Have you become frustrated with the hours you work just to break even? Do you find that the more time you spend tending to problem accounts, the less money you make? Chances are, you are still using a time & materials pricing model.
Maybe you’re not ready to make a change. That’s understandable. It is never easy to abandon a business process that has been in place for years. Especially when it relates to how you bill for your services.
Maybe you feel like you could not possibly charge more than you currently charge for your time now. Are you really worth $25 or even $50 more per hour? As a contractor myself, I asked myself the same questions. I soon concluded that flat rate pricing was the answer.
Most Businesses use Flat Rate Pricing
Think about other service businesses you encounter on a regular basis – Taxi drivers, pest control services, lawn services. They flat rate. They charge more than $120/hour for their services. Think about it. The pest control guy spends about 15 minutes walking from room to room in your office; spraying his special chemical mixture (that he bought at Home Depot) then presents you with a bill for $45.
The fire extinguisher inspector arrives at your office at 10:00 am on a Monday morning armed with his specialized tool kit – a ball point pen and a hole punch. He reads the dial on each of your extinguishers, punches out the appropriate inspection date on the hang tag and he’s out the door in less than 30 minutes. The price: $60.
Would you say these people are any more skilled than you or me? Of course not. So why would you price your services lower than most other service providers in business today?
This is not uncommon. While we don’t think we are used to it, most businesses we deal with on a daily basis charge us for their services based on flat rate pricing. You pay a flat rate price when you buy a car. You pay a flat rate price when you buy gas. Why not charge that way for replacing a furnace or a compressor?
Pricing Service Work is the Key to Contractor Success
The only way to really get what you are worth is to price your services correctly. It is not as difficult as it sounds. Think about how long it takes your best technician to replace a compressor. Now figure out how long it takes your slowest technician. Say your best technician does 8 service calls/day compared to 4 per day for the slowest tech. Who brings in more money for you? The answer is that the fast, skilled technician actually ends up costing you money. He is so efficient that in order to pay his salary, you would have to double his workload. On the other hand, the technician who took 4 hours to replace a compressor that should have only required 2, has just managed to permanently lose business for you with that homeowner because the homeowner talked to a neighbor who had the same job done in half the time.
It’s time to consider Flat Rate Plus software to increase the profitability of each technician in your company. With Flat Rate Plus®, the average technician bills $25 more per service call than he could on time & materials. Let’s calculate this out. If your technician completes 5 service calls each day, that’s $125 more per day; $625 more per week; $2,500 more per month and $30,000 more per year per technician!