Here it is again!!!

Chris_4

which is better.........flat rate or T&M.

I personally prefer flat rate! Need some opinions to help persuade the use of flat rate pricing.

maybe some homeowners can answer this one also.

these will be used as a basis of wether or not to change, so please be honest.

thanks for the help

Chris

Bryan_5

Chris,
That is a very good question. My answer would be that depends As a homeowner and a business owner where price is very important I feel you are playing with a double edged sword. On one hand people want the bottom line. But that can work against you because people may just judge you on price only. And if you show T&M they may think you are charging to much for your time. They may not realize why you charge what you do. You are valuable and deserve to be paid accordingly.

Now on that note I dont mind being charged either way as long as I feel I am comming out ahead. I do like the idea of being charged a certain amount and being confident it wont be more then that even if it takes you longer then you thought. But if you charge me for 10 hours flat rate and it only takes you 5 hours I may resent that. So I guess my suggestion would be to handel your billings the way they work best for you. If you decide to switch to flat rate you have to do it all the way. As long as the customer perceives real value you will do fine with either method.
Bryan

Dana

Were flat rate, 14 mechanics in the field. I wouldn't do T&M ever again, but, with that said, pay very close attention to what Bryan said in his reply. It covers it pretty well, "it is always a perception of value for the customers dollar", in any business, no matter what it is your providing. Your competition is everyone who sells or performs any function for anyone in any business, no matter what that may be. Because you get compared to everyone of them when it comes to what you provide and at what cost.

hot_rod

Some of each

We used a pretty slim FR book of very common tasks. The techs had work sheets to build more involved, or non typical tasks in the field. The vast majority of customers prefer FR to a "we'll let you know a week after the work is done" method, as only the boss does the pricing!

Freeze ups or complicated repipes would be a good candiate for T&M. Although a not to exceed number makes the customer more comfortable.

Make sure with FR that the whole company understands the how and whys. Open book managment goes along nicely with this. If all the employees see where the numbers come from thay are more apt to embrace the switch.

hot rod

Joe_13

average Joe HO

I understand T&M on repairs, but on a system replacement job it would be like me handing you a blank check! How am I gonna get bids compared? When I call you about replacing my boiler, you won't even be allowed in the door with that T&M line.

Doug Wagoner

Flat rate vs T&M

I work with a lot of subs, have been in the business my self and prefer quotes on larger jobs--over $5k. I like calling it not-to-exceed as apposed to flat rate. This gives the company an chance to give good customers a break and it gives the customer the assurance that there is a ceiling to the unknown. When the contractor's bill is less than the not-to-exceed everyone is happy and the customer senses you are concerned for his wallet too. Win-win is always better. I would rather make a dollar from a hundred customers and keep them than a hundred dollars from one and he find out later that I gouged him.

Unknown

Joe, a quote is different from flat rate

A quote is what you seem to be describing. A quote is good only for your job at that time.

Flat rate would be if he gave you a price over the phone, regardless of what your job involved.

A quote is a fair way to give a firm price for a certain contracted job, and in a certain time frame. It falls outside T&M, and Flat Rate.

The difference is a human looked at your house and figured the job, whereas flat rate is from a book.

You decide which you prefer.

Noel

Chris_4

thanks

for the tips.

will be looking seriously into changing to flat rate. I think there will still need to be a few times when T&M is needed though.

thanks again

Chris

hot_rod

I'd disagree, Noel

We never gave prices over the phone, regardless of T&M, bid, or flat rate.

To be fair to the homeowner you really need to see the job. Often the problem they describe on the phone is not to actual problem when you arrive.

We had a minimun trip charge or diagonstic fee. Then, with the homeowner present if possible, describe the problem, fix, and pricing issues. Get a siginature on the proposal and all parties are happy. The homeowner goes off to his day, the work is completed and billed, or collected at time of service in many small repairs.

Granted long, complicated, unknown problem jobs would be best T&M perhaps, or at least an agreedc up rate for a in depth diagonstic. Regardless, work out the plan with the owner BEFORE you start with the tools, me thinks.

Time of work payment, can be important especially in a resort/ rental community. Hard to track down absentee owners. Most every homeowner has, or has access to, a credit card

After years of trying plenty of methods and "books" this system worked best for us and our customers.

Every contractor needs to create a system that works in his market, and best fits the needs and wants of the customer AND contractor and assures a profitable business.

Every business new or old should start with a business plan, and an operation manual. It allows all the employees to be "on the same page" regarding policy. This is the road map to a sucessful business, in my opinion.

hot rod

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eleft_4

FR

Flat Rate is indeed a Two or Double edged sword... Either you stick the customer by charging for service They won't receive.. or you get stuck for service You do (unforeseen) and won't get paid for.

al

Unknown

Aren't semantics fun?

I'd accept that process, regardless of what we call it. A firm price is a firm price.

I don't care if the price of goods and the number of hours predicted is all in a book, or figured on a napkin, as long as it fits the house size and level of difficulty of the job itself.

That is a healthy competetive way to do business. The customer needs to do his part in comparing value and cost.

Time and Materials jobs will always have a place, too.

Noel

hot_rod

Noel, understood

and agreed. That was easy, and painless! Any other problems we can solve today?

hot rod

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