FLAT RATE PRICING, SIX MONTHS LATER

By Bob Wennerstrom,  President, Blue Streak, Inc.

For years I read the discussions on the appliance repair boards about flat rate pricing. Every time the subject came up, I came down squarely on the time and materials side of the argument. Flat rate did not seem fair to the customer to me, and the book prices were much higher than I was charging.

A couple months before attending the 2012 ASTI in San Antonio, an interesting thing happened to me. I told a customer I would charge them a half hour labor for the first trip, then come back for free to install an evaporator fan blade. By the time I returned, I forgot the original discussion. I charged them a quarter hour for the first trip and a quarter hour for the second trip. The bill was exactly the same either way, but the customer was upset that they were not getting a free return trip. I could not make the customer understand that the bill was the same either way, his perception was that he was getting some of my time for free and when he didn’t get that, he was upset enough to tell me he would not use my services again.

I took Dean Lander’s class “Charging by the Hour Does Not Work!” at the 2012 ASTI conference. He made some good points as to how the customer perceives a job, how they perceive time and how it is actually a relief for them to have a flat rate price quote up front, before the appliance is repaired. This takes all the pressure of time off the customer. They are not sitting in the other room looking at their watch and wondering how much the bill will be while the technician is working. With flat rate pricing, time is taken completely out of the equation, and we are now charging for a completed repair.

A technician on one of the appliance repair boards was recently lamenting his situation where he repaired a customer’s dryer, and when it was time to pay the bill, the customer began negotiations, in which the technician walked out with about ninety dollars. This was my reply to his post.

Good advice here. The only thing I have to add is that it helps immensely in getting paid if you quote a firm price before doing the work.

Mrs. Brassy, could you come and look at this belt? It is very frayed. Also the drum support is worn out. (point to the drum support). I can fix these problems for you for only $238. 52.  I have the parts in the van and can do it today! I will also vacuum all the dangerous combustible lint from your dryer as long as I have it apart. You will still need someone to clean the vent, and the dryer will not work properly until that is done. I understand that this is an expensive repair. If you choose not to repair, I only need to collect my minimum service charge of $79.95 at this time. Would you like me to repair this for you today?

Until I got my head around flat rate pricing and how the customer perceives it, I was firmly against the concept. I have been paid upon completion of the call every single time since I started doing this. People understand they have a choice, they make their decision, and you get paid. There is no negotiation after the appliance has been repaired because of perceived value of time.

I have adopted this strategy of presenting the repair to the customer and have taught it to my technicians. Adopting a flat rate pricing structure was the scariest thing I have done with my business. I thought people would balk at the high prices and not appreciate my services. I have found exactly the opposite has occurred. My customers have been very appreciative of fact that a repair is in no way linked to time and despite significant increases over my old pricing, I have had almost zero push back or complaints. I would like to thank all the USA members I met in San Antonio who encouraged me to adopt the flat rate structure. Without your encouragement and support, I don’t think I could have made the leap.

For information on purchasing the Original Blue Book Major Appliance Job Rate Guide, visit the USA website, www.unitedservicers.com to take advantage of special USA member pricing.

2 Comments Add yours

  1. Murray says:

    i have been in business since 1978, i have always given my customers an up front quote , no suprises . if i rarely make a mistake in my diagnosis, i bear the brunt myself , thats why its important to diagnose properly , Murrays Appliance Service , Ontario

  2. Chuck Rosas says:

    I believe in flat rate pricing also, however, I learned from this repair company in Redding, CA that: if you are purchasing parts wholesale, that the (marked up) part needs to be itemized separately on the customers receipt and taxed accordingly. If not, CA is so hungry for revenue, that they have stated that if the item is not taxed separately, that the entire bill becomes taxable…yes, that means both the service fee AND labor get taxed. Highly unfair, confusing and costly in dealing with the taxing authorities. Both sympathy and gratitude to the fellow who shared this (costly) info at the RSM in Emeryville.

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