Flat rate pricing....Who's actually doing it?
- Thread starter Mule
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brian john
Senior Member
- Location
- Leesburg, VA
We use flat rate pricing for certain testing applicatons and it beats other methods (T&M) in all cases.
Flat Rate pricing is nothing more then a contract price, one price for a task or a series of tasks, In my state if the job price is $500 or more, you must have a written contractm and the price of the entire cost must be disclosed before work is started, so flat rate is nothing new here it has been the law since the late 60's
Greg Swartz
Senior Member
- Location
- Colorado Springs, Colorado
Satcom, I tend to look at it a little differently.
Getting a contract is one thing. And most of our work is contract based... Flat rate or not.
When I see flat rate, this is what I think:
Item x - Flat Rate price $xxx
Item y - Flat Rate price $xxy
The price is set. No matter how easy the install... no matter how hard the install...
The price could be a couple hundred or a couple thousand... still a flat rate price.
For example: One of our contractors asked us for a flat rate price sheet. That way, he knows how much it is going to cost before he even calls me. Now, it may be a few thousand dollars... I use the invoice system with him. No contract laws here.
But, he knows the price. Easy install or difficult... the price is the same.
Regarding Mule's question: Who's using it? Well, we are to some extent.
We are working more on a flat rate pricing scheme.
Right now, most standard residential items... we have a flat rate price in place.
Also, all A/C electrical items, we have a flat rate price.
Almost none of our commercial service work is flat rated.
I do agree with Brian John, that if done right, flat rate pricing allows much higher margins than T&M.
Greg
Getting a contract is one thing. And most of our work is contract based... Flat rate or not.
When I see flat rate, this is what I think:
Item x - Flat Rate price $xxx
Item y - Flat Rate price $xxy
The price is set. No matter how easy the install... no matter how hard the install...
The price could be a couple hundred or a couple thousand... still a flat rate price.
For example: One of our contractors asked us for a flat rate price sheet. That way, he knows how much it is going to cost before he even calls me. Now, it may be a few thousand dollars... I use the invoice system with him. No contract laws here.
But, he knows the price. Easy install or difficult... the price is the same.
Regarding Mule's question: Who's using it? Well, we are to some extent.
We are working more on a flat rate pricing scheme.
Right now, most standard residential items... we have a flat rate price in place.
Also, all A/C electrical items, we have a flat rate price.
Almost none of our commercial service work is flat rated.
I do agree with Brian John, that if done right, flat rate pricing allows much higher margins than T&M.
Greg
bullheimer
Senior Member
- Location
- WA
i'm hip to that. bummer part is lowballers like me trying to make their mortgage. i've been tryin to hold out and keep my prices but when other guys are getting my work i have bid on i find out what they bid and bid the same. only ones i can't touch is the one or two industrial jobs the ibew is bidding at below cost to keep their guys busy. i was getting $2200 to $2400 for service changes last year no questions asked. now guys are talking customers into panel changes instead of service upgrades, at $1600, and running circuits all the way across the house for a lousey $350 instead of $500
What state is this?
partly...but not completely....a good flat rate system takes into account different variables...i.e. extend a circuit and install a receptacle...
you would have fixed prices for:
installing a receptacle (the actual device)
installing an old work box
installing a 4" metal box with mulberry cover
installing a new work box
installing an FS box
Installing NM-B in an open wall upto 15', additional price per foot over 15'
etc, etc, etc
so while you will have set prices for items based on your costs....you will use the flat rate manual like a chinese restaurant menu...and choose the correct method for your specific installation...
in terms of your contractor, if your electric is 10% of his total project cost and he's off by 10% on your cost, it's not gonna make a big difference. But it's also not flat rate in the sense of resi service flat rate....
"so while you will have set prices for items based on your costs....you will use the flat rate manual like a chinese restaurant menu...and choose the correct method for your specific installation..." This is one of the reasons many don't understand flat rate pricing, they don
t understand how to apply it, or write it up to cover the scope.
Pricing below your cost, is like taking a job, and paying the employer to work there.
Ok, with all due respect...Let's say you call a plumber to replace your sewer line at YOUR house....you get five bids, and Im adding a bit of humor here...
$5000 Big Shop, nice trucks
$4800 Big Shop, nice trucks
$3300 One man show, nice trucks
$3000 One man show, so so trucks
$2400 One man show, smells, truck really dirty
You tell me, and be honest, which one would you take?
My helper and I worked 9 hrs yesterday on a service conversion, material prices was just under $400. Havent billed yet but the price is going to be somewhere around $1500-$1600 and we were happy as Larks....customers next higher price was $2000, we did a code compliant job that looks nice, both the inspector and poco commented on it............no contract, only a hand shake......no laws telling me how to conduct by business
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Seriously? Who cares? Maybe you are not your ideal customer. One of the problems contractors have is the complete inability to not project our decisions on others. Let people make their own choices.
macmikeman
Senior Member
- Location
- Planet macmikeman
I'm not sure I understand this post. Are yoou telling us that your smelly and your truck is dirty?
My point is this is America, and if a job is code compliant, passes inspection, why should the higher bidder complain if there are those whom can do the job for less?
I'm not sure I understand this post. Are yoou telling us that your smelly and your truck is dirty?
Ha Ha, I guess the answer is "YES" "Sometimes"
Right now I smell good and my van is really clean, but last week?Because its the american way. We are in a race to the bottom. But, if basic accounting dictates a job should be $1000, and some guy who is too ignorant to learn basic account does it for $800 (and loses money) then he ha4 hurt a legitimate contractor directly. And the industry as a whole.
I totaly agree if the contractor "is Loosing money", and it does drag down the trade as a whole...... on the other hand, if the contractor is making money and does the work right, I starchly dis-agree
bradleyelectric
Senior Member
- Location
- forest hill, md
Well to me it looks like you could have made at least another 25%. Would that be a good thing? What if you were able to make another 50% and the customer was happy after you left. Would that be bad? What if you were good at selling a job and confident in your ability to do so? Would it be bad if someone called you for a service call and while there you noticed the problem was 1 of the busses of a split buss panel was damaged? Would it be bad to sell a service upgrade and have the customer comfortable enough with you to give the go ahead on the spot after you giving your price?
What's so hard about that? do it all the time
Not directed at any one person, but, I guess in truth there are two kinds of people, those that want it all, and those whom work together for the common good. And those whom want it all are the reason our economy is in such shambles as we speak. There is nothing wrong with dreaming about building a business larger and larger, but for me, I dont see it in the card's, Im too conservative...
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Were you making a literal statement here? It is a law? As in an actual law?
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