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In creating our own flat rate book, I am having a hard time with fine details. I've started with upfrontprice.com for the format with two prices under each item (Standard & Value Rate) because it is neat and easy to read. However, I foresee limitations.

The best book I've seen has numerous prices for each item, but is too busy. (Category Pricing: Value Overtime, Stand. Overtime, Value Reg., Stand. Reg., Add-on Value Overtime, Add-on Stand. Overtime, Add-on Value, Add-on Standard.)

This is how we are envisioning using our pricebook.

New customers pay minimum show up fee ($35.00). This covers price shoppers wasting our time and being compensated to show up. Fee covers getting a new customer set up in our system.

Existing customers - no fee. We are confident they will have us do the work.

Standard Rate - Higher price for those who are just using us because they are in over their head or their regular 'handyman' is unavailable.

Value Rate - To take care of our loyal customers.

To get the value rate -

1. Gold Club Membership - $250.00. - Customer gets value pricing, extended warranties, full home inspection (1 hr.), guaranteed emergency response, and a water heater flush.

2. Silver Club - $75.00 - Customer gets value pricing and guaranteed emergency response.

If we charge 1.5 hours for a new faucet install for an existing customer, the travel time is in the price. To do a 2nd faucet, it should be cheaper because we are already there. Do I need to create an add-on price for every item?

How does your price book work?

Also, do you ever add up all your prices and think "Whoa, that's a bloody fortune?" What I want to avoid is using flat rate and the bill come to $575.00 and mentally reprice T & M and have the price be $295.00. We are trying to raise our hourly rate by a reasonable amount ($25.00). In the above scenario, we would feel like theives if the hourly amount went up by $75.-$100.00.

HELP!
 

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My pricing structure is different, though I use flat rates, I base my rates on my own knowledge of what it takes me to perform each task.

The only comment I can offer you that I think is relevant is to take your feelings out of the equation altogether.

I learned very hard lessons (and still learning) that allowing guilt to dictate my price will put me out of business.

Lines from homeowners saying things like "I can't see why you figure it'll take more than 15 minutes" or "Can't you make an exception on the price?...it's just a couple of feet of pipe."

I learned an expression from an oldtimer that I've heard numerous times since, "If your customers aren't complaining about price, there's a good chance your too low.".
 
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Do you have primary and secondary prices? First, you figure what the cost of the first item is, with the cost of getting there included in the price. For the second price, you're already there, and should deduct the amount from the price.

I made my book with the primary prices then at the end of each section a list of the same tasks, mostly, for about $40 less. You'll still make a lot more money when you do several tasks at one job.

Today, I tweaked the book for sediment removal. We have a lot of water heater sediment to clean. I recently got about seven gallons of lime out of one through the 1" pipe-sized element opening. That can take up to two hours or so, and so I added three tasks to the secondary prices: under two gallons, 2 to 5 gallons, more than five gallons. It only had to go under secondary tasks because I'm already there to replace at least one element and draining is included in the task.

It's taken me nearly a year to get comfortable with it, and I tweak a lot. I often have to use a price similar to what I'm doing because I don't have a specific price, and that often leads to a change in the book.

I made my book in Open Office and made a separate file for each section. Then I found that Open Office often doesn't like to add anything in the middle without really screwing it up. So I sometimes have to make a replacement section and copy from the original section.

I use a binding machine with the plastic combs and it's easy to add or changes pages. Laminated sheets of card stock for the covers, regular card stock for the pages. Holds up pretty well. I sometimes have to replace the covers. I think I've only had to replace the comb once in a year. (Actually about ten months since last October.)
 

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WILLPLUMB4$
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My Bible has 3 prices for every task
1. primary price= pull up plung toilet= trip charge+ flat rate= total
2. add on = there to plung toilet= see above then put new flapper in= prmary+add on+trip
3 Special costomer price you call "club members"=5% off of all flate rate prices
 

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Crazy, one other thing. Add a misc task to your book roughly equal to a half hour of your hourly retail rate. This will allow your techs to do add-ons they know will be quick for that rate instead of one that is calculated on an average job. They should not be allowed to use it right away without approval. Once they get the hang of it, let them fire at will.

As for primary and secondary tasks, the difference should be all that deployment entails, including breaking out tools, drapes, door mats, etc., not just drive time.

As for looking at your numbers and wondering how in the heck you can charge that much, well, think about it. T&M is a best guess at the start.. a warning in the middle, and an apology at the end under most circumstances.

We hate to think that what we do is in any way unfair. But, we're professionals and we understand the risks better than our clients ever will. Why should they take the risk if its not necessary? Assume the risk, charge for it and then manage it. You have the experience to handle it and your client really isn't interested in it any more than you are to know why a push rod on your neighbor's lawn mower failed and your's did not.
 

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waterheaterzone.com
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Crazy, one other thing. Add a misc task to your book roughly equal to a half hour of your hourly retail rate. This will allow your techs to do add-ons they know will be quick for that rate instead of one that is calculated on an average job. They should not be allowed to use it right away without approval. Once they get the hang of it, let them fire at will.

As for primary and secondary tasks, the difference should be all that deployment entails, including breaking out tools, drapes, door mats, etc., not just drive time.

As for looking at your numbers and wondering how in the heck you can charge that much, well, think about it. T&M is a best guess at the start.. a warning in the middle, and an apology at the end under most circumstances.

We hate to think that what we do is in any way unfair. But, we're professionals and we understand the risks better than our clients ever will. Why should they take the risk if its not necessary? Assume the risk, charge for it and then manage it. You have the experience to handle it and your client really isn't interested in it any more than you are to know why a push rod on your neighbor's lawn mower failed and your's did not.
Excellent points. And exactly why I have been working in flat-rate plumbing for years now.:thumbsup:
 

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All great points, I'll throw a little tid bit in from a marketing point of view. Question-- Have you ever been at a grocery store let's say in the canned veggies isle and gotten a headache because there were too many choices of green beans? Studies have shown that people don't like too many choices. A perfect example in our trade is the ( good-better-best ) technique. KEEP IT SIMPLE:thumbsup:
 

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Louisiana Master Plumber
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Read Mark Up And Profit By Michael C. Stone. It Explaines The Flat Rate Pricing Verses T&M. You Will Make More Profit On Flat Rate. How Many Times Has Your Tech Forgot To Add All Of The Material. With Flat Rate Pricing There Is No Nogation About Cost.
 

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Why, so complicated?

Make a list of every service you perform, and write the highest price you would charge, for that service. You can make mental adjustments on the job.

Install Mansfield toilet $600
Install owner's toilet $300
Install Price Pfister 4 inch bathroom sink $350
Install owner's bathroom sink faucet $240
Install 40 gallon gas American Standard water heater $1500
Installowner's water heater $600
Install bowl wax, bolts, and caulk toilet base $240

Don't listen to anybody. Charge as much as you can get.

Most likely, using Up Front pricing and all these systems, you are losing sales. You prices have to come from your heart and nobody else. Only you know what you are worth.

Why would it be necessary to write two prices? We are plumbers, and not a wholesale distributor, where we discount based on quantity. Charge every customer the exact same price. Give discounts to only the customers you have to.

Didn't someone in the Ridgid forum post their entire price book that was made with MS word and could be modified.

Contractors constantly talk about how they run their business on referrals. Cheap customers only refer cheap customers. "Hey Jill, call Joe's Plumbing because he has cheap prices. He doesn't care about making money."
 

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WILLPLUMB4$
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Make a list of every service you perform, and write the highest price you would charge, for that service. You can make mental adjustments on the job.

Install Mansfield toilet $600
Install owner's toilet $300
Install Price Pfister 4 inch bathroom sink $350
Install owner's bathroom sink faucet $240
Install 40 gallon gas American Standard water heater $1500
Installowner's water heater $600
Install bowl wax, bolts, and caulk toilet base $240

Don't listen to anybody. Charge as much as you can get.

Most likely, using Up Front pricing and all these systems, you are losing sales. You prices have to come from your heart and nobody else. Only you know what you are worth.

Why would it be necessary to write two prices? We are plumbers, and not a wholesale distributor, where we discount based on quantity. Charge every customer the exact same price. Give discounts to only the customers you have to.

Didn't someone in the Ridgid forum post their entire price book that was made with MS word and could be modified.

Contractors constantly talk about how they run their business on referrals. Cheap customers only refer cheap customers. "Hey Jill, call Joe's Plumbing because he has cheap prices. He doesn't care about making money."
I love the overall tone of this reply, however some of the details could be debated.

1. Adj. should never be made on the fly. The "tech." on the job should never have this authority, this is not his $ and the price book should have been put together a part of the "system of doing buissness." The system is your buissness.... The tech's input can be used to adj. the price book, and then all price books are to be adj./ updated to reflect said changes for consistancy.

2. Your prices have to come from somewhere very tangable. Know your cost + know your cost + know what you want out of your buissness= your price.. MOST GUYS DON'T KNOW AND DON'T KNOW HOW TO COME UP WITH THERE TRUE COSTS OF DOING BUISSNESS.

3. I had mentioned giving a discount in a earlier post please allow me to explain.
My cost to install a o/s 4"c-set lav. faucet= $247.50
Price in price book= $275.00
10% discount to "discount club members"
5% off for seniors who ask for it.
no discount to be used with one another or coupons. unless i need it to make the deal!!!

3A. My add- on prices also = my "discount prices."

4. Mr. BatonRougePlumb did pound the nail on the head when he said cheap = cheap. Without a doubt my comp. is not known as "cheap" on the contrary typically refered to as the most or one of the most expensive. We take our time to get things right, use the absolute best products we can get our hands on, respond to calls with extreme professionalism and charge for every damn bit of it. When we are refered 9 out of 10 times to a new costomer they're cheeks are clenched when we get there cause they know it's gonna hurt the pocket book, but when collection time comes around, there O.K., cause they got the price up front, saw what had to be done, saw it actually get done neatly and quicky.
Long story short they believe they got what they paid for and you can't beet that.
 

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I have had the opportunity to run both T & M and flat rate. Funny thing, in the T & M, I have used the Trade Service Plumbers Pricing Manual, it lists three different rates, std, X+1/2 and 2X rates per Hr. Also in the same manual it lists a flat rate section which, comes close in many of the flat rate manuals I've seen. However, once added up with tasks & add ons, the price seems too high.

That said, I have found that figuring T&M using the material markup listed, then cut about 20%, it comes in at a reasonable flat rate equivalent. Now, some tasks, (water service, digging or extensive leak search), you will have to adjust to your own comfort levels to make it work for you.

Call it hybrid pricing or whatever you want, I think the T&M and a 20% cut get you in the ballpark and still gives you a + margin.

As to the reading of mark-up and profit, it is a great read...Gives some really good examples to help with pricing...I did find however that in service, it is hard to still figure in an extrapolated figure to give you a good yearly figure, especially if your company is less than one year old.

Pat
 

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Supertech, you have some great points in there...You hit the nail right on when you said, "Know your cost + know your cost + know what you want out of your buissness= your price"
 

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the company i work for was bought out a little over a year ago. we were a T&M company with the exception of larger jobs like repipes/remodels/water or sewer sevices/ect. those we figured up a bid specific to the job. the new owners are a francise out of the next town over so we are now flat rate. iv'e noticed a lot of resistance by the customers to this new pricing. i don't know if i'm not doing it right or what but most people around here seem to preffer T&M, especially from a long standing local company. also, are the prices listed pretty accurate nationwide? i know there will be regional variances but they seem pretty high for my area. i would have no chance getting $1500 for a water heater change out, for example. when i go out on my own i was planning to do T&M, is this a huge mistake?







paul
 

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OK, I think the problem most plumbers have with understanding the flatrate way is they think you get a flatrate book with a list of prices you need to charge for a task. What you need to do is set each price yourself don't base it on what joes plumbing 2 states away charges or mike's plumbing down the street. The VERY FIRST thing you need to know is your breakeven. If you don't know your breakeven you are more than likely losing money. once you know your breakeven and how many hours of chargable time a week you have you can set your hourly rate which you use to set the price of each task. the task will be like hourly rate x time estimated to do said task + material (marked Up ) + trip charge (if you charge one) and NO book you buy that already has the prices in it for you can do that. The only ones that work are the software ones that let you print your own and edit each task and set your hourly rate. I believe in flatrate pricing when it is used correctly.

OK, enough from me . :whistling2:

Plumber Jim
 

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This subject will last for ever.

"He, who makes the most money, wins."

"Show your cards, or fold"

Post copies of your bank statements. I think the flat-raters are going to win.

A flat-rater can bring in $1,000 to $2,000, per day, for labor charges. That is what is left after deducting the retail, or wholesale cost, for materials.

A T & M'er can charge $100, per hour, and if lucky, can get in four hours a day, because not every customer is home, some won't pay, etc. But, many T & M'ers use a book, that tells him how many hours, to charge the customer, to perform services. Even if a faucet takes 1 hour, to install, the T & M'er will charge 3 hours, because he is using his price book.

Most T & M systems are the same as flat-rate. A Flat-Rater figures how many hours it takes to get to the customer's home, install the faucet, creates his total price, and scribes it in stone

A Flat-Rater looks at the job, quotes a price, provides the service, and everything is settled. The T & M'er looks at the job, quotes a price, provides the service, and later, settles the score with the customer, who is not always happy with the tally.

Who is in the slow lane and who is in the fast lane?
 

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WILLPLUMB4$
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"He, who makes the most money, wins."

"Show your cards, or fold"

Post copies of your bank statements. I think the flat-raters are going to win.

A flat-rater can bring in $1,000 to $2,000, per day, for labor charges. That is what is left after deducting the retail, or wholesale cost, for materials.

A T & M'er can charge $100, per hour, and if lucky, can get in four hours a day, because not every customer is home, some won't pay, etc. But, many T & M'ers use a book, that tells him how many hours, to charge the customer, to perform services. Even if a faucet takes 1 hour, to install, the T & M'er will charge 3 hours, because he is using his price book.

Most T & M systems are the same as flat-rate. A Flat-Rater figures how many hours it takes to get to the customer's home, install the faucet, creates his total price, and scribes it in stone

A Flat-Rater looks at the job, quotes a price, provides the service, and everything is settled. The T & M'er looks at the job, quotes a price, provides the service, and later, settles the score with the customer, who is not always happy with the tally.

Who is in the slow lane and who is in the fast lane?
$$AMEN$$$:yes:
My personal opinion here.... T&M is a thing of the past and those using it will be forced to either conform or will become extinct! I don't know know when, but it's coming.
Can you imagine going into McDonalds or any other chain resturaunt and seeing the full menu minus the price next to it? I'm sure most here have been to that one fancy resturaunt in town where next to every entree it sais ...Market Price.. You order because you don't want to make a seen, you don't ask the price because you don't want to seem cheep, you intently listen to every one else order. THE ANXIETY is building and your stomach is beginning to churn or has already started to to flip. You were looking at the serf & terf, but not knowing the price, and listening to every one else order your not sure if you want the grilled cheese or to start washing dishes. Dinner arrives and is wonderful, desert & coffee, some of the best you've ever had! Now the bill. Again with the stomach. You pay and only after the fact do you realize you had the $ for serf & terf. (Thank God I chose flat rate :thumbsup:)
Why would you even think of giving your costomer the same anxiety? You don't like it do you?
Reason # 2 If you are T&M would'nt the most profitable way to run your buissness be to find the slowest, cheapest guy, with the least amount of skill and almost no learning abilities, that you could find, out on the job? After all wouldn't he make you the most money?
Slow guy= 6 billable hrs to replace upper thermostat on W.H bills out @ $200/ hr= $1200.00 ---fair day
Good guy hits 10 W.H. calls same day and takes .5 hrs.. 10 thermostats later you got $1000.00
Which one is better for you?
 

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WILLPLUMB4$
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In creating our own flat rate book, I am having a hard time with fine details. I've started with upfrontprice.com for the format with two prices under each item (Standard & Value Rate) because it is neat and easy to read. However, I foresee limitations.

The best book I've seen has numerous prices for each item, but is too busy. (Category Pricing: Value Overtime, Stand. Overtime, Value Reg., Stand. Reg., Add-on Value Overtime, Add-on Stand. Overtime, Add-on Value, Add-on Standard.)

This is how we are envisioning using our pricebook.

New customers pay minimum show up fee ($35.00). This covers price shoppers wasting our time and being compensated to show up. Fee covers getting a new customer set up in our system.Try this ($35 for normal buissness hrs., $75 for after hrs till 9:00 pm + weekends normal hrs, and $115 for after 9:00 & holidays.

Existing customers - no fee. We are confident they will have us do the work. ("We would be happy to wave the fee if a task is completed") don't devalue yourself.. do the "value club, or smart shopper card program for valued clients..
Standard Rate - Higher price for those who are just using us because they are in over their head or their regular 'handyman' is unavailable. No you could get into trouble for "price gouging" impress them so they wo't let the handy man touch there plumbing again it's for your hands only.
Value Rate - To take care of our loyal customers.

To get the value rate -

1. Gold Club Membership - $250.00. - Customer gets value pricing, extended (warranties, careful with this word, legally you may have to carry extra bonds, or other legal ramifications. Check local & state guide lines. full home inspection (1 hr.), guaranteed emergency response, and a water heater flush.

2. Silver Club - $75.00 - Customer gets value pricing and guaranteed emergency response.
LOVE IT
If we charge 1.5 hours for a new faucet install for an existing customer, the travel time is in the price. To do a 2nd faucet, it should be cheaper because we are already there. Do I need to create an add-on price for every item? Add on price should actually be your real price, cost + profit + mark up= Value price and or "value price" then bumb those up to get your standard price. otherwise the HO won't see the value in your program.

How does your price book work?

Also, do you ever add up all your prices and think "Whoa, that's a bloody fortune?" What I want to avoid is using flat rate and the bill come to $575.00 and mentally reprice T & M and have the price be $295.00. We are trying to raise our hourly rate by a reasonable amount ($25.00). In the above scenario, we would feel like theives if the hourly amount went up by $75.-$100.00.
The price is what the price is...................................................
The next sewer call you get figure up the bill and throw an extra $50.00 on it for the sake of it bury it in the machine rental or labor rate or mix it up. I'll bet not a word is said and there happy you got them fixed up.
That may help with some of your apprehension about seeing those big bills. Remember, the costomer doesn't know how much it should cost until you tell them and if you think oh my Golly there's no way I could pay someone else to put in a W.H for a $1000.00 I say ;
1. As a buissness owner that should be pocket change.
2. As a plumber why the hell would you pay some one to put a heater in for you???? Unless... They work cheaper than you and you can make way more out in the field by letting the other guy put your heater in for you
HELP!
Good Luck my Friend, the path is long and narrow and every one slips from time to time. Sounds like your headed in the right direction.:thumbsup:
 

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That is funny!



Reason # 2 If you are T&M would'nt the most profitable way to run your buissness be to find the slowest, cheapest guy, with the least amount of skill and almost no learning abilities, that you could find, out on the job? After all wouldn't he make you the most money?
Slow guy= 6 billable hrs to replace upper thermostat on W.H bills out @ $200/ hr= $1200.00 ---fair day
Good guy hits 10 W.H. calls same day and takes .5 hrs.. 10 thermostats later you got $1000.00
Which one is better for you?
I like that. I used to work for a very large T & M company, and all the slowest and least experiences plumbers made the most money.

You are not joking
 
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