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Flat Rate vs Hourly Costs

Flat Rate – Contractor 20/20 Offers Some Great Insight into Flat Rate vs Hourly Costs When Quoting Prices.

Note: this was originally a post I made to the ServiceRoundtable.com.

Contractor 20/20 has studied over 250 contractors in 26 states and Canada. This is how I see it. A low priced TM has a marketing advantage in four areas. A higher percentage of appointments booked even 90% and a higher percentage of appointments sold and higher customer retention and referrals. The main advantage of flat rate is the ability to disguise your actual prices. That being said … it is rare that I see a TM guy make net profits over 8%. I often see well run flat raters holding profits over 15%.

I do have a client, a TM guy who has profits over 20% (charges over $200/hour and says so upfront). The truth is some flat raters never see a problem that a price increase won’t solve and some TM guys seem to suffer from some deep seated need to be poor. The worst flat rates destroy consumer confidence in the industry. Sure the press and the attorney generals love them, but they are a curse to the trade. And those under-priced TM guys work 30 years to make 5 years of profit.

BEING GOOD IS SIMPLE…
1) Be skilled & efficient in everything you do.
2) Let consumers know (brand) in emotional terms why they want you (trust) and in practical terms why they need you (skill).
3) Track your true cost of bringing your goods to market.
4) Add 25% mark up for you.

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