Join Richard in this Masters Edition of Potty Talk LIVE as he and MDP Masters discuss charging hourly vs flat-rate, including reasons behind what’s best for your customers, your life, and your business.
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Resources
3 Golden Nuggets
- Matt Delnay, Mountaineer Plumbing
- Lance Ball, Aspen Mountain Plumbing
- Chris Copeland, Roadrunner Plumbing
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Show Notes
Time and Materials vs. Flat Rate
[03:17] Many new plumbing business owners start out charging for time and materials (and they’re not charging enough!) Our Masters came to realize that this wasn’t the best way to charge. While it seems like a good and fair way to charge, it is rife with problems.
If you have plumbers who work at different speeds, the price they charge will differ, and when neighbors compare notes, someone will feel like they got a worse deal. Charging hourly also creates room for your customer to feel like they need to watch their plumber the whole time.
Flat rate pricing may seem harder to deliver because it’s a higher ticket price, but it really gives Mrs. Jones the freedom to let the work get done and not worry about every trip to the truck or call to the parts store.
Making the Change to Flat Rate
[18:24] Once you decide to make the switch to flat rate pricing, you may expect to lose customers or have people unsatisfied. Our Masters did it, and while there was some pushback, overall their customers were happier. We live in a flat rate world, so that structure for pricing is the standard, and what people expect.
Flat rate pricing also allows your plumbers to do a thorough and professional job. They’re not under the gun to get in and out as fast as possible, so they can take the extra steps to set up nicely or do a little more thorough clean up.
How to Implement Flat Rate Pricing
When you’re trying to grow your business, you need to have the systems in place to be able to scale and grow. Working under time and materials just isn’t scalable. To really grow, flat rate is the way to go.
[25:07] Our masters have a few suggestions on how best to set the hours you’re charging for a job. They say either set the number of hours something will take at the pace of your slowest plumber, or take how long you’d take to do it, and double it.
Finally, don’t give a breakdown. Your customer doesn’t need (or want to!) to hear about the intricacies of running a business, what overhead you have to pay, all that goes into the business of setting a price. If they ask for a breakdown, simply don’t give one. We don’t do that here.
Richard’s Call to Action
If you want to learn more about numbers that matter and how to best run your plumbing business, why not schedule a free 30-min strategy call with us? Let’s talk about your goals and where you want to be this time next year, and we’ll help you create a path to make that happen. Schedule your free strategy call here today!
