So what is the skinny on flat rate or upfront pricing for the electrical contractors? It's all about implementing an easy business system to simplify running your electrical service company. The "price book" is a time and money saver to improve your bottom line. A Flat rate book reduces invoice bill errors that the technicians make in the field. The tech looks up the job description and then they show the book price to the customer for their approval before they start the electrical project. The customer seems to prefer knowing how much the total bill for the job will be in advance.
The Up front price is base on national average installation time and standardized material list. There is not a break down of labor or material, it's just the price. No more variable customer pricing problems.
T&M vs. Up Front pricing.
Every service job is a little bit different and every service electrician will have different amounts of time and material for the same project. The T&M company installs a 20 amp circuit for $580 for Mr. Wilson but only charges the next door neighbor $522 for the same 20 amp circuit. The two neighbors are talking about the wiring job you did for them and then Mr. Wilson is calling you wanting to know the why the neighbors job was 10% less than his. You try to explain the installer John has more experience so he was faster and used different material that was on the truck than the Sean did on his job. Mr. Wilson is not happy with you!
If you had a flat rate of $600 for that 20 amp circuit, you covered possible difference for the jobs and both customers are happy.
The Upside for the Customer & Contractor
The customer calls or uses your company's online contact form for a job estimate. You reply that there will be a service call fee for the estimate of $$$, and that fee with be credited to job if they okay the electrical work while the tech is still there (This step quickly eliminates the cheap low ball price shopper because they don't have any money to pay you any how). If they schedule an appointment you have a good high quality business lead that needs the work done right now. Dispatch the service tech quickly to review and price the job with the customer. If you get the job great, if not you still get paid for sending the service truck and tech to the look at their electrical problem. Everyone understands the invoice charges up front.
Many Flat rate price books have 3 pricing points.
- The standard unit price which includes the service call, labor and material for one electrical project.
- The lower "add on" price if they require more then one electrical issues resolved while the tech is already there working on the job.
- The discounted Service Contract Member or Maintenance agreements prices to build your customer base by offering them a preferred customer discount.
Why use flat or upfront pricing?
Think about it! The TV repair guy charges $600 to fix the flat screen, Root canal is $900, Dinner entrée is $24.95, replace hot water tank $500 and none of these company's break down labor and material prices. Why should highly qualified service electricians try to compete on hourly rates with some low ball handyman on craigslist?
- Most Electrical contractors use some form of unit cost or basic flat rate pricing without realizing it. Whether you count the number of device opening on the blue print or measure the square footage of the building you are unit cost averaging the job. Flat rate pricing your residential or light commercial service work is the same idea.
- The book price is the standard average price for the electrical jobs for your local area of the country. The jobs in New York City cost more than the jobs in Sewal, Iowa.
- Labor times are based on the "book time" for the job. Auto mechanics' have charged this way for years. The "job" pays the same whether they're really good and fast or for being a slower a new electrician.
- Quick and easy pricing with fewer mistakes on the job invoice.
- This provides better pricing for your valued customers.
Which pricing system is better?
You can build your flat rate book or order one of the many different up front pricing / flat rate pricing systems online.
Over the years of web surfing I found a good little starter flat rating electric program. It's a couple hundred dollars, not thousands. It covers many (a few hundred) basic residential service call items (Fixture , devices, breaker, fan, service gear to name a few). Now, When people are price shopping, just ask them the description of work they need. The look up that job and give a good up front price for that job right over the phone. Check out http://www.ccesllc.com/ .
Quick way to make your own flat rate price guide. Review your last five or ten invoices for similar jobs (maybe adding 2 recessed can lights). Assume the similar "job invoices" are in $800 to $950 range. Do not average the price at $875, charge a flat rate of $950 for that job to cover standard differences in your work area.