Diagnostic Fees
If you are using time and materials pricing now
you are probably charging a “service call” fee to have your
technician go out to a job with your truck and tools. Then you are
charging an hourly rate to do the repairs needed. You of course
explain this to the customer when they call and they are never happy
to pay your technician for driving out to their home or business.
You can’t blame them for thinking that way because they do not get
paid themselves for driving to work. Most of them however don’t
complain even though they don’t like paying for travel time.
Flat rate pricing usually works a
little different than time and material pricing. One thing nice
about using flat rate pricing, is that it adapts to many different
ways of running your business so the contractor can be more able to
meet local market conditions.
The following are some ways that flat
rate pricing is commonly used. Typically the service call fee or ½
hour diagnostic fee is included in the first repair task that is
being done. If more than one repair task is being done the
additional tasks do not include the travel time fee because it was
paid for in the first repair task. When a customer calls for service
they are told there is a diagnostic fee of X amount of dollars to
troubleshoot the system.
Some contractors do not like to use
the term diagnostic fee because some customers will say “I already
know what I need done so why should I pay a diagnostic fee.” Some
contractors will call it an initial inspection fee or a service
ordering fee or a minimum ticket fee or by some other name.
After the technician has diagnosed
the customer’s problem, they show the repair price in the price book
and get the customer’s approval before the repair is done. In the
rare event the customer doesn’t immediately approve the repair the
technician collects the diagnostic fee and goes to his next service
call.
How much should you charge for the
diagnostic fee? The lower your fee the more customers will choose
you to do business with.
Some technicians are so experienced
that they could afford to go out to a customer’s house for free
because they could diagnose 99% of problems in less than 15 minutes.
They could then talk the majority of customers into going ahead with
the repairs. The free diagnostic fee would be recouped in the repair
selling price.
The lower your diagnostic price the
more “cheapskates” you will run into. These are probably people you
don’t want for customers. The higher your diagnostic fee the more
you weed out the cheapskates however the fewer the new customers you
will get.
Contractors need to experiment with a happy
medium to discover what works best for them. Some contractors will
have a lower diagnostic fee when they are slow and need more
business. When they are very busy with work they increase their
diagnostic fees.
Some contractors will offer
different levels of service like standard or premium. The premium
service costs more but includes service within a certain time period
such as one hour, two hours, same day etc.
Some contractors will include only
so many minutes in their diagnostic fee and have a task in their
flat rate book entitled “extended diagnostic fees” for those
occasional hard to troubleshoot jobs.
Some contractors waive the diagnostic fee if
the repair is done. They have their repair prices set high enough to
cover doing this. It is important to run your business in such a way
that there is an incentive for customers to have the repair done
immediately instead of the technician coming out to the jobsite
twice. Customers need to realize that if they want to “think it
over” their delay in giving the technician the ok to go and do
the repair is going to cost them an additional service call or
diagnostic fee.
