Flat rate pricing

[Crappy days]

I just purchased flat rate software , and will be setting it up soon. Does anyone have any suggestions on column pricing. Such as regular, overtime, add on, preffered. DO you find that more columns are better for techs, or are they to confusing for customers. Is it better to have one book with both residential and commercial. Or should I keep them seperate , so the residential customer does not see the commercial discounted rates. Has anyone experienced any problems with too many columns or to few.

[PLUMBER RICK]

crappy, you're not going to get much support from me or the rest of the gang from what i remember.

flat rate= flat rape:eek:

why are you experimenting with this?

sorry, but i am a ''t & m'' plumber and all of my work is repeat and referrals. no advertising. and no small claim cases:)

try that with your system:rolleyes:

i'll watch this one too.

rick.

[ToUtahNow]

Crappy,

Boy another So Cal Plumber, what's happening to this place. I never flat-rated and personally do not care for it. If it works for you that's great I just never wanted my guys over-selling just to get a few dollars extra at the end of the week.

Mark

[Crappy days]

No offense rick , but you did not answer the Question. I asked if anyone has suggestions on pricing columns or number of books. Not how to stay small self employed and give techs an avenue to rip off customers. Flat rate in my opinion is fair to both the customer and tech. Just because I or my techs are fast does not mean we should lose out. On the other hand just because i or my tech is sick or working slow the customer should not suffer. Besides that I am a service and repair plumber, you seriously cant tell me you or other plumbers don't already flat rate some jobs. Such as a tub wast and overflow, faucet installations, drain cleaning ect.

[westcoastplumber]

No offense rick , but you did not answer the Question. I asked if anyone has suggestions on pricing columns or number of books. Not how to stay small self employed and give techs an avenue to rip off customers. Flat rate in my opinion is fair to both the customer and tech. Just because I or my techs are fast does not mean we should lose out. On the other hand just because i or my tech is sick or working slow the customer should not suffer. Besides that I am a service and repair plumber, you seriously cant tell me you or other plumbers don't already flat rate some jobs. Such as a tub wast and overflow, faucet installations, drain cleaning ect.

I agree with you crappy days. Just because I can finish a water heater in 1.5 hrs, fully code approved, I shouldn't be short changed, I remember when I started plumbing, I was slow, with years experience, I became faster, cleaner, I can deliver quality work, I should not make less because I have more experience. I understand plumber ricks case, but I think that flat "fair" rate pricing is better for everyone. Crappy, check the "Plumbers Pricing Manual" by Trade Service, www.tradeservice.com (http://www.tradeservice.com), it comes out quaterly, flat rate in the back of the book, 3 columns, both flat rate jobs and material cost. Hope this helps:D

[westcoastplumber]

No offense rick , but you did not answer the Question. I asked if anyone has suggestions on pricing columns or number of books. Not how to stay small self employed and give techs an avenue to rip off customers. Flat rate in my opinion is fair to both the customer and tech. Just because I or my techs are fast does not mean we should lose out. On the other hand just because i or my tech is sick or working slow the customer should not suffer. Besides that I am a service and repair plumber, you seriously cant tell me you or other plumbers don't already flat rate some jobs. Such as a tub wast and overflow, faucet installations, drain cleaning ect.

I agree with you crappy days. Just because I can finish a water heater in 1.5 hrs, fully code approved, I shouldn't be short changed, I remember when I started plumbing, I was slow, with years experience, I became faster, cleaner, I can deliver quality work, I should not make less because I have more experience. I understand plumber ricks case, but I think that flat "fair" rate pricing is better for everyone. Crappy, check the "Plumbers Pricing Manual" by Trade Service, www.tradeservice.com (http://www.tradeservice.com), it comes out quaterly, flat rate in the back of the book, 3 columns, both flat rate jobs and material cost. Hope this helps:D

[PLUMBER RICK]

No offense rick , but you did not answer the Question. I asked if anyone has suggestions on pricing columns or number of books. Not how to stay small self employed and give techs an avenue to rip off customers. Flat rate in my opinion is fair to both the customer and tech. Just because I or my techs are fast does not mean we should lose out. On the other hand just because i or my tech is sick or working slow the customer should not suffer. Besides that I am a service and repair plumber, you seriously cant tell me you or other plumbers don't already flat rate some jobs. Such as a tub wast and overflow, faucet installations, drain cleaning ect.

all of my quotes, if the customer wants 1 is based on my hourly wage. this is not hidden in some book and 3 times higher than the hourly rate.

why are you switching to flat rate? what is the hourly rate that you bill at?

believe me, i doubt that the customer would choose flat rate over time and material if they know the facts. if your plumber is qualified the client will not worry about the clock. if the plumber is not a plumber, but a "tech" and has little training then flat rate will protect the client. the problem is the client is paying for the lack of skill of the tech.

do you inform the client of your hourly charge? or is everything just a menu price?

when i did new construction, 1981-1995, everything was a competitive bid. we had to price the job not only to get it, but make money at it.

there is not 1 job that you can price flat rate, that i can't beat by at least 50%. i will not only get it finished faster, make my wages, and never have to explain my bill. i have yet to find a flat rate co. here in los angeles that can compete. all i ever hear is the horror stories from my new found referrals.

why the switch to flat rate?

rick.

there are a handfull of prior threads on flat rate. read it or not. i suggest you read it:)

[ToUtahNow]

I really have no problem with flat-rate pricing if the hours are based on a real plumber doing the job. When I give an estimate it basically is the same as flat-rate pricing because I am letting the homeowner know up front what the price is. Where I have a problem is when the flat-rate book uses a man hour rate based on someone who should not be doing plumbing in the first place. I would fire a plumber if he ever took as long to do a job as is allowed in flat-rate pricing.

I'm curious for you flat rate guys, do you ever tell the customer what your hourly rate is based on and how many hours are allotted to a job? If you do I see nothing wrong with your system.

Mark

[ToUtahNow]

I agree with you crappy days. Just because I can finish a water heater in 1.5 hrs, fully code approved, I shouldn't be short changed, I remember when I started plumbing, I was slow, with years experience, I became faster, cleaner, I can deliver quality work, I should not make less because I have more experience. I understand plumber ricks case, but I think that flat "fair" rate pricing is better for everyone. Crappy, check the "Plumbers Pricing Manual" by Trade Service, www.tradeservice.com (http://www.tradeservice.com), it comes out quaterly, flat rate in the back of the book, 3 columns, both flat rate jobs and material cost. Hope this helps:D

By the way I have been using Trade Service's pricing manuals and desk top pricing guides for over 20-years and I agree they are great. I am fairly familiar with the flat-rate hours they have but I just use them for pricing.

Mark

[BAPlumber]

This post refers to service work only.

I've used flat rate in the past and don't have much problem with it, if it is done fairly. it's based on t&m. One of the companies I worked for used $120/hr as a base for their flat rate then marked up materials 20-30%, they also had a fraction of their annual advertising and insurance costs added to each task.

Whether the service plumber gets paid hourly or on commission you have the same basic problems.

The problem you have with T&M is some plumbers want to make more money so they take more time, and the customer,and company gets screwed. The company because that plumber is not available on other projects.

The problem with Flat Rate is that companies and the plumbers want to make more money. So, they inflate their hourly rate to as much as $300/hr and encourage upselling of un-needed products or services. The customer gets screwed. The company makes a lot of money and gets law suits and Better Buisiness Bereau problems.

I think if properly done, with the need of repeat buisiness in mind, flat rate could be a valuable tool. It prevents customers from paying for extra time and gets the plumber to the next job so the company can make more.

With all that in mind there will be times when extra work will need to be done. In that case these additional jobs have typically been discounted about 30% on labor and removing the ins. and adv. costs. the material should stay the same.

Each buisiness owner should decide for themselves which way they want to go. But, should also have the customer in mind and if they want the repeat buisiness, I think repeats are good:D . Just don't price yourselves too low in the market and undervalue the trade:( .

If you want to show customers pricing at differant levels I would go with 3 columns, 1st level, discounted level, and savings. You can use the discounted level as commercial pricing if you want.

Brent

[Crappy days]

Utah,

I visit Utah often and if I lived there I might think differently about a price book. Unless I was doing work for a member of my ward than I definately would give them a flat rate plus ten percent (just kidding)! It is a different market in Southern Cal most of the professional plumbing shops with five or more plumbers flat rate to some extent. I do still and will always do some time and material. Management, pay, invenotry is just easier with the flat rate software. I am not planning on pricing my book like Roto Rescue or other large chains. Bestides, name other craftsmen such as fence builders, roofers, painters, masonry, stucco or other professions such as dentist, doctors, auto, etc that do not flat rate. For me is is easier to know my techs are following set guidelines rather then pulling numbers out of the air or charging customers for trips to the supply store because they were to lazy to check their bin for restock parts. Also, the turn over in repair is high. Not just with me, but all the shops in the area. The bottom line is if a guy wants to rip someone off they will be able to do it either way if I'm not constantly reviewing invoices or following up with customers. Last month, I polled five hundred of my customers and a staggering 74% said they would like a flat fee before work started. My hourly rate is $135 for the first hour and $85-95 for every hour after that. That is what it will continue to be with the flat rate books. The flat rate software just takes into account alot of other miscellaneous items (screws, dropcloths, disposable booties, etc) that techs just don't figure in. When I use the word techs, I do mean well trained plumbers with five or more years experience. My customers demand high quality craftmanship and I and my techs should be compensated for our standards and ethics.

[Crappy days]

I, will answer any Question the customer has regarding pricing, cost and mark up of material, & work performed. IF the customer doesnt like the truth thats not my problem. Also I'm not looking to be the cheapest in town Rick. I want my pricing to be in the middle. Any buisness course will tell you on services people choose based on a business reputation , notoriety, referal, price and for service not the lowest somewhere in the middle.

[apf]

Flat rate sucks , period . Nothing wrong with bidding a job though but that is based on the particular circumstances of that job . The cust. usually looses on those jobs..............but now that I think about it , I may have to go to flat rate since trap repair and house stroppages etc. are being done by Joe Blow home owner thanks to many forums that explain in detail sewer techniques that took years to fine tune............gotta make it up some where , Hey Dog

[freddy]

IMO if your not doing flat rate your prostituting yourself and the plumbing industry. Bringing it down to being a handyman profession. crappyday is moving to the next level by chargeing how all profesinal company charge. As for columes I use 3. 1 for service customers price 1 reg price 1 overtime night service, If your customer knows the price up front no crying when you give them the bill. Before book pricing customer would complain well my plumber back home in Cal, only charged 65.00 and hour... Now I don't even get in the truck to go look at the job for that. May do less jobs but make more money more free time for golfing fishing time with family. :) Freddy

[Josh]

Oh great this old topic all over again :rolleyes: We had 5 pages of arguments about this before and it turned out half go flat and half go hourly and whoever believes the oposite of you is stupid. There I summed up the rest of the thread for you guys. :D

Josh

[ToUtahNow]

Crappy,

As I said I am not totally against flat-rating as long as everything is up front and you are using real world man hours.

I am not from Utah I am from Los Angeles. I own some recreational property in Utah and I am the President of a Water Company in Utah. I am a Plumbing Contractor in California and Nevada and had a plumbing contracting business in Los Angeles until 1999 when I sold my shop to an employee of 20+ years.

I have also worked as a Plumbing Expert for Construction Litigation since 1988 so I have a pretty good feel for what it cost to get stuff done. The sad part is many of the flat-rate shops I have to defend have a shop full of kids who should still be riding with a journeyman learning plumbing and instead they are out there working like they are a journeyman. Having a truck full of materials and a pricing manual does not make you a plumber.

Many of my former employees have started their own businesses and some are flat-rate companies. Some are out there protecting the trade and their customers and some are not. I have no problem with an $85 per hour rate for a service plumber if you can get it as there are additional cost for a service plumber over a production plumber. I do have a problem when a shop uses a guy who takes 4-hours to do a 2-hour job and then bases a flat-rate book on him. There are plenty of real world cost estimating books out there, it seems odd none of the flat-rate companies use them.

Mark

[drtyhands]

basic math 101
A water heater (50 gal) $400
Time to install with delivery and disposal 2 Hours
$1040.00 charge customer

I can charge $320.00 per hour don't have to have any more education and or experience than 90 days watching the guy driving the company van.

All straps,valves,basically anything other than the water heater itself,is an extra at $120.00 per hour,plus 40% mark-up on material,Then I can go slow.

Wow sounds to good to be true.How could I be so foolish to charge t+m

[garager]

I have been building houses and garages and addition for years now. I do not use a flat rate, never have never will. I also do not mark up materials just to make more profits (which helps win bids). I do well enough and I'm not trying to get rich in this business. But that is what I chose to do. I have dealt w/plumbers and electricians, ect who uses flat rate. I will decide who gets the job by their reputation and bid, more so reputation. I don't see any problem w/flat rate as long as I can keep the bid down in order for us to win the bid. I do think Josh summed it up very well, and it does come down to the home owner, if they are pleased money wise and work wise you should be getting more work from them and their friends. But if they hear 6 months later that some other company would do the same job for less, you may never hear from them again. Competition is the name of the game, not everybody can go by flat rate, I might be hungrier then you, so I'll have a better chance to win that job.

[PLUMBER RICK]

the big issue is flat rate and emergency repairs.

a flat rate shop is not going to win bids on a real contract job. a job that the homeowner actually has put out to bid.

what i see is that the homeowner that does not have a plumber, is going to look in the yellow pages, call a few companies, non of which will give a price over the phone, not even an hourly price, tell the customer they will be there in under an hour, and then the "desperate housewife" will get sold on a repair without even knowing what the actual cost of the job really is. no break down of the material or labor.

sure there might be legitimate flat rate co's, but all i ever see and hear about from new customers is this flat rate scam.

when they can sell you a $7.00 fluidmaster ballcock for $600.:eek: installed, do you think that they will show you the break down of $593. labor:confused:

or how about the $800. thermostat:eek:

these are just 2 examples in the last week.

the ballcock guy got taken.

the desperate housewife was smart, she called her husband at work. not only did he have his wife to throw out the 2 techs form the house, she didn't pay them their inspection fee.

keep in mind that this goes on all day with these 2 different co's. even if they do just 1 in 5 jobs, they made up all for all the jobs, they didn't get. that 1 homeowner just made their day:rolleyes:

crappy, that 74% is very interesting in you polled clients wanting flat rate.

i would like to see the percentage after 1 job for for them.

i can raise my hourly rate at any time. typically once a year starting jan. 1st. my customers know this and are not blown away by the $5. increase to go along with the cost of doing business.

now if i switched to the flat rate system that the local shops are using, i would have to raise my prices 300-400%:eek:

sure, i would get rich fast, but the phone would stop ringing after the first job for them using the flat rate system others use.

of course i give fixed prices on larger jobs. but it's all based on my estimate of time and materials. still waiting for another co. to under bid me.

and yes my customers can afford to spend more. a persons wealth is not how i base my prices.

i don't do apartments. i work in condos, homes and commercial complexes. i even do a large percentage of work for other plumbing co's.

i think i do approx. 25% of my residential work for doctors and lawyers.

to sum it up, nothing wrong with a fixed/ flat rate. just along as it is realistic and competitive.

all i ever see from new clients are the ones that are not.

rick.

[Crappy days]

I think some people are missing the piont. I look at flat rate as any other tool . If used properly it will benefit everyone, If not then evertuone suffers from it. Also anyone who is a new constuction plumber could not possibly under stand where I'm coming from. I understand in new construction large remodels pricing is much different. However in repair there are alot more cost Vehicle, gas advertising, so on . When I look around me at the phcc meetings most of the larger service and repair shops flat rate in someway. I bacame self employed to live well, and spend time with my family. Besides my wife went to the ear doctor the other week , waited almost two hours after her appoinment time and then paid 145.00 for him to vist with her 10 minutes. I know im just as qualified in my trade as he is in his trade. Im not a work out of the pickup truck wearing jeans smokin a butt plumber. I run a professional shop. If people want cheap they can look in the pennysaver.

[freddy]

Crappy days I think your going the right direction, and it takes courage to make the step. Yes you will lose some customers but they will come back if you provide good service and clean people. Go just about anywhere and flat rate pricing is used and NOT BROKEN DOWN FOR THE CUSTOMER TO PENNY PINCH. like mc donalds yes i would Like a Big Mac no pickle how much will taking that pickle off save me in money. Re-place toilet wax ring 185.00 Customer (hey re-use the bolts and my supply that's been there 6 years and don't grout it to the floor. How much will that save me.....Mc Donald don't cut you a break so why should you start chopping your price figure out what it cost to run your bussiness and make a GOOD PROFIT.
You go into bussiness to make money for you and you family to live a better life. If you are charging what it cost you to make a living and PROFIT. You do not need to explain it to other plumbers. They'll never get it. be ready for the name calling Flat Rapist HA HA HA I'am laughing all the way to the bank baby.:D

[oldslowchevy]

yes but mc donalds dosn't cost me $185 for a big mac either i can get then for just a $2.50. so i would be dammed if i would pay you or any one else $185.00 to come out to my house while i miss a day of work, turn a valve off take out 2 bolts scrap out the wax ring replace the wax ring intall 2 new bolts reinstall the water line turn the valve on than toss the old wax ring in my trash can for a $3.00 wax ring. sorry i have done this job many many times and i would never go over $90 to do this job and even at that is steep, i mean i can do the whole job in less than an hour and a half.

[plumberscrack]

I'm not a work out of the pickup truck wearing jeans smokin a butt plumber.

Why were you looking at me when you said that?:D

It's really too bad this topic is back up again. I have now lost some respect for some of you guys:(

Josh was right.

~Bill

[drtyhands]

I think some people are missing the piont. I look at flat rate as any other tool . If used properly it will benefit everyone, If not then evertuone suffers from it. Also anyone who is a new constuction plumber could not possibly under stand where I'm coming from. I understand in new construction large remodels pricing is much different. However in repair there are alot more cost Vehicle, gas advertising, so on . When I look around me at the phcc meetings most of the larger service and repair shops flat rate in someway. I bacame self employed to live well, and spend time with my family. Besides my wife went to the ear doctor the other week , waited almost two hours after her appoinment time and then paid 145.00 for him to vist with her 10 minutes. I know im just as qualified in my trade as he is in his trade. Im not a work out of the pickup truck wearing jeans smokin a butt plumber. I run a professional shop. If people want cheap they can look in the pennysaver.

This is my last post I intend on this thread.

Crappy days and other flat rate,
This is not an attack on you personally,this is an overview and my opinion.
Because of the current status of society where a lot of people have the attitude of "Grab as much as you can as quickly as possible,because this is what the other rich guy is doing".And people who do not understand how to negotiate with this process get hurt(can you picture the elderly woman who is struggling to hold on to her last years of independence alone) she is the easiest one to get money out of.I know men personally who have quit these type of companies because they weren't comfortable with the pilaging attitude behind them.

I know a local service plumber who has been in my area for at least 25 years he is t+m at $105.00 per hour.His phone never stops ringing,he has a full time helper and all the amenities of what you might expect from someone who is well-off so I know flat rate is not the only way to get rich.

Again,this is not a personal attack on our our flat rate members.I just see how much damage it does to the good people in my community.There are a lot of companies abusing the system,peoples lack of knowledge,if the consumer was better educated we wouldn't be having this discussion.

Biting my tongue and signing off.

Adam:)

[Crappy days]

Again I dont how this went from flat rate to ripping people off. Today i installed a 600 series wilkinson 3/4 inch regulator , ball valve, and hose bib charged 385.00 . I did the job in 45 minutes with paper work , I believe that is a fair price. The price is not going to change with flat rate, its just going to make things easier book keeping, inventory, pay. Plus this way I and my techs are on the same page not 367. or 412. or 511. or 255. a set price . Consitency is the name of the game. Look at any large company and you will see they are consistant.

[PLUMBER RICK]

This is my last post I intend on this thread.

Crappy days and other flat rate,
This is not an attack on you personally,this is an overview and my opinion.
Because of the current status of society where a lot of people have the attitude of "Grab as much as you can as quickly as possible,because this is what the other rich guy is doing".And people who do not understand how to negotiate with this process get hurt(can you picture the elderly woman who is struggling to hold on to her last years of independence alone) she is the easiest one to get money out of.I know men personally who have quit these type of companies because they weren't comfortable with the pilaging attitude behind them.

I know a local service plumber who has been in my area for at least 25 years he is t+m at $105.00 per hour.His phone never stops ringing,he has a full time helper and all the amenities of what you might expect from someone who is well-off so I know flat rate is not the only way to get rich.

Again,this is not a personal attack on our our flat rate members.I just see how much damage it does to the good people in my community.There are a lot of companies abusing the system,peoples lack of knowledge,if the consumer was better educated we wouldn't be having this discussion.

Biting my tongue and signing off.

Adam:)

adam, my point exactly:). this is the same issue i see here on this side of town.

rick.

[PLUMBER RICK]

Again I dont how this went from flat rate to ripping people off. Today i installed a 600 series wilkinson 3/4 inch regulator , ball valve, and hose bib charged 385.00 . I did the job in 45 minutes with paper work , I believe that is a fair price. The price is not going to change with flat rate, its just going to make things easier book keeping, inventory, pay. Plus this way I and my techs are on the same page not 367. or 412. or 511. or 255. a set price . Consitency is the name of the game. Look at any large company and you will see they are consistant.


crappy, why is there such a difference in price between one of your plumbers and another? is one more qualified than the other? is one job different than the other? i can see the time being a factor, but the material should be priced identical, part for part.

385. is not a rip off, but is high. a 3/4'' wilkins 600 is under 50. a 3/4'' ball valve is under 10. and a hose bibb is under 5. so that equals $65.00. $220.00 for 45 minutes is :eek: still not a bad price. but not a time and material price. even if i doubled these prices to $130. and charged 1 hour labor with a service call. i would still be $155. less than you.

the interesting thing is i was stretching the price, to prove a point. i would be $200 less than you:eek: i guess doing this for 32 years now has either taught me to be fast, proficient and very fair with my customers. could i charge $385. for this job? sure, but i don't need to:D

i guess there is a better way to get rich faster. i just don't believe in it.

like i said you price is not bad, but mine is better.

still curious how many of your present customers you will retain when they get your new pricing structure. i guess you will know sooner or later.

not telling you how to do your business, but i can tell you what i see when i see other invoices and estimates. i can also tell you how many of these flat rate companies that have trucks that sit all day in the parking lot waiting for the next disaster to happen.

within 1 mile of my shop are 2 of the largest flat rate companies in california. both have more trucks that sit, than go out.

just my own observations.

then i see my buddies shop with 12 trucks and they are out all day. the guys don't do any pricing or billing. it's all done in the office and sent out within a week. i guess his clients trust him and know what to expect, no big surprises.

he's in his 30th. year and not going to change either.

rick.

[gear junkie]

385. is not a rip off, but is high. a 3/4'' wilkins 600 is under 50. a 3/4'' ball valve is under 10. and a hose bibb is under 5. so that equals $65.00. $220.00 for 45 minutes is :eek: still not a bad price. but not a time and material price. even if i doubled these prices to $130. and charged 1 hour labor with a service call. i would still be $155. less than you.

the interesting thing is i was stretching the price, to prove a point. i would be $200 less than you:eek: i guess doing this for 32 years now has either taught me to be fast, proficient and very fair with my customers. could i charge $385. for this job? sure, but i don't need to:D

rick.

I see advantages (and disadvantages)to both sides and use a little of both but let me play devil's advacote for second. Rick, what about the time getting the part, planning the repair, doing invoice, filing the invoice, gas for truck (don't you have a 4500? biggg guzzler), insurance, chemtech? I think you get the jist of what I'm saying. Crappy made $320 of "profit" from that job. After subtracting all those items, how much "profit" did Crappy really make? Just because you're not on the job doesn't mean you're not "on the job". Final thought; just attended a business seminar conducted by Trane and one of the big points was if you're not charging $200 an hour you're killing yourself for the very reason stated above.

[oldslowchevy]

charge me $200 an hour and i will learn how to do it myself, heck it is a sad day that the auto repair shop near me only charges $75 an hour and they do plumbing(muffers, brake lines, gas lines, cooling systems) then they do hvac on them also they must be cerified welders eletritions and now they must need to know computers sensoer and so on all for $75 an hour, yet SOME of you think you need to make $200 an hour ........................... please get real and while you are at it get a life

[oldslowchevy]

and the fact i cant spell worth a hill of beans by no means i don't know when i am being ripped off or not!!!!

[ToUtahNow]

As a little background, I have been a member of PHCC for many years. One of my plumbers was the first-year instructor for our local PHCC Apprenticeship program so I would schedule his day so he could make it to class. I have always supported PHCC and their efforts to make the Trades better.

In recent years it seems like the PHCC is more interested in converting all of the contractors to flat-rate contractors rather than training their employees to be plumbers. Now in addition they are pushing the new PHCC Maintenance Program.

One of my plumbers relocated out-of State to a large flat-rate company which seemed like a top-notch company. However, I noticed the knowledge of the techs that came out was somewhat spotty. One day I would get a really good plumber and the next day I would get a guy who could barely clear a drain.

As it turns out the shop has two qualified plumbers, a half a dozen mediocre plumbers and two dozen guys who should not be out on their own. Of course the labor rate for each of the plumbers is the same and the qualified plumbers spend much of their time saving the other 30-“Plumbers”. How in the world can a shop justify sending out a guy with a few months of training and charging $100+ an hour for his services?

The above example is where I have a problem with flat-rate companies. If you look at a flat-rate book they will tell you that you have a labor cost of $22.00 per hour plus and additional $8.00 per hour for employee benefits and costs for a total of $30.00 per hour. They then add $50.00 per hour for expenses for a direct cost of $80.00. To this they add 25% to give a total cost of $100.00 per hour per man in column 1. Column 2 is 1.5 times that and column 3 is 2 times that.

Using column 1 with a shop of 32-Plumbers working 40 hours per week you have a labor income of $128,000.00 per week ($6,656,000.00 annually) of which $38,400.00 per week ($1,996,800.oo annually) is your labor costs, $64,000.00 per week ($3,328,000.00 annually) is your weekly overhead and $25,600.00 per week is profit ($1,331,200.00 annually). Remember this is your labor only and does not include your profit on materials. I may agree with the labor costs if the plumbers are qualified but $104,000.00 per employee per year for overhead is way too high.

I am currently looking for a shop to do some work on a project I have. The project will require a man and a helper for 8-hours per day on and off for the next 5-years. I cannot tell you how many shops have told me they make too much money flat-rating to take work by the hour. To me it seems like if you have guaranteed work for 60-months you find a way to do it.

Mark

[Crappy days]

Flat rate pricing can work in the customers favor. If the tech is under trained they pay the same no matter how long it takes. Where I live 90 percent of the service and repair shops pay by percenage including myself. The shops that pay hourly are union, or the owners are very old and out of touch . Theres only one union shop that does service and repair, and they only do commercial. The good plumbers go to the flat rate shops, beacause they can make more money . Don't get me wrong there are good hourly shops. However more and more are going flat rate, the day of cheap, gas, leases, insurance, auto repair ect are over. I understand for some of the older guys its hard for you to relate. For example Im 30 years old , owned a condo wich I sold 2 years ago . We bought a 35 year old 1900 square foot modest home for over 500 thousand. I work an average of 55 to 65 hours a week plus have 3 full time employees. Provide my employees with health care and vacation/payed. In order for me to meet my expenses i have to charge an average of at least 85 to 110 an hour, and thats for all time spent . Customer do not understand the cost of running a business, all they sea is the time spent at the job. All I'm saying is I want to be paid for whats considered the average time spent on the job. Even if it takes me an hour, if the average is two than thats what I will be billing. We live in a free nation and everyone customer has the right to except or refuse the work to be done. I've have clients that have followed me from shop to shop until I opened my own business. My wife is an estate planning attorney everyday she meets with people who did not plan on growing old, and have not prepaired for long term care, retirement or the cost of service to there home. I my friends will not be one of them. I appreciate the feed back weather I liked it or not. I have made my mind up on this matter and will report back in the future.

[freddy]

Stick with the plan crappy days, these other shops that are (low fair prices ) don't have customers, they have low price shoppers just like walmart You may lose some shoppers with flat rate pricing but my experiance, is the ones you keep are your true customer that are there for the life of your bussiness
and will call over and over again. Provide great service and you will make money and provide training and benifits for your employees. :) Freddy

[gear junkie]

Well said Freddy. On a side note; where's Dog in all this? On an opinated subject like this? Not that I miss him or anything.;)

[PLUMBER RICK]

Stick with the plan crappy days, these other shops that are (low fair prices ) don't have customers, they have low price shoppers just like walmart You may lose some shoppers with flat rate pricing but my experiance, is the ones you keep are your true customer that are there for the life of your bussiness
and will call over and over again. Provide great service and you will make money and provide training and benefits for your employees. :) Freddy

well, i guess i did something wrong then. since i don't advertise, my 1000+ customers must be shopping. i guess i must of missed something in 32 years of plumbing.

by the way crappy, i too own my own home, my own office, my own warehouse. and a collection of tools and equipment that would make most shops look like a joke.

all this while still working t&m. growing my business larger and retaining 99% of my customers. even picking up more work from other plumbing contractors too.

lets see you match these numbers.

what i see you saying is that if all the competition is flat rate, the consumer will have no choice but to pay your prices.

amazing that the union shop is less expensive than your shop.

let me try to figure this out:confused: a union shop has more qualified and highly trained licensed journeyman plumbers. they have a higher cost for the health and welfare fund for their union employees. yet their hourly cost is less than yours. it's not the cost of doing business, it the greed that prices you higher.

the fact that a consumer is not knowledgeable or informed is not a reason to take their money.

i wish the union shop would read this and make it public for all to see.

i already know what "dogs" position is on this matter.

you have a lot of learning to do. it's not all about money.

rick.

[ToUtahNow]

Stick with the plan crappy days, these other shops that are (low fair prices ) don't have customers, they have low price shoppers just like walmart You may lose some shoppers with flat rate pricing but my experiance, is the ones you keep are your true customer that are there for the life of your bussiness
and will call over and over again. Provide great service and you will make money and provide training and benifits for your employees. :) Freddy

I would be interested to hear what your "experience" is? How large is your shop and how long have been in business? What type of customer base do you have? What is your gross income? These are the type of things which would give your statement credibility.

When I sold my shop seven years ago I had been in business for 20-years. The shop has now been in business for 27-years and has many of the original customers still. I did little or no advertising for the last 10-years because we had more work than we needed from our base customers. Many of the current customers are the children of our original customers or referrals.

You make and keep repeat customers by providing a customer with good service at a fair price. The talking point which is brain-washed into so many is with flat-rate pricing the customer knows what they are getting. That just is not true as flat-rate is the exact opposite by design. Why is it flat rate companies do not tell the customer how they arrive at a price? Why it is a flat-rate shop charges 4-hours to install a pedestal sink which should not take more than 1 ½ hour?

If you guys want to flat-rate that is fine but let’s call it like it is. If you are going to charge premium prices for a plumber give the customer a premium plumber and base your man-hours on how long it takes a premium plumber not a helper.

Mark

[garager]

Here is a prime example of flat rate (click the link), I made a right choice and he will get damn near everyone of my plumbing jobs from now on, business wise and private. I watched a mechanic throw his 24 year job away because of flat rate, instead of hourly wages the Ford dealership pays by flat rate on what type of work their doing. I'm not dead against it, just find some of the going rates hard to swallow. As Rick said "the fact that a consumer is not knowledgeable or informed is not a reason to take their money". But then again they are some what stupid for not getting bids from other companies. And when you find someone who is good and reliable, stay w/them. I wonder how many home owners are reading this thread and going wow. There are a lot of woodworker in this forum too, that are home owners, and not business owners, who are reading this.


http://www.ridgidforum.com/forum/showthread.php?t=11450

[Crappy days]

I, ve been in business 4 1/2 years advertised once in yellow book ,small add. Also once in local paper 10 words. 99.9 percent referal. I do alot of resturant and property manangment wich will still be t&m. Rick I don't care about your shop or what you have. And will see where I'm at when I'm your age propbably at my vacation home on the river , watching old drunks make fools of them selfs.

[Crappy days]

Actually Rick the union shop charges 145 an hour plus there parts mark up schedule is as follows 1.00 to 50.00 x 300 percent 50.01 to 100.00 x 250 percent 1oo.o1 and over x 150 percent(+tax). Last mounth I under bid them on a commercial water heater. Maybe I got the job also because there guy could hardly speak english (oh yeah but union shops are great & there staff are well trained). Just because it a union shop does not mean anything. My goal is to be busy and steady wich I have been. The last shop I worked for almost five years ago was t&m, the owner would justify anything between 150.00 and 175.00 an hour. He started his business about 11 years ago and now has over thirty truck. I suppose he rips people off at the those prices to doesnt he. I think this is crap, I never asked you or anyone else to tell me how to run my business, I asked for advice on column set ups and number of books. So far it only seems as though a few of you understand the english language.

[PLUMBER RICK]

Actually Rick the union shop charges 145 an hour plus there parts mark up schedule is as follows 1.00 to 50.00 x 300 percent 50.01 to 100.00 x 250 percent 1oo.o1 and over x 150 percent(+tax). Last mounth I under bid them on a commercial water heater. Maybe I got the job also because there guy could hardly speak english (oh yeah but union shops are great & there staff are well trained). Just because it a union shop does not mean anything. My goal is to be busy and steady wich I have been. The last shop I worked for almost five years ago was t&m, the owner would justify anything between 150.00 and 175.00 an hour. He started his business about 11 years ago and now has over thirty truck. I suppose he rips people off at the those prices to doesnt he. I think this is crap, I never asked you or anyone else to tell me how to run my business, I asked for advice on column set ups and number of books. So far it only seems as though a few of you understand the english language.

this is correct, and only a few of us can spell correctly too. hope your contracts are written with better grammar than your post. another reason to stay in school.

lets not even compare wealth, business practices and ethics. you will still lose.

you came to this forum for advice. some of the members gave you advice and some gave you an ear full. if you don't like it, don't read it.

i only wish you could have a track record like mark and i.

glad to see your wife is a lawyer, cause it looks like you will need one with all the "big business" you have.

i can keep going, but i'm not going to change your way of doing business.

i wish your current customers had a chance to read these post. they would be my customers.

i guess all the years doing this and only 1 time in small clams court. by the way i was the defendant and also the winner. even the judge couldn't understand why we were in court wasting her time.

do you actually know what your cost of doing business is? or does the book tell you what to charge? just because a book tells you it's worth x amount of dollars. it doesn't justify it in your actual cost. if you can back your cost to match your charges, then you're fine. but at 300- 400 an hour, there is no justification.

rick.

[Crappy days]

Rick, I never said I was a great speller or had a degree in english , once again you have missed the point. And certainly I never said I charge 300 or 400 dollars an hour or average that . Although I am saying you are A jerk , and if your customers really got to know you they would only hire your services because your cheap. Its because of arrogant old men like you I opened my business. Lets talk ethics I serve in my church regurlarly, am an eagle scout, and I have recieved the torch award from the BBB. Also I would bet money at my age I've served in my community, as far as man hours more then you could dream of doing.You sound like a hurt lib crying out for help attacking other people.

[gear junkie]

Crappy,
I respect you as a business man trying to make a living in life your way, but do not come into this forum and think it's okay to insult Rick or any one else. Rick has more time helping people, including myself, than anyone else on the plumbing forum. I understand it's a free country and there's the freedom of speech so you can call anyone you please a jerk; but in the end: who looks like the jerk?

[PLUMBER RICK]

Rick, I never said I was a great speller or had a degree in english , once again you have missed the point. And certainly I never said I charge 300 or 400 dollars an hour or average that . Although I am saying you are A jerk , and if your customers really got to know you they would only hire your services because your cheap. Its because of arrogant old men like you I opened my business. Lets talk ethics I serve in my church regurlarly, am an eagle scout, and I have recieved the torch award from the BBB. Also I would bet money at my age I've served in my community, as far as man hours more then you could dream of doing.You sound like a hurt lib crying out for help attacking other people.

Again I dont how this went from flat rate to ripping people off. Today i installed a 600 series wilkinson 3/4 inch regulator , ball valve, and hose bib charged 385.00 . I did the job in 45 minutes with paper work , I believe that is a fair price. The price is not going to change with flat rate, its just going to make things easier book keeping, inventory, pay. Plus this way I and my techs are on the same page not 367. or 412. or 511. or 255. a set price . Consitency is the name of the game. Look at any large company and you will see they are consistant.

well you must have messed up in math too.

the last time i checked the wilkins 600 3/4'' regulator is under $50.00, the 3/4'' ball valve is under $10.00 and a hose bibb is under 5.00.

according to my math this equals $65.00. add tax make it $70.36. the balance is $316.64 which is 3/4 of an hour according to your post.
a little more math and this works out to be $422.19 an hour.

sure the 422.19 has to cover your wages, travel, overhead and profits.

well i guess we were both wrong. it's more than $300-$400 an hour.

you said it yourself, i only did the math for you since you're a little slow. grow up and don't think your method of pricing is justified by hiding it in some little flat rate black book.

now you can share this post with your customers, church, and other scouts. it would be interesting to hear their comments.

interesting to hear from a 30 year old (with 10 years in the trade) that hasn't been alive as long as i've been doing plumbing. you're so smart, why post and ask questions, you're a pro at it already.

go back to school and take up math to go along with your other faults.

ps. when you finish top of your class, we then have something in common.

rick.

get your last jab in as this post will close, as it always does when we speak of flat rate.

[PLUMBER RICK]

Crappy,
I respect you as a business man trying to make a living in life your way, but do not come into this forum and think it's okay to insult Rick or any one else. Rick has more time helping people, including myself, than anyone else on the plumbing forum. I understand it's a free country and there's the freedom of speech so you can call anyone you please a jerk; but in the end: who looks like the jerk?

thanks for the compliments, i think that crappy is just getting frustrated in that some of us don't agree with his business ethics and math skills:D

i actually enjoy helping others, it just gets to me when other professionals can hide behind a book and attempt to justify it's right.
i see and hear about this new flat rate system everyday. if it was realistic in pricing, or the contractors adjusted it to be realistic, then i wouldn't be so ruff on him and the system.

in the end, the consumer is the one paying the bill. i only hope that more consumers would wake up and be more informed.

i think i speak for myself and others on this subject.

in the end crappy will continue to do as he is, preaching, but he will remember all the crap:eek: i gave him over it.

he's not the first or the last person to use this system. i'm just waiting for the first to use it with some realistic, justifiable prices.

you would be amazed at the prices in that little black book.

thanks again for being the big brother;)

rick.

[drtyhands]

Rick, I never said I was a great speller or had a degree in english , once again you have missed the point. And certainly I never said I charge 300 or 400 dollars an hour or average that . Although I am saying you are A jerk , and if your customers really got to know you they would only hire your services because your cheap. Its because of arrogant old men like you I opened my business. Lets talk ethics I serve in my church regurlarly, am an eagle scout, and I have recieved the torch award from the BBB. Also I would bet money at my age I've served in my community, as far as man hours more then you could dream of doing.You sound like a hurt lib crying out for help attacking other people.
Let me tell you something,
There was a single woman that was taken by a guy that was a total Fraud,he convinced here that god had them come together for a reason.They said a prayer together and inked the contract over the bible.He then commenced to steal $40,000.
I too attend sunday morning gatherings,But I certainly keep my eyes open to predators of all sorts as they tend to look for the softer souls to prey on.
How could you say Rick is a jerk:mad: it just goes to show how self focussed one can be.I am sorry you feel threatend.
There are a lot of flat rate,Iam sure you feel justified in your perceptions.This does not make you a bad person at this point.Just know that I will inform as many people in my network to the truth of how flat rate adds up in my perspective.
Sorry:(

[ToUtahNow]

I believe respect is due to everyone on this board including the new guys. Flat-rating is here and it is not going away anytime soon. If the shop owner is an honest man there is nothing wrong with flat-rating.

In other words if you are using qualified plumbers (journeyman or masters license) you should be able to charge a premium rate for those techs. However, if you are charging the premium rate you should base your man hour rates on how much time it takes a qualified plumber to do the job.

Back in the early 90s I had the opportunity to sit with one of the originators of flat rate plumbing during a National PHCC Convention. When I asked how he could justify the rates he was charging he explained what I considered his scam. He would charge a service call to get to the house. His plumber would then give his inflated estimate but offer a discount of the service call charge. Since he was already in the house he generally got the job.

To me this was just plain wrong but I was intrigued so I continued to question him. When asked about repeat business he told me his plumbers would leave a 10% coupon with the owner when he left the house and if the owner was DUMB (his words not mine) enough he would rip them off again. And so flat rating was born.

This business grew to over 200 trucks and a bunch of franchises before he went out of business. As many of you may know I have worked as an Expert Witness for Construction Litigation specializing in Plumbing & Mechanical since 1988. A few years ago I represented an equipment operator who had been hired by the above company.

Because the above companies Liability Insurance was not solvent, the California Insurance Guarantee Association had to step in to defend the plumbing company. The company had done a horrible job on this house and caused tens of thousands of dollars in damage while making an illegal repair. Because of California Law my contractor had to pick up the entire cost of the repair and all he did was operate a concrete pump.

I guess the number of trucks you have does not mean that much after all.

Mark

[Crappy days]

This is the last I"ll say on this subject. If you look at each post you will see that I never attacked Rick until he accused me of ripping people off and insulted my intelligence. I can see that Rick is very experienced and means well. However that does not give him the right to belittle or accuse anyone of wrong doing. If I have offended anyone I'm sorry.

[ToUtahNow]

I, ve been in business 4 1/2 years advertised once in yellow book ,small add. Also once in local paper 10 words. 99.9 percent referal. I do alot of resturant and property manangment wich will still be t&m. Rick I don't care about your shop or what you have. And will see where I'm at when I'm your age propbably at my vacation home on the river , watching old drunks make fools of them selfs.

I'm curious, why would you bill differently for property management and restaurants?

Mark

[oldslowchevy]

all he did was to use your own words and numbers against you

[ToUtahNow]

Crappy,

Cool your jets this is only an Internet site. We can all get a little too excited about our passions. Do not take it personal as Rick would still be the first one to help you in a pinch. I believe it is okay for us to agree to disagree about flat-rating.

Next month a bunch of us will be meeting in Long Beach for the PHCC Trade Show. If you have a chance you should try to meet us.

Mark