flat rate book integrated into all facets of the software. INHO, I feel that is the only way to go. My dispatcher bills the COD invoices as he is closing the work orders as the tech calls in that he/she is done.

    ERGOS does not supply the tasks for the flatrate book, you have to create it yourself and it is quite easy.

    There are so many ERGOS users that it would not be hard to get someone to give you theirs. I know that when I'm ready to get in AC work, I already know who I'm getting my flat rate book sections from.

    You always have to tweek them to fit your own needs, deleteing some and creating others.

    You imply that a flat rate contractor's techs would blow by problems that need to be fixed. I don't know why you would assume that. For us it takes constant training for our techs to feel comfortable looking for other problems that our customers have, but I don't see how being flat rate or T&M plays into that training issue.

    Do we run into problems that aren't in the book, sure we do. It is easy to figure out how to create one and then we have it for the next time. This isn't complicated, but it does take work to get set up, but once set up it works so much smoother than T&M IMHO.

    We have very few price complaints because customers know the price before we do the work.

    I have a few large commercial accounts that have to have an hourly charge on file, so we give them one. Sometimes we even bill that way. Sometimes we have to give a customer a standby charge so we give it to them.

    Our company philosophy and it comes from my membership in NEXSTAR is that everything must help create a WIN, WIN, WIN situation.

    a WIN for the customer
    a Win for the Employee &
    a Win for the company

    Neglecting any one of them will harm a company.

    Sorry this is so long, so that's it for now.


    Respectfully,

    Paul B. Shay
    pshay@arealgoodplumber.com
    LMP 1307
    LMFS 654B
    OUR MISSION: TO PROVIDE WORLD CLASS PLUMBING, HEATING, AND SPRINKLER SERVICE TO EACH AND EVERY CLIENT WE SERVE, FAR EXCEEDING THEIR HIGHEST EXPECTATIONS!

    To Learn More About This Professional, Click Here to Visit Their Ad in "Find A Professional"
    Since 1990, I have made steam systems quiet, comfortable, and efficient. We provide comfort while saving the planet.
    NYC RETROFIT ACCELERATOR QUALIFIED SERVICE PROVIDER

    A REAL GOOD PLUMBER, INC
    NYC LMP: 1307
    O:212-505-1837
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  • Perry_3
    Perry_3 Member Posts: 498
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    Weezbo; you've almost got it...

    "I am becoming more reluctant to help people at all because they seem to think all this work we do should be free and the materials probably ought to be given to them for the inconvenience that they experienced while you helped them.

    oops i'm being negative again... sorry."

    Almost got it right - getting close... You have to think how to be more positive for your clients...

    You are not only susposed to donate the materials and labor; but you should be paying them for the privilage of helping them. Most clients need at a minimum of $50 per hour for the time you are on site and $500 per day, payed in 1/4 day increments, from the start of the problem to feel adequately compensated and for them to properly value your work. For certain exclusive areas or clients you will need to double or even tripple that.


    Perry
  • Weezbo
    Weezbo Member Posts: 6,232
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    married life seems to be agreeing with you , Perry *~/:)

    i appreciate the effort :) i never considered offering them a per Diem :) might work out :) however when i was younger ,it did take me about 12 years to recover from helping a guy and his family :) i am not certain it made my shoulders any wider however it did help me weather many a bad storm later in life...

    i think you've got It :)
  • Perry_3
    Perry_3 Member Posts: 498
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    Didn't happen...

    She could not commit. We're still freinds - and she knows if she ever changes her mind to let me know. But, I'm looking at other options now (and got stood up on a "first meet" with a gal on Saturday).

    I understand about helping others. I do help others; but either it is a total gift of relitively low cost - or they have to really be working on things and just need that one solid push to get over an isolated problem (have the fire in their eyes). I am sure you know what I mean. Amazingly, the ones with fire in their eyes seem to need the least financial help long term.

    Have a great day.

    Perry
  • Ken_40
    Ken_40 Member Posts: 1,320
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    My only comment!

    Other than to offer:

    If the premise is fatally flawed, so must be the conclusions.

    To suggest making a decent living and flat rate are somehow inseperable is like saying withdrawing money from a bank is comparable to robbing it.

    The case was made years ago:
    http://www.masterplumbers.com/plumbviews/2002/flatrate_revised1.asp



    To Learn More About This Professional, Click Here to Visit Their Ad in "Find A Professional"
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Thanks Guys!

    Don't want to make this long winded, I have plenty to review and present.

    Thanks for the great civil discussion!

    Rich K.

    Make peace your passion!
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Thanks

    Paul,

    You put out some good advice. We are not new to this business as they have been in business 60 plus years. We are not implying anything about blowing past work either. I realize that there are many fine flat rate contractors and service providers.

    I know many traditional T&M contractors also that still enjoy great success and have a loyal client base. This is all part of this discussion. I have come to appreciate Frank's innovative ways regarding inventory,knowing your costs and marketing.Some other aspect's of his approach to providing service I disagree with.

    We will generate a streamlined system that not only generates proper revenue but does so with sound business ethics.

    And yes I am implying that we have some very unethical people in the service sector as we do in practically all forms of business.

    Thanks for the ERGOS tip.


    Have a Passion for Peace!

    Rich K.
  • Ken D.
    Ken D. Member Posts: 836
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    Flat Rate

    If memory serves (and it hasn't as I age), isn't Frank Blau's company in that area? He has done very well with flat rate.
  • laurence salvatore_2
    Options
    up front

    This may sound like a cop out, but we ask the clients do they want a number before we start or do they want T&M. About 40% take the flat rate number. Our hourly is $135.00. We have very strict licensing and apprentice regulations here in Connecticut. When the lads are on flat rate they get paid what the book says it takes wheather it takes them longer or shorter. It rarley takes them longer. I read all this pricing and business stuff and I don't know who's right. My mechanics make from 60 to 80K, they have health dental and eye care 401K's 3 weeks vacation after 5 years ect. I have put all my kids through college incluing one veternarian. I could retire tomorrow with no worries. We just do the work, collect on the spot and go on to the next. The Marty Flaherty system damn the torpedos full speed ahead. I just don't know. how much do you guys mark up matrial?
  • Rich Kontny_5
    Rich Kontny_5 Member Posts: 116
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    Yes

    Connect the dots!
This discussion has been closed.