Stormy, why do you have to ask these type of questions, if you are at that
point in your career that you need to think about these things please report
yourself to the BBB and ask them to protect society from you!
Why would that be the case?
I would rather know upfront what a repair is going to cost before it is
done. That is all that flat rate is.
The pricing structure in flat rate allows you to charge less or more than
T&M. I it depends on who is doing the repair.
A properly designed flat rate book that you show the customer, shows the
customer everything that is involved to do the repair, it entices them to
purchase maintenance agreements because of the discounts that are afforded
to agreement customers.
The customer is not going to be watching you and their watch too make sure
your not taking too long and increasing her bill.
Any competent company now a days is on some type of flat rate system. Going
Flat rate in a town of T&Mers would probably do very well.
ive seen it myself. one of the largest shops up here went to flat-rate and
it hurt them BAD. i picked up many of their customers.
and when you run into more trouble than you expected, then what? you charge
the customer more than you quoted him? for example, you diagnose my burnt
up 25 year old compressor and you sell me a condensor. after you install my
new condensor, you find that the fixed orifice is plugged. you now have to
recover the refrigerant and open the system.
......i give customers a rough idea of what the overall repair will cost,
but in the end i only charge them for exactly what they needed. i figure if
i cant make a living being fair, then im in the wrong business.
Did you do that by being a low ball contractor, what is your overhead per
Why would you install a condenser without a new coil?
What if your rough estimate is a couple of hundred less than the actual
Nathan, i am not trying to bust your stones, I am just debating the benefits
of something you do not believe in. I have been using flat rate for many,
many years without hardly any complaints. I cover my overtime and try and
make a 15% net. My four experienced guys make over 45,000/ year, and get 40
* 52 with great bennies, health, dental, vision, life, vaca, personal days,
short and long term disability. If I priced T&M my customers would chase me
away by my hourly rate, when I charge flat rate and include all of my costs
and my net profit, customer doesn't mind. My OH is $165/hour @ 60% billable
When I was on my own working out of the house, I charged half as much
because my OH was about half. But I still made a great slary and a nice
Customers that are just shopping by price and not quality, longevity, and
experience are not my customers, nor do I market or cater to them. I ask
customers looking for estimates if they are looking for the cheapest price,
if they say yes I let them know upfront they do not want to deal with me. I
am $1-several K over most other contractors, and survive solely on
referrals. Even my installs are flat rated.
The one big company that went out of business after flat rate and you got
alot of their customers, may not have gone out of biz because of flat rate,
but may have tried flat rate as a last resort after several other problems,
you never know.
absolutely not. my rates are in line with my competition.
in the last two years this particular customer (large developer with dozens
of commercial properties and over a hundred rental units) has spent over
$60,000 on my services, and im not going to jeopardize his account by
pushing anything that he doesnt want. he was aware that if we had to go 13
seer that it would require a new coil, but i found 15 units (10 seer 2.5
ton) at my local RSD (no 10 seer coils) which is what he wanted.
i dont think ive ever given a low estimate. i usually quote really high,
and then the customer is especially pleased when he gets his bill. in the
event that it was going to be more than my original estimate i would discuss
it with the customer before i exceeded the amount quoted. regardless, i
always make it very clear that its just a rough estimate.
how did you arrive at that?
i currently work out of my garage that we have outgrown. at this point
we're considering either leasing or purchasing commercial space.
sorry if i was misleading. they didnt shut their doors, but they lost at
least half (im just guessing, based on what ive heard) of their customer
base as well as many of their employees.
Our technicians are factory trained and certified to repair everything we
service, and due to our low overhead our standard rates are well below
industry standard. We don't have incidental charges (such as mileage* or
"trip/service" charges) and we don't mark our parts up like other service
companies. We also offer many service packages for commercial and
residential customers. Call to find out more at 406.252.TECH (8324).
Nate, this is what the industry considers a low ball contracotr, these words
are from your website. And, for not doing resi work, your site surely seems
to cater toeards it. If you are doing commercial Heat and Cool PM's for a
FLAT RATE of $50 you are not going to make it much longer
I figured how many billable hours out of 2080 I actually was able to bill
for and than divided my overhead expenses for one year by the number of
techs I have and the number of available hours I had to sell.
Your big developer that has given you 60K in business over 2 years obviously
has faith in you, or is he only using you for how cheap your prices are. IF
your work is that good I am sure an additional 10 percent would hurt that
relationship. I think that comes to about $250 per month. He is only
giving you 2500 per month, not what I would consider a big customer, unless
you have about 10 of them. Does that even cover one week of payroll.
I suspect that good business men are always considering options. I
missed a good chance to get some business education. Accounting and
such. So, while I am learning AC skills, I'm also learning business
As to protecting society from me, I'm much more concerned about folks
who are hellbent and determined to do it the same old way. A man who
is considering the big picture "Can we make it better?" is less
Christopher A. Young
You can\'t shout down a troll.
i disagree with flat rate billing on moral grounds. i give the customer
what he needs and whatever preventative maintenance applies and bill him
my focus is commercial refrigeration, but i do handle hvac for commercial
customers and very limited residential hvac (for landlords only, to much bad
debt in residential work). using your example and assuming the job is in
town (a LOT of rural driving in montana) i drive out to the house and
diagnose a bad condensor fan motor. i should have one on the truck, and
assuming i paid $90 for the condensor fan motor the customers cost is $198
($90 x 2.2). i install the fan motor, chemically clean the condensor, check
evap for air flow, check charge by superheat (subcooling where applicable)
and bill accoringly.
labor 2 hrs - $120
trip charge - $10
fan motor - $198 ($90 actual cost X 2.2)
capacitor - $25
nu-brite cleaner $15
TOTAL - $368 + anything else i might find wrong (such as if the evap needs
cleaning which is more labor + evap pow'r cleaner). in addition, there is
rarely a time when i find nothing else wrong. one of the most common issues
i find is overcharged systems that require recovery (creating more labor and
a $25 recovery fee). the most basic principle of hvac/r, and sooooo many
technicians screw it up.
I do a lot of driving in rural south Mississippi, and with you not charging
for condenser coil chemical cleaning, you are leaving another $100 on the
table, and only charging $25 for refrigerant recovery would cost *ME* money.
Its a minimum of $77 for me to take the recovery can off the truck up for up
to 4 lbs.... more than that cost more. When I went to flat rate,
my -average- ticket went from $125 up to $312.
BTW... how do you justify 2 hours to change a condenser fan motor and
capacitor?? and your getting overcharged for your fan motors.
Nate until you know that, how can you dare guess how much you should charge?
After you figure that out, then you add what you want for a profit margin.
Also you have to prepare for growth. If not when you start to do it you
will be pulling your hair out. your first instinct is to grow smaller to
handle it yourself, because no one can do it as good as yourself.
read two books. The e-myth revisited by Michael Gerber, and Another
Contractor by John Hall. If you are truly at two years your are going to
hit a brick wall in about another year or so! Then you have to make a
choice to implode or design your company properly.
If you are doing better work than everyone else charge what you are worth,
and not what everyone else is getting. You will lose customers, but the
ones that will stay will be happy to pay nore for your services. Less work
more money, more referrals from the people willing to pay more for quality
I charge 20-30% more than everyone else. I do not have an ad in the yellow
pages, and I get a new custoemr almost everyday.
ive been charging what i feel the market will bare, based on what the
heh.....sure seems that way sometimes.
thanks. ill look into them when the heat breaks and things slow down a
after dropping residential i have no need for the yellow pages. new
customers come from either direct solicitation from me (stop in, shake
hands, introduce myself, and tell them why i can do it better), or mainly
(anymore, anyway) word of mouth.
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