When Not to Use Flat Rate Pricing
Occasionally a repair task is so odd or so tricky that it may be
easier to do it by a time and material method.
Instead of flat rate in almost
all cases the contractor will earn less profit when doing work using the time and material
method versus flat rate pricing. The reason for this is simple. If your flat
rate pricing hourly rate is $125 an hour but your competitor’s time and
material rate is $75 an hour the customer will think you are overcharging them if you charge $125 an hour and they will probably quit doing
business with your company.
The less than 1% of the time you can’t easily use flat rate pricing it is better to charge the customerthe “going” rate in your town and lose a few bucks on that particular repair.
Remember, the cost to acquire a new customeraverages $400 in advertising costs in
most areas ofthe country so
you don’t want to lose a customerover a lousy 10
or 15 dollars.
Another option to an odd task is to just estimate the repair
costs on the high side and give the customer a flat rate price for
the repair.
Another option is to give the customer a maximum price that the repair will
cost and guarantee you will do it for that price but will charge them less if the repair takes less time than expected.
