Flat Rate Service Charge

Darrell

It's been suggested that I look into flat rate charging for service calls. Given the uncertainty of the installation and "maintenance" its sounds kinds scary to me. Probably I just don't understand. I don't have the oppurtunity to attend seminars up here that would address this stuff...can anybody help me with anecdotal information or experience or something to read? It does sound simple and I'm into simple. You can respond directly to my e'mail if you'd rather not post publically on this one. dwkincaid@acsalaska.net

[Deleted User]

Ellen Rohr

THat is the only two words you need to know. SHe has a web site at www.barebonesbiz.com

Ellen and Hot Rod are personal friends, both dedicated people to advancing our industry. Ellen has a couple of books you should read. Where Did The Money Go? and How Much Should I Charge? Both excellent primers for a person in your position.

As one who has been through the conversion process of going from T&M to FR, I can tell you that not everyone in your company is going to be willing to make the conversion. You yourself, MUST be solid with the conversion, or you will not be able to convince the other employees to go forward with it. And also, you can expect to lose some customers, but you probably didn't need them
anyway.

Employees who are not 100% commited will need to be let go, but those employees that stay will reap the rewards and benefits and be much happier than they were before. They then become your best salesmen, inside and out.

Be prepared for rough rows to hoe, but in the long run, it will be worth the battles fought.

Once you convert to FR, you must deliver value. You must exceed the customers expectations in every regard, but you have to build that into the hourly rate that you will be charging as part of your flat rate program, which will be well over the $100.00 per hour range.

Get prepared, and go for it, and don't ever double guess yourself, and never look back. You can win this battle called business...

ME

mp1969

Question

> THat is the only two words you need to know. SHe

> has a web site at www.barebonesbiz.com

>

> Ellen

> and Hot Rod are personal friends, both dedicated

> people to advancing our industry. Ellen has a

> couple of books you should read. Where Did The

> Money Go? and How Much Should I Charge? Both

> excellent primers for a person in your

> position.

>

> As one who has been through the

> conversion process of going from T&M to FR, I can

> tell you that not everyone in your company is

> going to be willing to make the conversion. You

> yourself, MUST be solid with the conversion, or

> you will not be able to convince the other

> employees to go forward with it. And also, you

> can expect to lose some customers, but you

> probably didn't need them anyway.

>

> Employees

> who are not 100% commited will need to be let go,

> but those employees that stay will reap the

> rewards and benefits and be much happier than

> they were before. They then become your best

> salesmen, inside and out.

>

> Be prepared for

> rough rows to hoe, but in the long run, it will

> be worth the battles fought.

>

> Once you convert

> to FR, you must deliver value. You must exceed

> the customers expectations in every regard, but

> you have to build that into the hourly rate that

> you will be charging as part of your flat rate

> program, which will be well over the $100.00 per

> hour range.

>

> Get prepared, and go for it, and

> don't ever double guess yourself, and never look

> back. You can win this battle called

> business...

>

> ME



While I basically have no problem with a flat rate approach to repetitive functions I feel that you still have to have an hourly number in order to quote projects that are unique and not in that one size fits all category.

$100.00 / hour is not unreasonable in I would guess
most of our industry (on the service side) On the quote and bid side I think you indeed have to look at things a little different.

If you have separate teams you should have two different service and install rates as service requires dispatchers, more truck inventory and thus more overhead.

I have been involved with those who have perfected flat rate to the point where marketing skills have allowed them to overcharge. This has given the industry a black eye and has paved a clear path to the DIY box stores.
Flat rate is not the cure all end all, you still have to know your costs and control your overhead.In the Milwaukee area we have several contractors who are burying their $225-$250 hourly rate in to questionable flat rate pricing schemes.

There is a reason why flat-rate has new names like Up front or No Surprise pricing. Especially here in the Milwaukee area some very innovative flat-rate pioneers have priced themselves to the point of shrinking their customer base which will result in higher hourly rates to meet bottom line expectations.

Whether flat rate or conventinal pricing you need to know your costs (all of them)and books like Ellen's will help you with that. My advice would be to watch overhead and hone your marketing skills in order to sell quality service with a fair return. Don't however let great marketing skills cause you to grossly overcharge. This will only lead to more harm to our industry and increased usage of HD Lowes and the likes.

MP 1969