Some people make me laugh. spacebluesonoma is one. He is the kind of customer that will low ball everyone and every thing. I wouldn't put up with him for five minutes. How many people complain about a plumber's rate, but will go to the local Red Lobster and drop a hundred dollar bill for a lousy dinner? A plumber provides a service (such as changing a water heater) that will last for years, and they have to get grief because the price is more than a local handy man would charge. The price must be fair, not cheap. If a plumber can't make a very good living, he should get a new line of work. I bet spacebluesonoma's diy handywork is a sight to behold.
People like him actually keep u s very busy....A DIY-er goes in ..starts a job...gets in over his head..and screws the job up worse than before he started...Thx space...Wink-wink
i totally agree that price must be fair and not cheap.. youre paying for good quality service..
Well this is my first eve. on this site. Saw this thread earlier and another on a different line that prompted me to come back and join this evening. Hello Gentlemen.
Having worked in the Plumbing and construction trades for a bit over three decades it has been my obsevation and experience that flat rate pricing is a fabulous deal for a shop full of salesmen. T&M is still the fairest way for honest tradespeople to deal with customers on the service side of HVAC and Plumbing. Most flat rate programs base all pricing as if each job were the only one to be done on a trip. For instance if a plumber is called out to rebuild a toilet and the flat rate is 150 bucks for that job and the customer asks him to change a flapper in another bathroom, that serviceman has to charge as if he made another entire seperate trip for that job. That becomes 300 dollars for about 45 minutes work and 30 bucks worth of parts. Its not fair to the plumber to put him in the position of gouging a customer while looking him in the eye. And its certainly not fair to the consumer.
Though I seldom do residential service work anymore I never did have a problem when a good faith estimate ran over by a bit. If there were unforseen circumstances that caused a good faith estimate to be inaccurate by more than a small amount an honest explantion of that circumstance, before the work went any farther, always eliminated at least 98% of any customer complaints. Even the ones who did complain called me back for other work so I know they didnt really think they were being taken.
I worked for a shop that went to flat rate pricing about fifteen years ago. It was a rip off of the customer sold as a fair deal. Within a week this plumber said no thanks. I liked to look my customers in the eye when I saw them in a store or at social occasions like sporting events and the like. To this day it was a decision I do not regret. That contractor closed a few years ago and his name is not worth phlegm throughout an entire half of a State. No one in the trade will have anything to do with the guy.
If you do good work and treat people fair you will be prosperous and successful.
PLUMBER, I FEEL THE SAME WAY. HERE IN LOS ANGELES IT SEEMS THAT EVERYBODY WANTS TO GET RICH WITHOUT WORKING FOR IT. THE TRADE HAS CHANGED ALOT SINCE I WENT INTO IT FULL TIME IN 1981. NOW WHEN I GO TO THE PLUMBING SUPPLY HOUSE THE OTHER "PLUMBERS" SHOULD BE GOING TO A HARDWARE STORE. THEY CERTAINLY DON'T KNOW PLUMBING PARTS. LIKE YOU SAID, THEY ARE SALESMEN, NOT TRADESMEN. I GUESS IT'S A MARKETING GIMMICK. WHO PAYS $7.50 FOR A COKE AT A FAST FOOD RESTRANT. THAT'S WHAT FLAT RATE IS. I'M A TIME AND MATERIAL MAN. I DON'T ADVERTISE AND I HAVE MORE WORK THAN I CAN HANDLE. ALL OF MY CUSTOMERS ARE REFERRALS. WHEN WAS THE LAST TIME YOU LOOKED IN THE YELLOW PAGES FOR A DOCTOR? THE HONEST AND GOOD WILL LAST. THE DISHONEST WILL GO AWAY. WE'RE HERE TO STAY.
I am new to these boards. I have been in this biz for 20 years this August. There is no such thing as a free estimate. Flat rate is the standard practice of all car dealerships on car repairs.
YOUR CORRECT ABOUT THE CAR DEALER PRICING. BUT PEOPLE ARE TOO SMART TO PAY $7.50 FOR A SOFT DRINK. IF THE PRICE IS COMPRABLE TO T&M THEN I CAN FEEL LIKE IT'S NOT A RIP OFF. BUT EVERY ESTIMATE OR INVOICE I'VE SEEN SHOWS JUST THE OPPOSITE TO THIS. I DON'T MIND WORKING FOR AN HONEST LIVING. HOW MANY REPEAT CUSTOMERS DO FLAT RATE SHOPS HAVE. I HAVE WELL OVER 95%. THE ONLY REASON WHY IT'S NOT 100% IS BECAUSE I DO A LOT OF WORK FOR OTHER PLUMBING CONTRACTORS CLIENTS. I DON'T WISH TO TAKE THEIR CLIENTS. I HAVE TOO MANY ALREADY. 750 PLUS. NO ADVERTISING AND NO HELPERS. ALL REFERRALS.
Re: Flat Rate Pricing
There are a lot of misconceptions about flat rate pricing. Part of the reason I switched to it is that a lot of my customers were insisting that I tell them what it was going to cost, often referring to it as a "ballpark figure." But when the job was finished, that ballpark figure became the only thing they could remember.
Figuring out your flat rate price begins with knowing what it costs to do business. You can bet your bippy that McDonald's doesn't base the price of a burger on what Sonic is charging. You can also bet that people don't call all the fast food restaurants on the phone to see which one is cheapest before they go out to buy burgers for the kiddies.
But McDonald's makes about 25% profit on the burgers they sell. Can the same be said of plumbers? Do most small-town plumbers even know what the word profit means? When buying some phone book advertising a couple of years ago, I was told by a representative that the two types of people they have the hardest time collecting from were lawyers, followed by plumbers.
There's a reason that mechanics use flat rate to price car repairs. And how often do people hand the mechanic a set of points and eight spark plugs? How often do they go to one grocery store to buy a chicken, then to another grocery store deli and hand them the chicken and say, "I like the way you cook these but your chicken price is too high, so just charge me the labor on this."
it's not true that all flat rate prices are like charging the price to get you there. The flat rate systems I've looked at all have a price for the first job, which includes getting there, and secondary tasks that are added to that job, and don't include that.
One of the things I've learned in my research is that no two plumbers that I've seen do things exactly the same way. One may mark up all material 30% and charge $85 per hour, another may charge $65 an hour and double the price of materials. I've seen plumber's invoices where the materials weren't even listed - just "Material = $150" and the labor charge. I've also seen them mis-add their bills and go home with an extra $50 - and I wondered how often they get away with it - how many customers re-add the bill to check it.
Some charge shop-to-job, others charge a minimum service charge and then by the hour. Some just charge for the hour. And in the flat rate world, some charge a lot and put in the absolute cheapest parts they can find. Others demand the same quality in their parts and service no matter how they do the job, knowing that a trip back destroys the profit. Some use anything they've got on the truck to complete the job and get the bucks, while others go and get what they need if it's not on the truck, because they take pride in their work.
The numbers don't lie. You need to charge what it costs you to do business and come up with a profit. In a profession that uses hundreds of thousands of parts, uses up service trucks, requires a shop and someone to answer the phone, and so on, it takes a lot of profit for a company to grow. How many t&m people are actually making a profit, let alone a decent profit? According to DEX, not very many.
If your customers are calling your wife and asking, "What's his hourly rate?" what's the likelihood that you'll get that customer, and why? Are you lower than the rest?
And as to the customer, how many bills do you hand to them and wince, knowing they're going to be shocked? Isn't it better to get the shock over with at the beginning of the job so they don't feel trapped into paying it when you're done?
You can make money with t&m if you can get the hourly rate you need and perhaps a separate charge to get to the job, if you even know what it is you need. But when the customer is calling all the plumbers in the book to see what the rate is, what's your standing? If there aren't many plumbers in your town, and the code enforcement is tough enough to keep out the riff-raff, you stand a good chance and my hat's off to you.
If you hire plumbers and send them out in a van, do they have health care, retirement, good wages? (Neither do I, but I'm working on it.) I did have those things when I worked in a housing factory over thirty years ago. I haven't had them since. I've heard there are flat rate companies that will fire a "tech" who doesn't bring in $1,500 per day, but I don't know who they are. I did talk to one who works for a flat rate company from another town a couple of months ago, and he told me he made over $60k last year. I haven't set my sights that high, but in the thirty years plus that I've been in business, I've seen a lot of other area plumbers go down the tubes. I've seen longtime businesses go bankrupt and there are others threatening to quit because whatever side job they have is paying them more money.
I've only recently switched to flat rate, and the response so far has been great. In fact, I often get a check before I even start working, though I tell them they don't have to pay until the work's finished. It's "Here's your check, we've got to run, so lock up when you leave."
However you run your shop, don't knock flat rate until you've looked into it more deeply. Some of it's hype, and greed will kill your business no matter which way you charge for it. But not enough money might kill it even faster.
Re: Flat Rate Pricing
herk you seem to have put alot of thought in to your very frist post here and before the war starts please allow me to welcome you here and ........DUCK!!!! lol
Re: Flat Rate Pricing
Welcome to the site. I'm not sure digging up a battle from 32-months ago will make many friends but it will sure get you noticed.
I don't think it is really a flat rate versus T&M debate as much as it is how a shop is run. The arguement about being able to tell a customer what it's going to cost before you start really has more to do with shops who have under qualified plumbers. As a T&M shop I would give the customer a price over the phone which included materials and labor and explain what those charges were. I was able to do this because my plumbers were qualified and I knew how long it took to do a job. Some of the flat rate shops quote a price but will not explain how they arrived at the price and often only give the price after the customer has paid a minimum service charge.
BTW: Yes we made a profit we were able to pay all of our bills and gave our guys full benefits. You might be surprised to learn how many business actually can make a profit while given full disclosure of their pricing.