Electrical Flat Rate

Electrical Flat Rate

So you're looking for information about Electrical Flat Rate Pricing? This section may be a little long, but do take the time to read it, because it may substantially benefit your bottom line.

First, let's take a minute to discuss what an Electrical Flat Rate Pricing system actually is.

It is simply a book with a set price for a set task (job). In other words, if Mr. Jones wants a ceiling fan installed, then your Flat Rate Pricing book will have a preset price for that task. This price will be the same for Mr. Jones neighbors and his relatives. It is simply a Flat Rate for anyone wanting the same job.

The idea behind the price itself, is that if you did the job lets say, 10 times at 10 different customers, you would take all 10 totals / divide them by 10 to get your average installation price.

So technically, some of your customers would be paying less than they should be and others would be paying more, but as long as they all paid an average Flat Rate, you would always be making a profit on the job.

Of course when you're setting your prices, you would also add for other items as well, so no one actually pays less than they would have on a T&M basis. As a matter of fact, Electrical Flat Rate prices are substantially higher than the T&M rate, but many customers don't seem to mind paying them (more on this below).

An Electrical Flat Rate price book is also something that many contractors can put together little by little on their own, if they have the patience and know-how to do it.

Now there are many schools of thought about Electrical Flat Rate Systems. If you're in the business of doing residential and light commercial work, then there's simply no other way to go. No other way, assuming you want to make a decent living at what you do. There are still many contractors out there charging T&M (time & materials) and making money, but they're definitely not making what they should be!

Getting paid from a residential customer whom you've just billed on a T&M basis is similar to sticking your hand in a fire ant nest. You hand them your bill and you just never know what you're going to get it return. Will the customer just look at the bottom line and pay you? Not likely! They'll usually gasp, then sit down at the kitchen table, put on their reading glasses and pick it apart.

During this time they'll be looking at their watch while glancing back at you. When they're done, they'll come up with a list of reasons your bill isn't fair, is way too much, the job shouldn't have taken this long, their neighbor had it done last month for half the price, why they can't pay you, why you should give them a discount.

Now that you're getting the picture, lets look at another scenario. The customer has called you for a job, and over the phone you informed them that there will be a service charge to come out and give them an estimate.

You also told them that this charge will be dropped if they actually hire you to do the work. So they think a moment, and then accept your offer. You're now coming through their door, they promptly pay you your service call fee and you look at the job they want done.

After a few minutes you ask them to sit down so that you can over the estimate with them. You pull out your book (with all the prices) and point to the items they want, they take a look and gasp, while at the same time you're explaining to them that these are standard prices and that they would be lucky to have you do the work. Especially since you have everything you need for the job with you, and you can do it on the spot.

At the same time they notice the prices in red, which are directly next to the ones you quoted them, and ask you why those are less. You now point out that those prices are for service contract members, and then you go on and explain to them how and why all service contract members get so much for so little.

When you're finally done, you've signed up a new member and sold the job for a considerably higher price than you would have gotten with T&M. The customer pays you, gives you a nice tip and assures you that they'll recommend you to everyone they know.

Quite a different scenario, don't you think? These two scenarios are played out thousands of times a day, and can you guess who had the better day? Now of course, you don't always get the job with an Electrical Flat Rate System, but then again you don't always get it on a T&M basis either. At least with the electrical Flat Rate system you get paid for the service call and don't leave empty handed.

Now, in order to tell you why people would pay more and be happier at the same time, one would have to be a psychiatrist, but the basic theory behind an Electrical Flat Rate system is that they'd rather pay more, knowing the exact amount and not having to worry about the job taking too long, rather than take their chances on a T&M basis.

With the Electrical Flat Rate system after they've gotten over their initial price shock (and they will get shocked) they'll relax and let you do your work instead of following you around to make sure you're not wasting any time.

Now that we've discussed the pros and cons of both systems, let's look at what they cost, and where you would get an Electrical Flat Rate system? If you do a search on the internet under Electrical Flat Rate price systems you'll come up with probably over a dozen different ones out there. Most of these are extensions to plumbing and HVAC price systems. The problem with these is that:

You're inevitably paying for the bells and whistles you don't need

You're paying for costs associated with the plumbing and HVAC parts

More importantly the systems were not written specifically for the electrical field

They don't have a good breakdown for many tasks

Many of these Electrical Flat Rate systems overly simplify many tasks, especially wiring. They don't allow for a more detailed type of breakdown for many wiring tasks, and you end up with insanely high or low prices.

In order to get the work and keep the customers, your prices need to stay somewhere between reality and the twilight zone. Additionally, some of these price systems are ridiculously high priced, and on top of that, many of them even limit the amount of books you can actually print out!

If you're capable of using a spreadsheet (and most people are) try Custom Estimation Systems for Electrical Contractors, it's a simple to use Flat Rate Pricing System, that has more than enough categories and tasks. It has an excellent price breakdown system, especially for wiring tasks and is definitely one of the most reasonably priced Flat Rate Pricing Systems that you'll find.

Flat Rate systems have been around for a while, and they're getting more and more popular every day. If you're going to be making a living within the residential / commercial areas, then do yourself a favor and use an Electrical Flat Rate system. Once you've used one, you'll never look back.

If you're fairly new to the contracting business, then you may also want to take a look at The Electrical Contractor's Blueprint for Success. Click on the Book for more details.

footer for Electrical Flat Rate page