Flat Rate versus Hourly

Fee simple flat rate for a service versus hourly parts and labor for the same service.

My GOAL is to complete the job as quickly and efficiently as possible so it may appear I only take short period of time to complete a repair in your home but consider all the behind scenes services performed to complete that ‘quick’ repair including but not limited to: phone time, travel time, time at warehouse restocking parts, paperwork, vehicle fuel & maintenance stops, warranty returns, specific repair research and training, inventory shipments, and etcetera.

I may spend 8-10 hours on the road but might only complete 5-7 jobs depending on specific jobs and locations that day so this does average out to be 1.5 to 2.5 man hours per job plus expenses. So most jobs actually average 1.5 to 2.5 man hours in order to complete the ‘quick’ repair plus actual expenses in addition to man hours such as print advertising, internet advertising, insurance, fuel, maintenance, inventory, internet provider, office phone, mobile phone, parking, tolls, headquarters land and building, utilities, garbage services and etcetera.

And IF this is an issue of TIME and the client actually wants an hourly instead of a flat rate; the questions THEN become:

  • Is the client willing to pay MORE for a less experienced technician who takes longer to do a job?
  • And pay MORE for a company that didn’t bring the part and makes a return trip?
  • As well as pay MORE when the technician travels a greater distance to complete the SAME JOB as he did for a nearby client?

Is this REALLY what the client is asking for? To be charged by the HOUR and pay MORE for slower services?
I don’t believe this is true. I believe the client is merely accustomed to old fashioned hourly concepts and he would actually prefer to pay the same fair price for the same service even if it takes a little more or less time on a particular job to perform the same service.

Regarding parts- Some clients have said: “I can order or buy the part for less”

The fact is I did not buy a wholesale/resale license to charge for parts and I did pay taxes when I bought these materials therefore my materials are not for resale and are merely expendables I use to perform a SERVICE and not sell parts.

And I typically do not quote specific part pricing especially since there are so MANY different pricing levels on parts. Including but limited to: “Vendor price”, “Wholesale price”, “Distributor price”, “Dealer price”, “Truck Stock price”, “Retail price”, “Sale price”, “Discount price”, “Clearance price” and etcetera. And while it’s true I must account for my cost of expendable materials; I merely charge for a flat rate SERVICE therefore a claim of “I can get parts for less” is actually irrelevant! 🙂

I do not compete with a mega corporation bearing its mass purchasing power for parts but there are optional services I can provide IF the customer really wants to provide his own part.

If the client desires to supply his own part under its own warranty; I certainly can provide basic labor services to install the client’s part for less than normal job rate. BUT the client would have to pay for more services if his part fails and he needs me to replace it again so; the client is taking substantial risk that the diagnosis is correct and his cheaper part won’t fail. And of course; no diagnosis is complete until part installed to confirm successful repair.

The fact is that many reputable companies maintaining a consistent pricing policy now rely on a standard flat rate price system known as the “Major Appliance Service National Price Guide” also known as the blue book which provides an industry standard price reference for these services.

But I have found that I can typically perform these services for substantially LESS than current book price and a warranty substantially longer than the standard 90 days. 🙂

I recently experienced a client telling me how to do my job in the following manner by way of her logic of: “A company should be charging by the hour and should only charge her for the technician time in her home and no other time it actually takes to complete the total job“.

Think about her logic.

In her reality-
The technician shall report for work at company headquarters then; spend an hour traveling* to the warehouse and standing in line to pick up a part for the job. Then spend another hour traveling* to the job site and spend 20 minutes in the home repairing the appliance then another 40 minutes traveling* back to company headquarters to report back to the boss.

At which point the boss says:

You shall only be paid for 20 minutes of your time in the client’s home even though it took 3 man hours to complete the total job“. 😱

This person is setting herself up for a huge shock if she ever wants to pay a contractor by the hour to perform remodel work in her home including contractor man-hours spent picking up and delivering materials from various suppliers. 😏

*Traveling – Typically involves stop & go traffic and/or substantial distance.