Comparing Flat Rate With Time & Material


Comparing Flat Rate With Time & MaterialAre you still using time and material pricing?  Have you ever thought, really thought about how your pricing looks to your customers?  Chances are, they are a bit terrified.  All they know is there equipment doesn’t work and you are going to be sending out a technician bearing a large bill.  Why not remove that fear right up front?

 

How about your technicians?  Do you think they have ever felt pressure to finish up a job quickly because of that homeowners concern about the cost of the repair?  Do you think that has ever led to mistakes or callbacks?

 

Have you ever wondered about how you can make your company look more professional in the eyes of the consumer?  Consider the following characteristics from the points of view of your customer and your technicians.  Isn’t it time to get serious about flat rate pricing?

 

Basic Characteristics Flat Rate Time & Material
Quote Presented to Customer Fixed Price Open Ended Price
#Prices/Each Repair One Two
How Is Material Treated Bundled W/labor Priced Separately
Labor Standard Natl Standard No Standard
Co. Investment Required Thousands of  $ None
Frequency of Price Changes Every 6 Months At Will

 

Customer Perceptions Flat Rate Time & Material
Homeowners Preferring* 91% 9%
% Used on All Jobs* 44% 56%
Tech Credibility Presenting Price High W/Book Highly Variable
Perception of Risk When Repairs Take Longer Than Expected Company Risk Customer Risk
Homeowner Stress as Repair Time Lengthens None Increases

 

Technician Impact Flat Rate Time & Material
Technicians Emphasis Be Thorough Be Fast
Potential for Callbacks Less More
Complaints re-Time on Job None Moderate or Worse
Need to Justify Rate None High
Potential for Homeowner to Question & Compare Rate None Moderate to High
Potential for Math Errors Less More
Time to Complete Paperwork Less More

 

Fairness Flat Rate Time & Material
Price with Slow Technicians Same Higher
Price with Fast Technicians Same Lower
Profit with Slow Technicians Same Lower
Profit with Fast Technicians Same Higher
Odds that 2 Neighbors will Pay Different Price for Same Repair None Almost Certain

 

Miscellaneous Flat Rate Time & Material
Professionals using this Method Doctors Lawyers

 

 

*  Decision Analyst Research, courtesy of Callahan Roach Products & Publications

© 2006 Service Roundtable