How The Technician Explains The Charges

Techs hate to explain time and material. The customer demands a price, the tech gives them a range of, for example, $150-$200 and the customer thinks they were just quoted $150. Ask any tech. This a fact.

Under flat rate pricing, the tech figures out what is wrong and quotes the price for the repair out of the book. He or she mentions that when this repair is made he will complete the rest of his diagnostic procedure. This covers him if other repairs are needed.

Flat Rate Pricing Example:
“I need to replace your fan motor. Your total investment is just $255. Once I make the repair, I will operate your system and complete the rest of my diagnostics” Nothing else will happen without your approval.

Increase Customer Satisfaction

Each time you explain to a customer what needs to be fixed you are interrupted with one question (Hint, it's not "where did you go to college"?). The question is "how much"? Technicians attempt to explain their company's charges using the old time and material song and dance and they look unprofessional at best. Customers are nervous about financial situations that are out of their control so they demand that your techs give them a guaranteed price. Under pressure, your technicians offer the customer a range, perhaps $200 to $300. He just quoted them a price of $200 and the customer is timing their every move. Your techs don’t deserve that.

With flat rate pricing your technician explains the options to the customer and quotes a firm price up front. Having full control, the customer can decide what they want done and offer their approval. Who could complain about that?

When you quote out of the book, the math is already done, the proper spelling is right in front of you, and the customer is assured that they are paying the same price everyone else is paying. There are fewer math errors because the prices include parts, labor, sales tax and discounts.

You Will Improve Collections

Collections are a breeze. Have you ever noticed that most of your complaints come from invoices that were filled out after the tech left the job site? Very few people complain about invoices they have already paid!

How Flat Rate Pricing Increases Efficiency

Another important reason to use flat rate pricing is to allow your company to benefit from fast, efficient repair work. Have you ever noticed that your fastest techs bill out the least amount of money and enjoy the highest hourly wages?

We call this the Backward Equation. You hire a tech, train them, supply them with tools and equipment, and they get good and fast. The better they get the more you pay them. The faster they get, the fewer hours they bill on each call. You are losing money on great techs. Flat rating rewards the efficient and penalizes the inefficient.

T&M Limits Your Success

T&M sets a limit on your profitability. Your labor rates were likely based on everything going well. No matter how well the service call goes, your profitability can only be so high. No matter how good you get, that limit still exists. No one ever got rich being paid by the hour.

Where you make your money is when you write up a sales proposal, get the job, and the job goes really well for you. Your company profits from being efficient (or a bit lucky). Plus the customer gets what they expecting for the price they agreed to.

Unfair Comparison of Rates

Another reason to flat rate is so you can charge what you are worth (and only what you are worth) and not be unfairly compared to an ignorant competitor that is cheaper. You will catch more telephone shoppers. You see, someone will always be cheaper and customers often do not know what else to ask about except price.

Taxi cabs routinely bill out well over $110 per hour and the cost of operating a taxi cab doesn’t even compare to a $50,000 “hardware store on wheels” driven by a tech who is almost impossible to replace. And the taxi driver expects a tip! How can they get away with those rates? Simple, they don’t charge by the hour. In fact, many large cities actually require cabs to provide guaranteed flat rate pricing to major destinations. These government mandated rates are well in excess of what most service departments ever dreamed of charging by the hour.

It’s impossible to provide high quality parts, trained personnel, and excellent service, 24 hours per day and still be cheap. It can’t be done. Stop allowing the public to compare your hourly rate to that of your most ignorant competitor. You can sometimes outsmart the competition but you can never out-dumb them.

Some Flat Rate Fallacies

You don’t have to use flat rate pricing 100% of the time. You can still quote an hourly rate for certain diagnostics and repairs. Who said it was all or nothing?

You set your own rates. When we provide you with books or software (to print your own books) you set your markups and profit. We don’t! We can and will offer advice but only you make the final decision on what to charge.

Do ‘Flat raters’ charge too much? No. Flat rate pricing is no excuse to charge more than what your company is worth. You charge whatever the market will bear or whatever you are worth.

Some are under the impression that a flat rate book would be hard to create and that the book would have to be huge. Neither is true. Deal with a flat rate provider that has actual experience in the field and has used the book they sell. 

What’s Wrong With Flat Rate Pricing

Why would anyone be against flat rate pricing? Some people say flat rate pricing is not good but we wonder how many of these folks demand a guaranteed price for themselves? How many of them would drop off their service trucks for repairs and not demand to know the cost of the repair prior to authorizing the work? We doubt many people would go for this.

Complainers often say that the only people that recommend flat rate pricing are the people who sell flat rate pricing systems. If this were a legitimate argument, then doctors could not recommend surgery or medication, and so on. The fact is that there are many experts that recommend it but don't have a financial interest in selling it. Most top experts recommend flat rate pricing. In our case, we recommended it long before we developed one to sell.

Advocates of T&M will tell you it’s not fair to charge a customer the “average” price when a job goes better than expected. Is it fair to your customer when your techs don’t have the right tools, parts or training? Maybe they’re a little slow because they’re hung over from last night’s big party. Is that fair? With T&M, you tell the customer what the repair costs when the job is complete. With flat rate pricing, you tell the customer the price before the work starts. Which is more fair?

How The Flat Rate Books Are Created—Size Matters

Here is where size truly matters. Hand your technicians a huge, heavy flat rate book with hundreds of pages (some have thousands) and you will have a riot on your hands. Get a book that is too small or too simple, and your technicians will drive you nuts with questions and errors. The last thing you want to do is spend weeks or months fixing a book that is poorly designed. Don’t trust anyone except a real world contractor to the job. Look for a company with actual experience in the field. You’re looking for people who have served as employees and owners—not simply consultants or lecturers. This is absolutely critical to the creation of a good flat rate price book that your people will enjoy and you can trust.

Your Options on Flat Rate Pricing

Basically you can have books printed for you or you can print them yourself. Don’t be fooled by a low price offered on “introductory books” or “starter systems”. The ‘low’ price will be a distant memory after you have spent months fixing them. If you do oil, boilers, refrigeration, or anything special, be careful. Many flat rate companies seriously lack experience in these areas.

Having the books printed for you is a nice option if you are a very small company and don’t like computers. You have no way to change these books however. You must also pay for changes and updates. Typically you are going to pay a minimum and a per-book fee. There are usually annual fees and other charges that can eat you alive.

Most folks prefer the control and flexibility that only software can provide. In the long run, flat rate software is usually the least expensive choice because annual fees, changes, and reorders will kill you. Don’t deal with a company that charges annual licensing fees or the software stops functioning. Beware, they are out there.

Still On The Fence?

There are three types of people; those who make things happen, those who watch things happen, and those who wonder what happened. Which one are you?

More About Us

We are Aptora. We are the software spinoff of http://www.mrhvac.com. While many companies consider flat rate software and books a “side business”; something they do out of a spare bedroom, we are perhaps the largest flat rate and service business management company of our kind. Flat rate pricing and software is our business. We sell thousands of HVAC, plumbing, electrical, and appliance products every year.

Free Catalog

If you have never received a copy of our catalog, you’re in for a real treat. We believe it’s the largest of its type anywhere. Request a catalog here.

Still Need More Information?

1. Please visit http://www.flatratesystems.com

2. We would love to hear from you and tell you more. Please call us at 877-232-7978. The call is toll free.

How'd You Figure Your Labor Rate?

Most people call their competitors and find out what they charge. They usually undercut their competitors by a few dollars or more; not realizing that their competitors likely don't know much about pricing either.

This is no way to figure your hourly rate. Calculate your breakeven properly by visiting http://www.aptora.com/breakeven