“We just didn’t make any money on service, so we added flat rate pricing and that’s when we started making money.” – Doug’s Heating and Air Conditioning
There’s the age-old debate between the two different pricing methods- time and materials vs. flat rate pricing. Time and materials is the old way of doing things and worked well for many years. However, times have changed and processes have gotten better and more efficient. Simply put, you can make more money going flat rate and your customers will prefer the upfront price. Your technicians will also favor it because it will put more money in their pockets.
Here are five signs that it’s time to implement flat rate pricing.
1.There’s little or no profit left after employees are paid
You are in business to provide good service and turn a healthy profit. Flat rate allows you to do both. Many times it’s just a matter of changing your hourly rates.
2. Cash flow is always a struggle
You need money to make money as the old saying goes. Without proper cash flow a business struggles. They end up “stealing from Peter to pay Paul” to make up for poor cash flow. With flat rate you are charging for your overhead, the time driving, everything that goes into doing a job right. Your customers are willing to pay more when presented with an upfront price that includes everything.
3. Customers want to negotiate price – flat rate pricing mitigates that
When a customer thinks you are taking too long or didn’t tell them about additional repairs they demand a discount. This never goes well. If you give them a discount, then the business suffers. If you don’t give them a discount, they think they are being cheated. This can all be avoided with flat rate pricing because the customer knows the price before the work is completed.
4. The internet makes everyone an expert
With time and materials pricing a customer may go on the internet and look up parts prices. They will ask you why your “materials” are costing them so much.
5. Time is NOT on your side
Unlike the Rolling Stones, customers will be very concerned about the “time” in time and materials pricing. If they hover around you and watch the clock, the technician feels pressured and the customer often thinks they are not moving quickly enough.
Ready to make that flat rate switch? FieldEdge is the best way to get started on your new pricing journey. Our zero-cost solution is jam packed with features that will make your life easier and more profitable. For more on flat rate pricing and profitability schedule a time with a representative today.