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  • #31
    Re: Flat rate pricing

    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
    Last edited by ToUtahNow; 05-12-2007, 11:05 PM.
    "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

    I never lost a cent on the jobs I didn't get!

    Comment


    • #32
      Re: Flat rate pricing

      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.
      THE GLASS IS ALWAYS HALF FULL

      Comment


      • #33
        Re: Flat rate pricing

        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

        Comment


        • #34
          Re: Flat rate pricing

          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.
          Buy cheap, buy twice.

          Comment


          • #35
            Re: Flat rate pricing

            Originally posted by freddy View Post
            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 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.
            phoebe it is

            Comment


            • #36
              Re: Flat rate pricing

              Originally posted by freddy View Post
              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
              "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

              I never lost a cent on the jobs I didn't get!

              Comment


              • #37
                Re: Flat rate pricing

                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
                Great Link for a Construction Owner/Tradesmen, and just say Garager sent you....

                http://www.contractorspub.com

                A good climbing rope will last you 3 to 5 years, a bad climbing rope will last you a life time !!!

                Comment


                • #38
                  Re: Flat rate pricing

                  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.
                  THE GLASS IS ALWAYS HALF FULL

                  Comment


                  • #39
                    Re: Flat rate pricing

                    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.
                    THE GLASS IS ALWAYS HALF FULL

                    Comment


                    • #40
                      Re: Flat rate pricing

                      Originally posted by Crappy days View Post
                      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.
                      phoebe it is

                      Comment


                      • #41
                        Re: Flat rate pricing

                        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.
                        THE GLASS IS ALWAYS HALF FULL

                        Comment


                        • #42
                          Re: Flat rate pricing

                          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?
                          Buy cheap, buy twice.

                          Comment


                          • #43
                            Re: Flat rate pricing

                            Originally posted by Crappy days View Post
                            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.
                            Originally posted by Crappy days View Post
                            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.
                            phoebe it is

                            Comment


                            • #44
                              Re: Flat rate pricing

                              Originally posted by gear junkie View Post
                              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

                              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 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.
                              Last edited by PLUMBER RICK; 05-13-2007, 09:07 PM.
                              phoebe it is

                              Comment


                              • #45
                                Re: Flat rate pricing

                                Originally posted by Crappy days View Post
                                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 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

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