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Old 05-15-2019, 05:54 PM   #11
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so I just got an email from a customer , I gave them a estimate for a job for 6 hrs. and we got done an 1 hr. earlier . He is questioning why he should pay the full amount. I explained if he wanted time and material that would have been different story , I also said with the estimate if it took me 5 hrs 6 hrs or even 7 and even 8hrs the price would have been the same. am I wrong ?
Quit giving estimates and only give quotes under 5k or proposals over 5k.
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Old 05-15-2019, 06:49 PM   #12
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I would be very careful with that wording "proposal" because legally speaking is it in the civil law? If it isn't defined in the civil law then you are asking for trouble of interpretation when it is disputed.

That single amount/price could be interpreted as a flat rate contract if you didn't set a T/M rate on the work order because there's no unit of measurement to go by.

If there's only one price on your work order then it would be considered flat rate contract. Then as a flat rate you can't make the bill higher at the end unless of major circumstances. Also when you reach a major unknown circumstance you have to immediately notify the customer and tell him how much more it's going to be. If it isn't a major unknown circumstance you can't ask the customer to pay more. The customer can't ask for a rebate if it took less time because he signed a locked in price.

It would be best to explain all this to the customer before you start and maybe have that clause on your work order otherwise that major circumstance can be disputed by the customer and you might have to explain it to the disciplinary committee(If you have one) or in court.


It’s quite a bit different in this neck of the woods.

Working with contractors or business we do have a a clause for unforeseen issues.

Here’s one example leak coming from the second floor... it needs to be fixed soon. Open up the ceiling, a main branch line is leaking. We’ll say something like “It could be $500, but if we have to into the wall, we might have to keep chasing it, could be $1500-2000... just depends.” (Numbers are just an example.)

Once we reach the initial $500 bid we get the customer, show them the issue and see if they want to continue explaining everything so they understand their situation. Our high bid would always be everything replaced, with a buffer for the unseen.

Also, you need to understand probably 90% of our customers are either repeat, who trust us regardless, or referral from one of our repeat customers. Handshake.

I don’t advertise, my Master doesn’t advertise. My only nonpayment was poor management at a chain restaurant. Met the owner on a chance, he had staff issues. Now I get access to his peach grove. My Master was paid in full before seeing the judge including court fees.

Our business model has worked for him for 35 years, and seems to work good for me.

I know other parts of the US are different, like working in California. Don’t get me wrong, there are customers who we just say call someone else. I guess you can say it’s just instinct.
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Old 05-15-2019, 09:30 PM   #13
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so I just got an email from a customer , I gave them a estimate for a job for 6 hrs. and we got done an 1 hr. earlier . He is questioning why he should pay the full amount. I explained if he wanted time and material that would have been different story , I also said with the estimate if it took me 5 hrs 6 hrs or even 7 and even 8hrs the price would have been the same. am I wrong ?
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In my area an estimate is just that, an estimate of time and materials it will take. What you gave was a flat rate or a quote. Quite frankly I would be pissed to if I was that guy.


I would offer him something, like maybe a half hour of labour off the bill. Obviously you don't want to seem too soft but I think you used the wrong word.


My wife and I get pissed off all the time because she talks one way and I talk another. I am very literal, I mean what I say word for word. Where as she is likely to say a phrase which can't be taken word for word and only holds a particular meaning as a whole to particular people. I am not familiar with many of the phrases she uses.


One thing that often confuses the children is that she will say get in the CAR even though we don't own any cars anymore. We have a truck and a van. The kids assume she means her truck. Or she will often call the van a truck. It happens with her parents pickup truck and suv too. My mother in law likes to call her suv a truck so the kids will get in the pick up truck instead of the suv. My mother in law gets real pissed at that one and I find it hilarious.


Then you add this on top of the usual female issue of wanting men to infer things and you can imagine the hell that can break loose.






.
With flat rate pricing, the price is the price. Unless there are things that cannot be seen during the initial eval (like a busted flange after pulling a toilet, etc). At that point, a conversation would be had because the scope of work may change, but that is talked about before starting ideally.

Ask the guy if it would be ok to charge him more if the job took you longer than you thought.........I thought not.

You both agreed on a price before work was started. You fulfilled your end of the contract. The End.

The whole idea behind flat rate, is the customer doesn't have to worry about you coming to them and asking for more money because it took you longer to accomplish something. If you can slam it out and get to the next call faster than you thought, then everyone wins, you make money, they get back to status quo faster, etc.

Your prices have to reflect a price point that covers the jobs that should take .5, but take 2hrs. And on the jobs that go better than normal, maybe smoke an extra cig behind the truck or put on a show for a few minutes to make them feel better about the money spent (we go above and beyond to clean up/keep things clean, so that's how we show the "value")

It all works out evenly in the end from a rev standpoint, and the customer doesn't have the anxiety of "how long is this gonna take cause your charging by the hour", and you won't be trying to rush, and do hack work.

That's how I explain things to customers that have price objections. Some customers ask me what our hourly rate is. We don't have one, the pricing is task based. We have (internally) a "billable hour", ours is about $450 at the moment. A water heater is 2.4 billable hours. But that is just an internal metric used to compare one task to another.

With flat rate, drive time, material cost, etc, is factored into the price. If I have to run and get something from HD, I'm not charging the customer for that time, since things like that are built into the pricing so that over the long term it averages out.

Lets say for example:

All I did, every day, was install customer supplied toilets. The price for that task is fixed, and it reflects a number that I have found thatkeeps me in business so I can come back if you need me, warranty work, pay my wage, benefits, etc.

Build every task in your price book with that in mind, and simply click on tasks and hand over your "estimate". Gas line by the foot, diagnose leak in ceiling, diagnose electric heater, and on and on. The price is the price, even if it takes me longer than I anticipate.

I wouldn't discount an hour off a 6 hour job, that's close to 20%. On something that was agreed to from the start.

If we are talking 50% difference, meaning the job was drastically easier, then sure, I'm not out to skin people.

But if I complete a job quicker than anticipated because I'm efficient at it, why should I be penalized for that?
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Old 05-15-2019, 09:58 PM   #14
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@ECH
“But if I complete a job quicker than anticipated because I'm efficient at it, why should I be penalized for that?”


EXACTLY!
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Old 05-15-2019, 11:13 PM   #15
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Build every task in your price book with that in mind, and simply click on tasks and hand over your "estimate". Gas line by the foot, diagnose leak in ceiling, diagnose electric heater, and on and on. The price is the price, even if it takes me longer than I anticipate.

But if I complete a job quicker than anticipated because I'm efficient at it, why should I be penalized for that?



I don't think you understand what I was saying, which I find ironic because that was the whole point of my post. I am not saying you should have to give discounts after the fact on flat rate pricing. I was saying that an estimate is not flat rate. An estimate is your idea of the cost of a T&M job. A quote is a flat rate price.



The problem here is he used a word and the customer did not think that word meant the same thing as he did. Estimating is saying the robber looked about six feet tall, if you're off a little it's expected. A flat rate is when you use a measuring tape as he walks out of the bank.






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Old 05-16-2019, 01:53 AM   #16
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Flat rate is a bid. If the scope of work changes so does the bid! It’s called a change order in construction and is no different in a residential setting.

T&M is for the birds, why should everyone of my customers have an in-depth look in to my business finances? Do you know how much profit Walmart makes on a loaf of wonder bread???
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Old 05-16-2019, 08:11 AM   #17
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I don't think you understand what I was saying, which I find ironic because that was the whole point of my post. I am not saying you should have to give discounts after the fact on flat rate pricing. I was saying that an estimate is not flat rate. An estimate is your idea of the cost of a T&M job. A quote is a flat rate price.



The problem here is he used a word and the customer did not think that word meant the same thing as he did. Estimating is saying the robber looked about six feet tall, if you're off a little it's expected. A flat rate is when you use a measuring tape as he walks out of the bank.






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Understood
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Old 05-16-2019, 01:07 PM   #18
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A lot of good points here, and this will help me make a decision on what to do . I've only been in business now for 5 years and this is a big help . I have always though about flat rate pricing like having a flat rate for a toilet install, or a shower valve install but trying to put all that together in difficult . Thanks guys
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Old 05-16-2019, 06:34 PM   #19
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A lot of good points here, and this will help me make a decision on what to do . I've only been in business now for 5 years and this is a big help . I have always though about flat rate pricing like having a flat rate for a toilet install, or a shower valve install but trying to put all that together in difficult . Thanks guys
Take what I say with a grain of salt. I've been a plumber for less than a year. I am just parroting what my managers and owners tell us when we talk about customers having price objections.

We are not a high volume type of plumbing company, we take our time, being very thorough, building a relationship with the customer, staying there for as long as they want to talk. In the hopes that they will call us back (and we can save money on marketing). We are not the company that gets in and out asap and has thin margins but does enough volume to make money.

We rely on diagnosing the original problem, but checking 4 major components as part of our process on every call, regardless of the reason for the original call. Many times on, lets say, an angle stop call, the PRV is shot, expansion tank is waterlogged, heater on its last leg, etc.

Some customers eat it up and are happy to pay 300 bucks for me to change the gate valve main and relocate it lower on the wall so they can reach it, or change the main valve to a ball valve because the gate valve may or may not work in an emergency, or are surprised to find out their attic heater is leaking in the pan. And it turns into a much bigger call.

Hell, I got a 40 dollar tip on Tuesday because I carried a fake x mas tree downstairs for a guy that just had knee surgery. He didn't even move forward with any of the plumbing options I gave him. He is the guy that wanted the main moved lower on the wall. He has bad knees, if he or his wife has to shut off the water, they have to get a ladder, yada yada.

Those are "our" customers.

Other customers feel like we are up selling, and we are. But ultimately we are checking things in the home that can cause major damage, or expensive surprises, and providing options that are in their best interests.

The same way you go to the doctor for a broken toe, they are gonna check your pressure. Because if you drop dead walking out of the place, they could be liable if they didn't check it. Not to mention probably feel terrible that they could have avoided your death, and we help you avoid a burst pipe, or make sure you have a reliable way to shut off the water in an emergency and know how to use it, or aren't surprised with a cold shower on monday at 6am, or have a burst rubber washing machine hose and 20 grand in flood damage.
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Old 05-16-2019, 07:55 PM   #20
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I don't think you understand what I was saying, which I find ironic because that was the whole point of my post. I am not saying you should have to give discounts after the fact on flat rate pricing. I was saying that an estimate is not flat rate. An estimate is your idea of the cost of a T&M job. A quote is a flat rate price.



The problem here is he used a word and the customer did not think that word meant the same thing as he did. Estimating is saying the robber looked about six feet tall, if you're off a little it's expected. A flat rate is when you use a measuring tape as he walks out of the bank.






.
Excellent post there!

This is exactly what reflects the issue in the original posts. I tried to hint in my previous post and your post reinforces the problem of the argument. It's all about the wording that is written on the work order of what the customer thinks vs what you think.

Like I said previously you have to take your time describing how the rate will be applied so they can understand.


To the others this is not a debate about flat rate vs T/M its about the words used to describe the pricing structure and of what the customer will end up paying.
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