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Why did you switch to flat rate?

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  • Why did you switch to flat rate?

    Not trying to start any hurt feeling but am genuinely curious. We've done the discussion on the advantages of each and it seemed to come down to personal opinion but no one really discussed why the switch. Most plumbers, I think, started as T&M then somewhere along the way switched to flat rate. What was the reason? Did you go to a seminar, meet a flat rater? How hard was the transition from one pricing method to the other.
    Last edited by gear junkie; 01-02-2008, 04:06 PM.
    Buy cheap, buy twice.

  • #2
    Re: Why did you switch to flat rate?

    U-ho

    Here we go

    Regards,

    Comment


    • #3
      Re: Why did you switch to flat rate?

      I switched mainly because alot of the customers that i had felt that T&M was shady, and that i would take my time to make more money. With T&M you can only charge so much. If i told you it was going to cost you $200 an hour for me to cable out your main drain, your eyes would do this then you would do this. Then you would watch over my shoulder and make sure i would be there for entire hour and stare at your watch.

      Now if i told you it would cost you $200 to cable out your main drain, weather im there for 10mins or 3hrs, how would you feel then? I would go for the flat rate. Most main drains if ran properly with the proper access can be done in under 45mins (keep in mind, just a normal clog, no roots involved). So now i just made my hourly rate in 45mins. PM me for other info, on this. I really dont want to get to in depth on here with it, if you need more info on it, then PM me. We can talk for days on it
      The History of Sanitary Sewers Good site on the history of sanitary sewers and cleaners

      www.thedrainsquad.net Our website

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      • #4
        Re: Why did you switch to flat rate?

        See guys, nothing to be scared of, just 2 guys talking about pricing. You can join the conversation.
        Buy cheap, buy twice.

        Comment


        • #5
          Re: Why did you switch to flat rate?

          Originally posted by gear junkie View Post
          See guys, nothing to be scared of, just 2 guys talking about pricing. You can join the conversation.
          Fer cryin out loud Ben, I just got home from work!

          After hearing the same few words over and over and over: "Can you tell me how much this will cost?", I finally just started telling them.
          I make a point to disclaim responsibility for unforeseen existing conditions, such as corroded drains & water pipe, for the most part Greg summed it perfectly above.
          Herk has a very similar way of pricing to mine, he accumulated a list based on his experience of how long it takes him & material costs.
          When I finally got a poeek at a flat rate book, I saw my prices were pretty much the same, give or take a few bucks...kinda nice to see I was close.

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          • #6
            Re: Why did you switch to flat rate?

            I switched to flat rate after a compediter took me to lunch and challenged me to do as his company was doing and showed me invoices and how his system worked.He even provided me w/ the flate rate system(price books ect..)I now use callahan /roach system.HANDS DOWN the smartest(luckiest) thing I have ever done.

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            • #7
              Re: Why did you switch to flat rate?

              I switched because I live in an area where price shoppers just call around to see what your hourly rate is, and it was quite apparent to me that the other plumbers had no idea what it actually cost them to be in business.

              In a small area like this, plumbers tend to do a little bit of everything - they plumb new houses, commercial buildings, do service work and remodels. So what's happening, I think, is that they go out and work on a house, and then toward evening they go out to a service call and basically give away some of the money they made on the house. They do not crunch numbers. They make their hourly rate by checking what everyone else is charging and then charge $10 per hour less.

              But I talked to a flat rater from a nearby city and when he told me that he had been paid $60k the previous year working for a flat rate outfit, I realized that I was being an idiot by not moving up a bit.

              In the couple of months I've been doing it - it's been working. It's too early to tell what a year will look like, especially since I started so late in the year. But the customers seem happy. And I'm happy since I'm no longer on the hourly pressure - I can relax and just do my job. Occasionally there's a small blip where I lose money, but mostly, I'm making 25 - 50% more per ticket than I would have been likely to make by the hour. Keep in mind that I scalped the prices from what the other flat raters would charge - instead of $900 - 1100 for a water heater install, I'd more likely get about $700 - 750. But I was getting about $550 - $650 for a water heater install before. (That includes the heater . . . )

              I'm not going to get rich quick, but I'm going to keep a close eye on whether the jobs are priced where they should be.

              Comment


              • #8
                Re: Why did you switch to flat rate?

                I didn't switch; I bought into a friend's company and the flat rate pricing structure came with it. This is a drain cleaning business only. We flat rate largely because we can give a customer calling around a number that is more meaningful to them than an hourly rate. Also, as Herk says, saying $200/hr sounds outrageous, but saying $95 for a toilet or $125 for a sink doesn't sound nearly so bad. I always answer the how much question with the caveat 'unless I run into something unusual' and kick over to an hourly rate after one hour when I run into an access issue, object in the line, broken line, 100'+ of 4" frozen solid for 3 weeks, concrete, or whatever. If it takes me over an hour (heck, 30-45 minutes) it is NOT run of the mill and more $ is fair. I am smart, experiened, fast, thorough, and clean, and I am not going to short myself for being those things. The flat rate makes sense as I can quote a price to the customer that is useful to them without sounding rediculously expensive.
                This is my reminder to myself that no good will ever come from discussing politics or religion with anyone, ever.

                Comment


                • #9
                  Re: Why did you switch to flat rate?

                  Sorry; as Drain Medic, not Herk, says.
                  This is my reminder to myself that no good will ever come from discussing politics or religion with anyone, ever.

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                  • #10
                    Re: Why did you switch to flat rate?

                    Also, flat rate by its nature pushes you to crank through jobs and be efficient and thorough and hone your process. T&M actually rewards you for being slow and having comebacks. Flat rate will make you better, leaner, faster, stronger (6 million dollar man music swelling in background). T&M has no reward for you making youself better unless you up your rate, and then you are more difficult to sell.
                    This is my reminder to myself that no good will ever come from discussing politics or religion with anyone, ever.

                    Comment


                    • #11
                      Re: Why did you switch to flat rate?

                      I've been reading this site for a couple of days, and like what I read. I am a master plumber (20 years) worked in mainly in new construction. Finally I have decided to go on my own, doing service. I would like to get more information and opinions on flat rate pricing and which model (book) is the best to use. At the moment I use a variation of T&M and flat rate pricing. Any thoughts?

                      Comment


                      • #12
                        Re: Why did you switch to flat rate?

                        I do a kind of flat-rate. Its kind of like T&M except I ALWAYS figure out the estimated cost BEFORE I do anything. That way there's no argument when I'm done and its time to collect.
                        Plus, I am a fast, smart, efficient plumber and prefer to be be paid for my work, not my time.
                        Water Heater Reviews & Water Heater Information

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                        • #13
                          Re: Why did you switch to flat rate?

                          We went flat rate for a bunch of reasons. It simplifies book keeping. We have 9 service men on the road and it makes on the spot invoicing simple for the service man and the customer. It keeps me from having to explain why we have to charge 95 bucks an hour wether we're there 10 minuts or 58. Our system also tracks inventory and keeps up with material price and overhead cost increases. I would never, never go back to t&m pricing. Since changing our profit margin has increased and more importantly our recievables have dropped to a managable level. Do we flat rate price for new installation work (contractors, new housing, commercial ect) no we still bid T&M for large jobs.
                          sigpic

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                          • #14
                            Re: Why did you switch to flat rate?

                            Originally posted by NHMaster3015 View Post
                            We went flat rate for a bunch of reasons. It simplifies book keeping. We have 9 service men on the road and it makes on the spot invoicing simple for the service man and the customer. It keeps me from having to explain why we have to charge 95 bucks an hour wether we're there 10 minuts or 58. Our system also tracks inventory and keeps up with material price and overhead cost increases. I would never, never go back to t&m pricing. Since changing our profit margin has increased and more importantly our recievables have dropped to a managable level. Do we flat rate price for new installation work (contractors, new housing, commercial ect) no we still bid T&M for large jobs.
                            We bid everything new, remodel,blah blah.How do you guys get away with T+M on construction.Is that the way it's done over there or are you one SMOOOTH talker

                            Seems like you got the best of both worlds

                            Anyone out here know how I can get a job T+Ming in Southern Calif.

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                            • #15
                              Re: Why did you switch to flat rate?

                              I've never heard of bidding a new home or remodel on T&M..I think he may mean something else.

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