Why I Don’t Like “Book Rate” Repair Vendors

by Steve Crossland, REALTOR in Austin TX on May 4, 2009 · 126 comments

Austin Appliance RepairMy long time appliance repairman John at Austin Appliance informed me today that he’s only coming into Austin once a week now, and will eventually stop serving Austin altogether. He lives in Spicewood and mainly works Marble Falls now.

Darn it. My veteran vendor team people keep getting older and retiring on me. John’s also working now as a fishing guide on Lake LBJ. Sounds better than fixing dishwashers and refrigerators I must admit. I’ve use him since the early 1990s, and I hate to lose a trusted service call vendor.

So today I put my feelers out for a new appliance company or person. I’ve had many good recommendations already but the problem I keep running into is the pricing structure that seems to be more prevalent now than it was 10+ years ago. It seems most service companies nowadays want to bill a service charge just for showing up, usually $50 to $92, then, once there, they want to quote a price based on the “book rate” of the repair, and then do the job only after the price is approved.

That doesn’t cut it for me. I don’t use “book rate” vendors because book rate pricing is a poor value for my property management owners. It’s inefficient and expensive, two things I despise. Maybe for Joe or Jane Homeowner who only need a service call once every few years, it’s not such a bad deal. You know the cost before the work is started and exactly what will be done. But I can’t operate a property management business under that pricing scheme. Instead, I need my guy to show up, fix the problem, and bill me a fair rate for time plus materials. I’m not worried about getting ripped off because, after nearly 20 years of managing and fixing rentals, I know what it should cost to fix things.

Here’s why my way is better and why I don’t use book rate people.

Suppose I manage your rental property and the tenant submits a repair request for a malfunctioning garbage disposal. If I can’t troubleshoot the repair over the phone and help the get the disposal unclogged and running, I’m going to send my Master Plumber Larry to the property. Larry charges by the hour.

While I have a plumber on the property, he’s not only going to fix the disposal, but he’s also going to go throughout the house and do a quick check on all of the plumbing at the property. He’s going to look under every sink for leaks, check the p-traps and make sure they aren’t loose, look at the water heater, check the commode flappers, check the washer connections, check the inside faucets for any leaks, and check the outside hose bibs for drips.

This entire preventative maintenance check of the plumbing might take an extra 5 or 10 minutes, literally, if everything checks out clean. I just bought my owner some pretty good insurance for about $10 or $15 extra time, and we accomplished the highest possible value for the service call to the property. If we do find other problems, we’ve done what we should have done and found them and fixed them while there, instead of going in to fix one thing and leaving without looking at anything else. If I have to pay somebody to drive to a property, I want more value than fixing just one item.

Likewise, if my tenant has a fridge not cooling, I’m going to ask my appliance guy to also check out the dishwasher and the range while there. I’ll also have him look at the washer hoses and connections to see if they are leaking. It won’t take more than a few minutes and will cost little to nothing extra at an hourly rate, even if billed in 15 minute increments.

Book rate vendors want to call the additional items an extra “diagnostic fee” and bill extra per item, not simply for the few extra minutes spent. So, in a pinch, when I’ve had to use book rate vendors in the past, and they tell me the diagnostic fee covers only the appliance they are sent to look at, I tell them “never mind”, and I never use them again after that job.

As a property manager, I pay well, I pay fast, and I’m about as low hassle of a customer as any vendor could want. I don’t sqabble about repairs, I just say “get it done and charge a fair price for your time”.

My owners know when they hire me that I’m not going to dilly daddle around trying to obtain permission to replace a water heater that has reached the end of it’s life, or replacing a worn out dishwasher. In fact, my plumber Larry, who I’ve also used since the early 1990s, doesn’t even have to call and ask my permission if he deems a water heater in need of replacement. He just takes care of it immediately and sends me the bill.

Sidebar for tenants: If you are a tenant, and your hot water goes out, you want a property manager like me and a plumber like Larry handling the problem because it’s going to get fixed asap and you’ll be taking a hot shower again real soon. I’m astounded that there are property managers out there who will actually tell a plumber “I need to get the ok from the owner”, and send the plumber away while he tracks down the owner to obtain permission about something for which there is only ONE choice! Meanwhile the tenant gets bent out of shape because now the owner wants a second bid and it’s been two days already. This scenario is a quadruple lose situation.

The property manager loses because he is revealed to be an incompetent idiot who can’t get a bad 15 year old water heater replaced without going through a rediculous approval process that should have been anticipated and agreed upon in advance of taking the property for management.

The tenant loses because he receives poor service for an important and time urgent repair.

The vendor loses because instead of proceeding immediately with the work needed, he has to leave not know when or if he’ll be called to return to do the obvious.

The owner loses because ultimately the work is going to cost more, and vendors don’t like wishy washy property managers who jerk them around with unnecessary bids, so in the end, the property manager has a less talented more expensive pool of vendors and thus a less efficient and more expensive property maintenance operation with which to service the managed properties.

By using only hourly service vendors who are trusted and empowered to just go fix the problem and charge a fair hourly rate, I can deliver a better quality maintenance service to our tenants (which helps retain them at renewal) and keep repair expenses and problems down for our owners.

Anybody know a good hourly appliance repairman? Send him to me, I’m interviewing!

{ 126 comments… read them below or add one }

1 shireen May 5, 2009 at 8:27 am

The best appliance guy I know won’t come south of the river any more!! The guy he recommended would go any where but he worked so hard, he had a heart attack! And now is on a very reduced schedule. Sigh.

The old-timers are disappearing!!

This won’t help you Steve but as a homeowner I have discovered on-line appliance part services. I can research and order the right part without leaving home, watch videos or read descriptions about how to make the fix, the part comes to my door, and I fix it!

I save the cost of the service call and don’t spend any time wandering the aisles of Home Depot. Of course, these are fairly simple fixes, I won’t be replacing my water heater any time soon!

2 Jeff May 6, 2009 at 11:39 am

I agree- they quote you hourly- if you need them to take a peek at something else you may be talking a couple minutes. It’s definitely a trend that is disheartening and growing across the country.

3 Dean Landers May 6, 2009 at 1:20 pm

Hi Steve and Sylvia,
I appreciated reading your perspective on book rates, which our industry typically calls flat rates. Before I offer you some suggestions in finding an appliance service professional I want to provide you with another perspective.
I am a professional appliance service company owner who also serves as the president of a national trade association (United Servicers Association) and I am the author of the Major Appliance Service National Price Guide, the “Blue Book” in the appliance service industry. I have written and spoken extensively on the topic of flat rate pricing, which is becoming the norm in many trades and appliance service is one of them.

The implementation of flat rate pricing is designed to provide the customer with price protection and peace of mind. When a company uses flat rate pricing the customer is quoted a specific trip and diagnostic charge up front which covers all the initial expense of getting the technician and his stocked truck to your house and making a determination as to what is wrong with your broken appliance. No hidden or unknown charges. No surprises! Once the diagnosis is complete the technician will quote a total repair price along with a recommendation for or against making the needed repair before the service is actually completed, again preventing any guess work surrounding the total cost. In both instances the customer is protected from unforeseen issues such as problems that are hard to pinpoint, poor manufacturer electrical diagrams and schematics, poor or non-existent technical support from some manufacturers, products that are difficult to get apart due to rust, corrosion, installation complications, hidden screw locations, and a myriad of other potential time delays in completing a diagnosis or repair. Of course when using the hourly method of job pricing these things would result in a higher labor charge without any forewarning or advance knowledge.

Flat rates are also a pretty good protection against paying someone who is inexperienced in being able to charge the customer for their “On The Job” training. A trainee or a rookie may take 2 or 3 times as long as or longer than an experienced technician to make a diagnosis or complete a repair. Customers would much rather pay the experienced person over the rookie even though in the hourly pricing model you love it works in reverse. The experienced technician is actually penalized for knowing how to complete a repair in a short amount of time. All the years they have spent in learning their trade does not serve them as they are only able to charge for the minimal amount of time actually spent making the needed repair.

There is a long history of misunderstanding and undervaluing our services, which has created a much larger problem for our industry. The average age of an appliance service technician in the US is 54+. Most small independent companies, which represent the overwhelming majority of companies in the country, have been charging substandard rates for years, have little or no retirement, and can’t afford to hire someone to train in order to take over their business. They are relying on the sale of their businesses to fund their retirement. But to their shock and surprise there is little if any value in their life’s work. The actual value of their service business is next to nothing because young people do not want to work in such a low paying industry and other business owners are looking for a reasonable ROI and there is none to be found in these small appliance service enterprises. All the owners who have dedicated their lives to providing outstanding service to their customers struggle to retire. When their small businesses are sold they bring in a fraction of what CPA’s will tell them the company is worth on paper. The old adage is true in that your business in only worth what someone will pay for it! In order to support or hire a trained technician, provide health insurance, a stocked service truck, and all the various office functions and personnel to support them in the field, professional service rates, IE flat rates are an absolute necessity.

Yes, there are exceptions to what I’ve described above but they are rare and even more so for the one and two man companies that make up the bulk of service businesses in America. The exceptions usually involve companies who have been charging professional rates so that they can hire an efficient office/admin person, buy a decent service management software package, establish a dynamic computerized customer data base, supply a solid parts inventory, provide a well maintained service vehicle, retain comprehensive insurance coverage, keep all their business practices current, maintain technical training requirements and continue to market their services to existing and new customers to mention some of the bigger issues.

Imagine in your business not being able to charge for the level of expertise and years of wisdom gained from serving as a property manager. Without knowing anything about your business I am fairly certain you charge more than the start ups who come along every so often competing for your clients. And why do clients call you? Does it have anything to do with the reliability and professionalism you bring to them? Sure it does! I certainly understand why you want to have this type of arrangement with your appliance service vendor as it is totally beneficial to you without any consideration for the service company owner or understanding on your part as to the various expenses and overhead involved in providing this level of service. Without your realization you are taking advantage of these small businessmen who have not learned to properly value the level of professionalism and expertise they bring to the marketplace.

Make a list of the things you liked in your old service company besides how they price their repairs. I will bet that professional, personalized, expert, speedy service tops the list. And like it or not, these things are expensive to provide. So you will either end up with another old timer who is going to retire soon (and who is, I suspect currently under pricing their services) or you will end up having to come to terms with the real cost of appliance service in today’s world and hire the companies who are charging “Blue Book” rates. Think about the last time you were looking for a good doctor. Did you even take into consideration how much he charged or did you make the decision to use his services based on the qualities I’ve listed above? If you dared to compare the quality of service between what the large box stores service departments provide and the small independents, the small independents win or tie every time and in every category. But the Box stores all charge about the same as the prices listed in the Blue Book! HMMMM! So the quality of service is what we really want but in the end it is the simple fact that we don’t like paying the fair market rate for these services.

The choice is totally yours. There are tons of companies out there to choose from. I know my company has had a few property management companies over the years take their business to other service companies because they were able to rationalize the trade off for the drop in the quality of service they are provided in order to get cheaper pricing. They clearly understood what they were giving up and we parted as friends. Sometimes they call us back when their other provider is on vacation, can’t get to a problem tenant soon enough, or can’t figure out the problem on a particular appliance. We gladly help them, charging our standard flat rates for the services we render.

My suggestion to you and any property management firm or high volume service purchaser, when looking for a service professional, is that you ask the prospective companies you are interviewing as potential contractors to provide you with a discount due to the volume of work you will offer them. Make sure you are clearly outlining the benefits involved in doing business with your company. You may find that there are other benefits they offer as part of a package they provide to their larger clients, such as 30 day billing and preferential scheduling, etc. Ask them to identify the added value of doing business with their company.

My company works with dozens of large property management firms. Often times we get a preauthorization limit to perform work before going into the tenant’s house. Many simply trust us to make the right decision in whether to repair the unit or advise that it needs to be replaced. It is rare that we can’t get in touch with the property manager for an okay or we don’t have an agreed to authorization limit, or a standing authorization. Some property managers require us to call for an authorization on every call. Many times, even when we can get them on the phone they have to call their client (I know this is not how you handle this) and are unable to reach them in order to get a final okay. Sometimes, but rarely we have to come back for a repair we could have completed on the first trip. This can and does happen, regardless if the service company charges hourly or flat rate.

I hope I’ve given you a strong argument in support of flat rate pricing and also a broader understanding of the appliance service business in general. Please let me know if you have any other questions or if you want to take issue with anything I’ve written. I’m delighted to have this exchange.

Dean Landers
Landers Appliance
United Servicers Association

4 Steve Crossland May 7, 2009 at 4:49 pm

Hi Dean,

Thanks for your perspective. You made a lot of points and raised a lot of issues, but here’s the bottom line for me.

Book rate to replace a 1/2 hp disposal is $345. That’s too much for a 30 minute job that requires an $85 part. It should cost $150-$180 to replace a disposal.

If I found out someone like my Mom, almost 70 and on a fixed income, paid a plumbing company a service call plus $345 to replace her disposal (over $400 total), I’d have to say she got ripped off.

You won’t find a rental property owner or property manager in the country willing to pay that price.

Also, what I’ve observed is that the “flat rate” is only flat for easy jobs. Once a problem is incountered, the vendors want to add on to the price and blame it on something they failed to ascertain or notice before quoting the price. So, the flat rate floats up, but never floats down on easy quick jobs.

What I’ve observed over the years with so many mom and pop vendors is not that their efforts can’t be profitable, but that their administration and management of the business is sorely lacking. They are often good at fixing things but terrible at managing money. Charging more won’t fix that unless the root problem is cured first, which is budgeting and living within one’s means.

Thanks for your comments. I think you have valid points, but your industry should recognize that the book rate method really is one sided in favor of the vendor. The argument that the older more experienced vendor suffers under the per hour scheme isn’t valid because that same vendor can knock out 5-8 jobs in a day whereas the slower newbie can only do 4 or 5.

Also, I have no problem paying a higher hourly rate for highly talented and experience people. I don’t think it’s hard for a good husband/wife combo running a service business to earn over $100K per year net, before taxes and insurance, if they run the operation properly. Not bad for a gig that requires no college.

Steve

5 Dean Landers May 8, 2009 at 9:52 am

Good Morning Steve,

The Blue Book flat rate price (version 7.08) for a ½ HP Kitchen Aid disposal is $288.20 and an Insinkerator is $322.97. Both of these prices include the service charge to come and diagnose the old unit and then replace it with the new unit. You mentioned an $85 cost for the disposal and I think therein lies the problem. Customers can buy parts as cheap as service dealers today. The difference is that we had to order it and have it available on our truck and for that convenience we are entitled to a profit as well as a handling charge.
If we marked up the disposal 50% and charged $127.50 for the unit, added the $79.95 service charge and the $91.65 labor to complete the installation the total price comes to $299.10. You may be able to get a plumber to supply and install the disposals for less, in which case you can make that decision. You can also try to keep units on hand and supply your own disposals which would reduce the price $42.50.

The Blue Book pricing was compiled using real data from many different companies from all around the US. The prices reflect real life factors in determining the final cost; they are not inflated just for the fun of it all. Flat rate pricing protects from the situation you mentioned about adding to the price based on some unforeseen problem arising during the repair. The flat rate IS the final repair price regardless of any additional issues that pop up at any time in the repair cycle.

You say the flat rate method of pricing is fair only to the vendor. The Blue Book is a time tested tool that has been widely accepted by the general public in the automotive world as well as HVAC and other industries including appliance repair. If the prices were not fair to both the customer and the company they would not have had staying power!

I will not take issue with your observation about our industry being populated with poor business people. Most service company owners are converted from working for someone else into their own boss without any management training. Few if any have had any advanced business training since high school, if then. It stands to reason they would run less than perfectly efficient businesses. That does not alter the fact that they are entitled to charge the going rates for the level of knowledge they have. Most companies that I have consulted for and dealt with over the years have very little wasteful habits draining profits with the sole exception of carrying too much parts inventory which is and probably always will be the bane to our industry.

Your point about being able to do more jobs since they are quick and therefore should not be entitled to charge more than the less experienced person is so egregious that I want to point out the ridiculousness of it. Do doctors who have reached a high level of knowledge and accomplishment charge less for their services and see more patients to make up the difference in what other slower less professional, less knowledgeable doctors can charge? I went to the dentist 6 weeks ago and had my teeth cleaned (he did the cleaning himself as he always has) and was charged $95 for about 30 minutes worth of work. I went back 2 weeks later and had some teeth bonded. This also took about 30 minutes and I was charged $195. Why the difference? I had my full annual physical recently by my family doctor and he charged me $150. I had a simple outpatient surgical procedure two years ago that took about the same amount of time and was charged $1500 by the doctor alone. Your argument is flawed and doesn’t hold up to reality.

Your last comment about being a good gig for someone who didn’t go to college also misses the fact that an experienced appliance service technician is a highly trained professional who has spent years learning the trade. There are few people in all the various electrical and mechanical trades who have the skill or knowledge to be able to repair their own appliances. Appliances have become highly sophisticated. By comparison my technician’s and most I know are able to repair most plumbing, HVAC and household electrical problems. Yet we have as clients many electricians, plumbers and HVAC technicians. That speaks to their high level of knowledge and skill required to be proficient in our trade.

I would encourage you to keep searching for the type company you feel comfortable with but at the same time keep talking to the flat raters. You may find all that you are looking for with that one exception!

6 anonymous May 9, 2009 at 9:32 pm

Steve,
After reading Dean’s comments, I realized this is a parallel to the discount realtor vs traditional priced realtor. Wow!

Thx,
Anon

7 arz May 10, 2009 at 10:39 am

I must point out that Realtors do charge very flat fees (6% regardless of quality of services or degree of services). So the same argument against appliance service providers should be the same as those toward realtors…

I do, on the other hand, agree that experienced realtors should be paid more.

8 Ray May 13, 2009 at 2:58 pm

Too funny… Yes, flat rate realtors and appliance repair businesses (neither require anything close to rocket science abilities) are BOTH ripping off the consumer.

As far as flat rate appliance repair goes..

I was recently quoted around $300 flat rate for replacing an A/C condenser capacitor. I know this to be about 6 times what the job is really worth and that it would take no more than 30 minutes for a competent technician with basic training to complete the job. End of story, not interested in negotiating. I’ll simply get the part and do it myself and save on the bogus ‘upsells’ too.

9 observer May 15, 2009 at 10:08 am

So, buying ivestment properties and renting them out is not that profitable after all?

PS. Anon, that was my first thought too! :-)

10 Steve Crossland May 15, 2009 at 1:18 pm

Dean, thanks for your comments. I decided to run a quick survey of property managers I know from across the country to ask what the various costs were for repairs that they have made by professional, licensed vendors. There were 25 respondents and the results are below.

I’d be interested to know how these numbers line up with your book rates. I can’t find a property manager anywhere who has ever paid more than $300 for a new disposal installed, but maybe some of your other book rates are in line.

1. How much should it cost to replace a garbage disposal, including the service call and all parts?
$100 or less = 0%
$101 to $120 = 4%
$121 to $150 = 28%
$151 to $180 = 36%
$220 to $250 = 8%
$250 or more = 0%

2. How much should it cost to replace a dishwasher with a standard 3-cycle rental grade unit, including service call and all parts and materials?
$less than $250 = 0%
$250 to $300 = 24%
$300 to $400 = 56%
$401 to $500 = 16%
$501 or more = 4%

3. How much should it cost to replace a bad shut-off valve under a kitchen sink, service call, parts and labor included?

$100 or less = 36%
$101 to $120 = 28%
$121 to $150 = 24%
$151 to $180 = 8%
$181 to $220 = 4%
more than $220 = 0%

4. How much should it cost to swap out a 40 gallon gas water heater, assuming no code upgrades or other problems, including all parts and labor?

$400 or less = 16%
$501 to $600 = 24%
$601 to $700 = 24%
$701 to $800 = 12%
$800 to $900 = 0%

5. What should the cost be to check a leaking commode and replace the supply line and all tank gear. Service call and parts included?

$100 or less = 48%
$101 to $120 = 16%
$121 to $150 = 12%
$151 to $180 = 12%
$181 to $220 = 12%
$220 to $250 = 0%

6. What should the cost be for a service call to check out “A/C not working” and discover a bad thermostat wire? Thermostat is replaced with a standard programmable unit, and preventative maintenance service check is performed on the entire system while there.

$100 or less = 0.0%
$101 to $120 = 24%
$121 to $150 = 12%
$151 to $180 = 20%
$181 to $220 = 28%
$220 to $250 = 8%
$250 to $300 = 0%

7. What should the cost be for a plumber to check a clogged commode, find and remove foreign debris (hairbrush)? No parts or materials, just the service call.

$100 or less = 68%
$101 to $120 = 28%
$121 to $150 = 4%
$151 to $180 = 0%

8. Do you prefer hourly vendors or flat rate vendors? Hourly vendors usually charge a service call plus time and material. Flat rate vendors may or may not charge a service call, but once at the job will diagnose the problem and then quote a “book” price or “flat rate” bid price for repair. You might use a combination of both, but if you had to live with one or the other, for most service call repairs, which would you choose?

Hourly – I know how much repairs should cost and how long it should take and I trust my vendors to charge fair prices.
80.0%

Flat Rate – I like knowing exactly what the repair cost will be before the job is started.
12.0%

Don’t know = 8%

9. In your market, what is the average cost per hour for good, qualified service vendors? Assume a sole proprietor with company name, clean late model service vehicle and insurance, experienced and capable in one or more of the main trades such as plumbing, appliances, HVAC, electrical, etc.

$15 hr or less = 0%
$15-$25 per hour = 4%
$26-$35 per hour = 12%
$36-$45 per hour = 12%
$46-$55 per hour = 8%
$56-$65 per hour = 28%
$66-$75 per hour = 20%
$76-$90 per hour = 8%
$91-$120 per hour = 4%
$121 per hour or more = 0%

11 Steve Crossland May 15, 2009 at 1:19 pm

RE: Flat Rate Appliance Repair = Flat Rate Real Estate Agent.

Apples and Oranges. Not even the same discussion. Realtors only get paid for success. Appliance people get paid just for showing up. The issues are not the same.

Steve

12 anonymous May 17, 2009 at 10:34 pm

Going back to my comment, I think there is some amount of similarity. Most home sellers really only need the following from their real estate agent to sell a house:
1. MLS listing
2. Access to sales data for CMAs (although most home owners know the comparables that have sold near them and what they listed for)
3. Lockbox access for showing agents

Flyers could be made by the owner. Or an original file provided and leave it to them to copy and refill as needed. A for sale sign is needed, but an owner could even provide this. Even if the agent provides the sign, its already a sunken cost that they’ve written off their taxes (or will this year). All the standard forms used by real estate agents in Texas are free and available for download. Digital photos can be provided by the owner. The owner can stage their home; google provides tones of diy results.

Faxing and negotiating – no value on the faxing (why isn’t this online all the time, instead of some of the time?!). Negotiating – maybe, but I’ll stick my neck out and question how much so. If the property is priced correctly at listing, the only negotiating necessary should be to extract the highest price between the multiple offers. Lots of people know of to maximize a multiple bid situation or select the strongest offer and immediately move on. If there is only a single offer, it is likely right where it should be and not way below the listing.

Sellers don’t need much else to really sell a house.
Websiter for the listing – waste of $’s – mls is available on the web. Probably not worth it even for a million dollar house.
Open house – marketing for future clients for the listing agent.
Virtual tour – waste of $’s – photos are enough for buyers.
Panoramic Sky view photos – see virtual tour, even bigger waste of $’s.
Babysit the inspector – isn’t that what the buyers agent is for?
Babysit the appraiser – isn’t that what the buyers agent is for?

I could do all this for a buyers agent as well – most of the value can be set up as an automated task now, which should lower the price to the consumer.

13 Steve Crossland May 18, 2009 at 8:23 am

Hi Anon,

Like many before you, if you have a better model for mass selling real estate, design it and bring it to market. I have nothing against people who want to try different ways of selling.

But I will say that your understanding of what’s involved in selling a home is simplistic and limited. There are a lot of moving parts and a lot of things that can go wrong, and one never knows when the “easy” deal suddenly turns into a very complicated problem, which can happen to any deal at any time.

But if you can build a better mouse trap, go for it.

As for the comparaison with appliance repairs, alternatives to the book rate pricing are available, though not without some degree of frustration in finding the right vendors who are a good fit. Property managers are “professional customers” though, meaning there does exist a market for serving us. Some of the vendors at our local property manager’s association get 100% of their business from our members, and they are more than happy to complete multiple jobs each month for a single client on an ongoing bases, and they manage to run profitable businesses that do very well with charging $300+ to replace a garbage disposal.

Steve

Steve

14 Dean Landers May 19, 2009 at 11:13 am

Ray, Steve and All,

Appliance service technicians require much more extensive training than a realtor as it takes years to develop even an adequate technician and a life time to become a master. I would also argue that some of the requirements are much more in line with a rocket scientist’s job. Dramatic innovations are introduced regularly. Look at the difference between the washers that were in use even ten years ago and those in use today. Refrigerators have a reciprocating/modulating compressor that requires much more refined electronic controls. The next time you need service on an Asko dishwasher or a Thermador wall oven or a GE Monogram refrigerator take a look at the electrical components and the disassembly required to access these components. Read through some of the technical service notes and you will see what I mean!

Service technicians do not “only get paid to show up”. They are paid to provide a diagnosis and estimate of the broken appliance. This requires extensive training and knowledge, proper tools, a service vehicle equipped with adequate stock, and all the other fixed costs associated in maintaining a viable business.

The various jobs you listed are seldom included in what most appliance service companies actually do. If the repair is directly involved with a major household appliance such as a refrigerator, washer, dryer, dishwasher, range, wall oven, cook top, garbage disposal, trash compactor, ice maker, etc. then service companies will normally undertake the repair. Most appliance companies do not also do HVAC work. We also do not do plumbing on toilets or sinks including replacing main shut off valves unless it is related to the dishwasher. The repair prices listed in the Blue Book are brand specific and will vary accordingly. Give me a list of the top five repairs and the brands of appliances you have those repairs completed on and I will provide you will the book price.

You said “As for the comparison with appliance repairs, alternatives to the book rate pricing are available, though not without some degree of frustration in finding the right vendors who are a good fit. Property managers are “professional customers” though, meaning there does exist a market for serving us. Some of the vendors at our local property manager’s association get 100% of their business from our members, and they are more than happy to complete multiple jobs each month for a single client on an ongoing bases, and they manage to run profitable businesses that do very well with charging $300+ to replace a garbage disposal.” I have already stated that large property management firms and any company that can provide a large block of work to a service company can ask for and will often times receive a reasonable discount.

15 M1EK May 21, 2009 at 2:08 pm

“Service technicians do not “only get paid to show up”. They are paid to provide a diagnosis and estimate of the broken appliance.”

But they do, in fact, get paid for a diagnosis even if they can’t fix it, and even if the diagnosis turns out to be wrong. Sounds like Steve’s a lot closer to the truth than you are.

16 Dean Landers May 22, 2009 at 11:44 am

Dear M1EK,

I do not mean to be disrespectful in my response. Please do not be offended at my rebuttal to your comments.

But …

So do doctors! But there is a big difference (and it is in our favor!) between us and doctors. Those of us in the appliance service business will actually return for free and re-diagnose a problem if we have done so incorrectly. Doctors charge regardless of how many times they get it wrong!

You can try to spin this any way you like but the facts are the facts. Because you are speaking from a lack of knowledge about the appliance service industry, I can understand how you can come to these erroneous conclusions.

Appliance service business owners typically operate small companies with 15 or fewer employees, with the majority having only one or two people. We develop long lasting relationships with our clients and even if there is an unfortunate event such as a misdiagnosis or a repair that does not fully resolve the problem, we work with our client to come up with a reasonable solution such as refunding the repair monies or returning for free or whatever the situation calls for. If you have been using the same service company for an extended period of time than you know what I am talking about because I am sure that you have had to work through one of these types of issues. If you keep bouncing around looking for the cheapest deal you can get you might end up with an unscrupulous service person.

Quality service has staying power built on repeat and referral business, just like a property management firm, or real estate agent or any business for that matter. Check references if you are looking for a reputable service company. But remember that professional, high caliber service excellence is not cheap.

17 M1EK May 22, 2009 at 12:11 pm

“Because you are speaking from a lack of knowledge about the appliance service industry”

Blaming the customer 101.

Dean, I’ve had enough experience just as a homeowner, before even getting into the very limited landlord realm (only one property), to know that what you’re saying isn’t true in practice. Steve is obviously speaking from a lot more experience (many more properties); and if he disagreed, I’d be more likely to reconsider whether I had just been unlucky.

18 Steve Crossland May 22, 2009 at 1:31 pm

Hi Dean,

You said to M1EK:
> Because you are speaking from a lack of knowledge about the appliance service industry, I can understand how you can come to these erroneous conclusions.

Seems a bit condescending. Even I, a believer in full service real estate and full commission service, don’t belittle those who choose Flat Rate or Discount Brokers. All I can do is state what I think the value of my service is and leave it to the consumer to decide.

What you are attempting to do here is to say that the only sane or logical choice an appliance repair customer has is to choose a flat rate appliance repair vendor who bills service based on the rates in the book you publish. That’s just simply not true.

I found and am trying out a new hourly guy, who was referred to me by someone who apparently read this blog article!

First service call, on a property I own, in which the dishwasher was not draining properly, resulted in discovering that the tenant had replaced their own disposal (in violation of these lease, but apparently they broke it and thought they were doing the right thing) and neglected to remove the drain plug into which the dishwasher drains.

What would your service repair charge manual (book rate) say the charge should be for such a call, which was diagnosed and cured in less than 10 minutes, after which the vendor was off to his next job?

Steve

19 Dean Landers May 28, 2009 at 2:17 pm

Dear Steve and M1EK,

Forgive my delay in responding. I am also the president of an industry association (the United Servicers Association) and carry a fair amount of responsibility to its ongoing operation.

As I reread my post I see I was a bit condescending. I’m sorry if I offended either of you. Please forgive me.

I was/am not blaming the customer. The initial discussion surrounded an argument that “book rate” companies were over priced and potentially even rip offs. My aim is to try and educate potential buyers of service goods. I am not trying to justify the Blue Book as the one and only method of pricing. I was providing justification for service companies to have higher charges than a lot currently charge. I’ve stated previously that if you are looking for an hourly service company, you should continue your search until you find the right person to fit your needs. They are out there.

M1EK,
I’m not sure what part of my statement you are taking issue with.

Steve,
The trip and diagnostic charge would be $79.95 and if we would have had to remove the disposal to remove the knock out plug it would have been $29.95 labor for a total of $109.90.

20 Joe Bacala September 9, 2009 at 5:46 pm

Hey Steve,

As a appliance repairman who had to work his way through school (nights) for three years while working full time I find it ironic for you to say you don’t need to go to college or vocational training to fix appliances.

I don’t charge flat rates, I charge by the hour, which you would probably think is too much.

I refuse to do work for property managers or apartment complexes because you always get a surprise when you get there. Examples below:

While your here can you look at that?

Can you take the part out of another appliance we have in storage?

I’ll have my guy pick up the part, we have an account.

You should give me a break because I will give you lots of business.

I’ll make an appointment and have to wait a half an hour for the property manager to show up.

Can you stop by the office and get the key and bring it back when your done?

Hey Steve I have a great Idea, when an appliance breaks go buy a new one.

I love private property owners. They are thrilled that I showed up on time, thrilled to have their appliance fixed and often offer me a drink or a sandwich while I’m there. Who needs to work for pinheads like you!

21 Steve Crossland September 10, 2009 at 9:14 pm

Hi Joe,

> Who needs to work for pinheads like you!

Vendors like working for good property managers (not the ones you described) for several reasons.

1) You have only one relationship to maintain which provides continued, repeated access to a never-ending stream of jobs. Granny might make a good sandwich, but she ain’t gonna get you to retirement.

2) You can complete multiple jobs but have only one customer to bill. For example, my A/C Company sent me 6 invoices at the end of last month. I just mailed out payment in one check for all those jobs two days ago. We pay fast.

3) Good property managers are much easier to deal with than retail customers. I send my plumber to a job to check a leaking water heater, he finds a 12 year old unit that needs replacing, he just swaps out the heater, leaves me a message about what he did, and sends a bill. I trust him, we don’t create goose chases, which makes him way more efficient and profitable than he can be dealing with your chit chatting sandwich makers.

I know there are a lot of property managers just like those you described. You would be wise to know that there are different types out there as well, who make much better lifelong customers. My A/C company has received steady business from me since 1990, through two different owners even. We have vendors who come to our monthly property management meetings who don’t spend a penny on advertising and who stay backed up with steady work because of their networking efforts with property managers.

Call us pinheads, but we’re getting a lot of vendors who understand how to find profitable customers through the economic downturn. Property management and rental repairs don’t slow down at all.

Enjoy your next sandwich, but you might also try a local property manager’s meeting and see what happens.

Steve

4)

22 Mike December 6, 2009 at 7:46 pm

I have thoroughly enjoyed the banter here between all involved. I have found one thing in common. I believe all venders involved in this conversation care about the customers, and all customers understand the cost of quality and reliability. The trouble is linking the two together. For this I have no suggestions.

I CAN say that I have been a fan of both Flat rate and hourly rates in my, Going on, 23 years in the HVACR business and I think the proper method of billing by the service company comes down to geographic area. I have worked for Sears (who used the flat rate method at the time) in a huge city, and now own an HVAC R appliance repair company in a “VERY” small town. (One blinking light, everybody knows everybody) and I am convinced of one thing. The small town will not tolerate the Flat rate, if there is an hourly rate entity in the same area.

Most small town people are skeptical and typically very cunning when it comes to spending their hard earned money. They will not call you twice if you charge them $300 dollars to replace a garbage disposal. They will however reward, say, a $210 dollar replacement with LOTS of referral work.

So here is the quandary. Somewhere between big city and small town is the line between Flat rate and hourly? Easy for me cause small towns don’t get much smaller than where we are.

At 23 years in the industry, I still LOVE my job, still work my tail off, and make less money per call then the other guys, still happy with my profit margin. Don’t kid yourselves; Happy is still a factor in this business. The more detached you are from the joy of your work, the more compensation to try to justify. Our company mission statement is: Treat EVERT customer like they are your ONLY customer, or someday they might be!

I wrote this on my way to my first customer!

Anyway, I’m for which ever system fits the demographic. And that’s for you to figure out…

23 Mark December 26, 2009 at 2:09 am

I have a interesting perspective. I have owned and operated a appliance repair company for 20 years and my live in girlfriend owns a property management company. I have attended training sessions run by Dean and other flat rate proponents. Dean is right that many hourly appliance companies under charge for their services. I have read over Dean’s book and the prices are fair. I charge a service call and hourly rate. Maybe I shouldn’t post this in a public forum, but I have the highest service call rate in my area, but because of my skill and expertise my completed jobs are still in the same final price neighborhood as those with service calls 40% lower than mine. While I was reading the posting I felt insulted by Steve who doesn’t seem to value a good appliance repair person. My girlfriend on the other hand thought that Steve was right on and that Dean was a slick salesman. So, I guess it depends on your perspective.

Going back to the comparison of the Realtor to the Appliance Tech. Sometimes appliance jobs do go very easy and it seems like we are getting over paid, but other times problems arise, so you take the good with the bad. Just like in real estate, sometimes houses sell immediatley, before you have done much work at all and other times you work your ass off and put in lots of time and money to sell a house. You collect your 6% whether the sale was easy or hard.

24 Steve Crossland December 29, 2009 at 4:00 pm

Hi Mike and Mark,

Thanks for your comments. The comparison between appliance servicing and real estate sales isn’t a valid comparison.

> You collect your 6% whether the sale was easy or hard.

Actually, we get paid zero most of the time. We weed through a lot of buyers who never buy, and thus provide a lot of information and services for people who never pay. We can’t charge a service call and get compensated for every trip we make and every bit of service we provide. The successful transactions subsidize the uncompensated efforts because the consumer will not accept fee for service in real estate.

But a group of property managers was lamenting this topic just earlier this month. We continue to be charged higher and higher rates for services that don’t measure up to what we received 15 or 20 years ago. Part of it is the cost of parts and the poor quality of modern appliances. But a larger problem are the book rate companies that don’t understand the value of a good, low hassle repeat client and instead are happy to charge too much for one job and then never hear from us again.

Steve

25 Dean Landers December 29, 2009 at 4:43 pm

Hi Steve,

I have enjoyed the back and forth on this issue.

I would offer a couple of comments to what you and your other property management friends have expressed:
Unlike most appliance service businesses from 20 years ago, today most are actually run as legitimate businesses. That is to say that they know what their cost of doing business is and what they need to charge in order to stay profitable.
Appliances have a tremendous amount of electronics and require a great deal more knowledge (IE training) than ever before.
There are a larger number of repairs that require multiple electronic parts to correct the problem. This is not discovered, however until the first component is replaced only to find out that additional parts are required in order to complete the repair. This process normally involves multiple trips to the home.
Has you have pointed out, repair parts, especially the electronic components are outrageously priced.

Have a great and happy New Year!

Dean Landers
Landers Appliance, Baltimore
President, United Servicers Association
Author of “The Original Blue Book”

26 mike January 15, 2010 at 3:23 am

I disagree with hourly appliance repair and here’s why. My technician comes to my house for 70.00 and gives me an estimate. He might say the job will cost 150.00 weather it takes 5 minutes or 5 hours and the 70.00 estimate charge is waived if I have it repaired.
I have found that if the technician is slow, why should I have to pay for his speed?
I would rather have a book rate, if the technician is great he will finish faster and I can go about my day. I find that most technicians that charge by the hour go slow just to up the bill. no thanks, give me a flat rate. A great company with experienced technicians will have flat rates and they usually fix it right the first time. Hourly people for the most part are slow and inexperienced. If its a one man show that has been repairing since the 90′s he is probably great at the hourly rates, but with the newer appliances with 3 or 4 computer boards, give me a flat rate. I don’t want inexperienced technicians to waste my time. Time is money and in the long run I find that I save money using the experienced flat rate companies.

27 Steve Crossland January 15, 2010 at 12:18 pm

Hi Mike,

And if the technician then reaches under the sink, presses the reset button on your disposal (thus “fixing” it), or resets a GFI breaker that is preventing the dishwasher from running, you’d really rather pay the “book rate” $150 than the hourly service call?

Steve

28 Mike (ThermoDyne) January 15, 2010 at 5:59 pm

Mike, Your perspective can be compared with the cab driver who avoids the interstate to run up the time a bit, which I completely agree with by the way. However, If there are “great companies with experienced technitians” out there, than you must agree that some of them are hourly rate. And if you agree with that, than aren’t you saving money with the hourly rate “great companies with experienced technitians” ? It seems to me that you have decided Flate rate is better because your bill will be the same whether the tech is good or bad. This is arguablely incorect. How many return calls outside of the companies labor warranty are due to bad technitians If you are capable of finding a “great companies with experienced technitians” , Than find one with hourly rates and save money. The objective of “flate rate” was to save the COMPANY money, not the customer. So how can this objective ever benifit the customer. Flate rate is based on the highest possible cost of a repair, regaurdless of the acual cost to complete it. Furnace parts for example: An inducer motor can cost anywhere between $100 and $400 depending on the manuafacture and your local market cost. Still, you will pay what ever the company has decided you will pay (which is the highest cost)
The whole thing goes back to my earlier point. Somewhere between big city and small town is the line between Flat rate and hourly? If a small town hourly rate company has a good reputation, there is only one explination for it. They have GOOD TECHNITIANS!

29 Mike (ThermoDyne) January 15, 2010 at 6:03 pm

Now here is the spell checked version!!!

Mike, Your perspective can be compared with the cab driver who avoids the interstate to run up the time a bit, which I completely agree with by the way. However, If there are “great companies with experienced technicians” out there, than you must agree that some of them are hourly rate. And if you agree with that, than aren’t you saving money with the hourly rate “great companies with experienced technicians” ? It seems to me that you have decided Flat rate is better because your bill will be the same whether the tech is good or bad. This is arguable incorrect. How many return calls outside of the companies labor warranty are due to bad technicians If you are capable of finding a “great companies with experienced technicians” , Than find one with hourly rates and save money. The objective of “flat rate” was to save the COMPANY money, not the customer. So how can this objective ever benefit the customer? Flat rate is based on the highest possible cost of a repair, regardless of the actual cost to complete it. Furnace parts for example: An inducer motor can cost anywhere between $100 and $400 depending on the manufacture and your local market cost. Still, you will pay whatever the company has decided you will pay (which is the highest cost)
The whole thing goes back to my earlier point. Somewhere between big city and small town is the line between Flat rate and hourly? If a small town hourly rate company has a good reputation, there is only one explanation for it. They have GOOD TECHNICIANS!

30 Terry Wright June 2, 2011 at 4:12 pm

I was just ripped off by a “Blue Book” appliance repair service. They charged me $262.00 to replace a freezer thermostat. They initially wanted over $300.00 to do the job. After I protested, they dropped the price. I had no idea what a freezer thermostat costs. I looked it up after the tech left and was very upset to find that it was $20 retail. The repair took less than one half hour.

In the future, I will replace my appliances rather than give these “Blue Book” thieves any more of my money!

31 Mike (ThermoDyne) June 3, 2011 at 1:34 pm

Mr. Wright,

You are the example I was trying to point out to flat rate proponents.

If my cost on the same thermostat was $20.00, I would have charged you $60.00 (marked up for time to procure the part, risk of non payment for a non returnable part, handling any warranty replacement needed for the “one year” I would cover it’s free replacement, and of course to make a little money) If you were within 20 miles of the shop I would have charged you a $35 trip/diagnosis fee, and one hour minimum labor rate to install said part.

($60+$35+$45=$140.00)

I give you a 30 day warranty on labor to replace the part (because 30 days is usually enough to tell if you have received a defective part), and 1 year on the part itself. If it took me less than the minimum 1 hour to do the work, I still charge you $45, but I give you a credit for the remainder on your next service call. (now I have left you with an additional reason to keep my number handy)

Am I going to make money? Enough
Am I going to get rich this way? – No
Am I going to work harder to make every dollar? – Yes
Am I going to be VERY sure I fix it right the first time? – Absolutely!
Are you going to call me again? – My future literally is depending on you calling again…
Am I busy? – Good grief yes!

And if I may, Judging by how busy I am, and how many calls the office receives about how great it is to have a fair small town service guy you can trust? – People love this small town service company that charges time and materials.
(Ramble warning)
It seems to me that not only has the flat rate pricing been developed to protect the service companies, but is only desirable to the consumer because its hard to find a quality guy you can trust, regardless of what method he uses to charge.

Unfortunately companies mistake comments like the guy before us above, (paraphrasing) “I’ll take flat rate because it prevents a bad tech from running up the bill” How about not having a “bad” tech do the work. And I have some news for him. Flat rate doesn’t protect him from anything. If a job takes longer than the flat rate allows, the tech is required to add on an addition flat rate code to cover his time. You think that “bad” tech is going to say to the customer, “I have taken more time than I should putting in this part, I will explain why to my boss and I’m sure he will not reprimand me”. Nope, he will tell you some additional time will be need to complete the job and it will now cost you more.

So, thank you for you perspective and sharing your recent burglary story. Don’t get me wrong, I like money just like the next guy but, as I tried to convey to the flat rate defenders, you can’t charge every customer the worst case scenario for a service call. It has to reflect the actual repair or the customer feels robed. And to rework the flat rate books to account for individual brand names, types of equipment, and every service related variable so it IS perceived to be fair to the customer, you might as well use time and materials with a fair part mark up that makes money and is justifiable for your efforts to acquire it, etc.

32 Terry Wright June 3, 2011 at 3:59 pm

Thanks for your reply Mike. I would not have any issue with the way you presented the costs associated with the thermostat repair. The price you quoted is very reasonable. The company that I used just stated that they charged the book rate and wouldn’t show me the book. If I was able to view the book, I may have felt a little bit better about paying what I did. After finding out (after the fact) that it was a $20 dollar part, and the diagnosis and repair took all of 20 minutes, I was asking them to at least show me the damn book!

I’m glad to hear that there are still honest people out there like you. Thanks and I know that your business will do well because “word of mouth” is the best advertising. Keep your customers happy and they will pass the word.

33 Dean Landers June 8, 2011 at 6:26 pm

Terry,
I’m sorry someone used the name of the Blue Book to cover an unethical practice. As a service company claiming to use the book, the company should always have the book available to show the customer. The listed book price for an upright, frost free freezer lists a particular part number that has a retail costs of $97.03. Often times there are multiple potential part numbers and therefore prices. If the part number and price are less it is assumed the user will adjust the price accordingly. The idea of the book is to help service companies establish a reasonable labor and service charge rate. Since February there is now a new on line version that actually ties the current part number and price into the service charge and labor so that the total price is up to date. It would prevent a Blue Book user from neglecting to adjust the part price.

Mike,
You are the example of a company owner whom the book was developed for and whom I referenced earlier in this blog and have written about extensively in various trade magazines over the years. Please forgive me for my forthright approach to challenging your assertions. People are not using your company because you use time and material. They are using you because you are friendly, easy to deal with and good at what you do! Based on the charges you listed and my 30 years of experience in this industry as a service company owner and consultant, you are not able to sustain a viable business with a lettered, insured, stocked truck, workers comp and business liability insurance, telephone system, web site, administrative help including a customer service rep to answer the phone, paying rent and utilities, provide any benefits such as health insurance, retirement or paid sick and vacation time for yourself and/or your staff, get up to date training on current products, use the latest technology to insure a speedy and proper repair, and the list goes on and on. I am certain that you are not operating a typical company with the various costs I’ve mentioned. You can’t afford to! Maybe you work out of your house and don’t pay yourself rent for the part of the house you use for the business. Or you could have inherited the building you are operating out of. Maybe you work on your own service vehicle, don’t bother with liability or health insurance, or don’t have paid staff to help with the various duties of running a business. Maybe you make your own ethanol fuel, have a part time business, your wife has a high paying job, you receive a retirement income, or whatever, but I know you are cheating yourself by working for wages that are far below the costs of operating your business.

There are great tools available to help small service business owners determine what their cost of doing business is so that they can charge the appropriate rates to insure their longevity. I would be happy to talk with you about the legitimate costs associated with operating an appliance service business to help you understand your true costs.

34 Carl July 29, 2011 at 12:22 pm

I have been an appliance technician for 15 years and have worked for two companies that charged hourly and switch over to a flat rate system. In both instances the technicians, CUSTOMER, and the company the flat rate system turned out to work better. From the technician side having the ability to give an accurate estimate before starting the repairs makes you not worry about the clock and allows you to do the work required without trying to hurry the job or drag your feet. Your only concern is repairing the appliance correctly for the consumer. From my experience the customer appreciates getting an accurate estimate before the repair starts and can make an educated decision if they want the unit repaired, when I was charging by the hour this was always a difficult thing to do given, and when I had to tell a customer that I ran in to unexpected problems and the bill is now going to be more, it made for an upset customer that may never call again. From the company’s stand point it made the bottom line a little better, (trust me nobody in appliance repair has a mega-yacht) but, it also made the customer complaints go down. Nobody was calling complaining about the tech looking in his van for 10 minutes to find the part, or the time he was on the phone with a manufacturer, or God forbid he had to use the restroom. Yes these are all complaints that I have heard when charging hourly.

When working on a flat rate I believe it works out to be fair for everyone. As an example we come out to replace a fan motor in a refrigerator. Tech A is new to the trade and has never done this job and takes longer, on hourly charges the consumer will over pay. Tech B has 10-20 years experience and does the job the job quickly, on hourly charges the company loses out on profit. Tech C comes out and has 40 years experience and has the most expertise but, moves a lot slower than he used to, and the hourly charges will be more. Did the same job get done at all three jobs? Yes but, we have three different bills for the same job. What does that do for your company’s reputation when your customers compares the bills for the work done? How do you explain that to the consumer? Not an issue on flat rate.

The original poster stated that he knows what it should cost to replace a part or appliance. I beg to differ, unless you have owned a service company or been a technician you do not understand all the hidden cost of doing field work. What it sounds like to me is, you don’t have a problem with flat rates as much as you have a problem with what people charge, and don’t appreciate the years of training it takes to be a competent technician.

An other large factor that goes in to the charges is the technicians salary. While some might think we are overpaid grease monkeys, what you don’t realize is that (at least in Washington state) we can’t find qualified people to do the work, and that drives up the demand which in turn drives up the salaries.

Good luck on your search for a service company that doesn’t appreciate their value. They are out there and they usually don’t last long.

35 Mike (ThermoDyne) July 29, 2011 at 9:56 pm

Dean,

   I think we just need to agree to disagree on this one. I started my business in my house years ago yes, but now I have two trucks, two trailer, tools for both, I have a 1200 square foot office on a very busy highway with great visibility. I designed and built our sign, we trade the local radio station services for air time, we have a meager budget for advertising but we run and occasional ad,  pay rent but will be purchasing the building soon and will thus turn wasted rent into equity. I have all the tools need for HVACR and small appliance repair & installation, I have parts and some equipment inventory, I have  $2,000,000 worth of insurance, licensed, certified, qualified, and up to date on all necessary training in my field. We provide 24 hour emergency service (answered by a person day or night) I have a full time parts manager who tracks down and orders parts. As far as latest technology, i am so far beyond my competitors its not even fair. Our computer network  links two truck computers, iPads, phone system, security, GPS routing, through a custom built work order and billing system. From any of the iPads, phones, truck computers, or office computers we use to operate the business, we can locate/order parts, access all of our PDF training  manuals, service manuals, and  any other data available via the web, to ensue the customer is taken care of promptly, efficiently and with enough value for their dollar that they don’t call anyone else once they do business with us. As far as sustainability, our first years sales was 15k. Second 40k. Every year since we’ve had an average 23% increase in sales.  My salery is now in excess of 60k annually, and I see no reason for that to go anywhere but up. I have a high school education ONLY. I taught myself excel spreadsheets and built our work and billing system from the ground up. Why? because I wasn’t going to pay for someone else to do it, that would force me to raise prices,  I taught myself how to build web pages, because I wasn’t going to pay someone else to build it, that would force me to raise prices.  I don’t know if your getting my point so here it is. I make an honest living, and flat rate (in many cases)  =  customer paying more than what is fair. This is not honest, this is called SAFE. Safe for all the companies that don’t have quality techs. I make a smaller profit than those who use THE BOOK because i don’t charge a customer the worst case scenario for a repair, I charge what is fair, and in turn they reword me with more and more and more business.  I have built a successful company from nothing by charging FAIR prices for ever repair. And the customers call me back. We have more than 400 customers in our system and at least 50% are repeats. The rest will eventually be there too when they have another service need. We have more than 100 planned service customers, and if you know the business, you know that’s very good for a young company. We’ve been in business going on 5 years and are growing in the worst economy in decades. The reason why no one can agree here on what’s best is, it comes back to my original point, Find a competent repair company with competent technicians and repairs will be done right at a great value. Flat rate doesn’t make a company sustainable by increasing efficiency or making technicians smarter. Flat rate brings in more of the customers money for a repair which would cost less when compared to time and materials. Not even CARL’S reason for using flat rate makes a company sustainable. quoting Carl; ” From my experience the customer appreciates getting an accurate estimate before the repair starts and can make an educated decision if they want the unit repaired,” 
  Me again, As  we all know, being given the flat rate cost before the repair starts is no guaranty what the final price will be.  If something else is found to be a problem, the deals off. So-gone is any assurance that the customer made the correct decision to repair vs replace, all based on a flat rate price which was incorrect because the tech was either inexperience or incompetent.  Still I’m not seeing the great advantage to the CUSTOMER when all techs are equal. See, i don’t have a problem with flat rate. Its nice within a set of normal circumstances, but the prices are hiked up to protect the companies from bad techs, it doesn’t protect the customer. Back to my point. Provide a quality reliable tech, and the “flat rate” vs “time and materials” argument is over. They WON’T CARE. They will pay anything to know it’s right. What’s wrong with that. 

By the way Dean, and this comes from a tech who, after 24 years still likes my job and my customers,  sustainability was achievable long before flat rate came along, it was made possible with hard work, long hours,  and dedication, and customers recognized it. its the free market. Provide a quality product i.e., Honeywell, Copeland, etc. and you will probably be around for a long time. pick flat rate if you want, my customers just look for quality. 

Something else Dean. Don’t think some of the motivation for pushing flat rate programs has been lost on me. I like to make money too. There is so much money being made selling the flat rate systems you have mentioned. And guys like me are called low ballers and sell outs because we are the reason the flat rate companies can’t ramp up prices to the moon. I hear it at every dealer meeting I attend from my competitors. Instead of relying on their own abilities and those of there techs, they count on a priced controlled system that drives consumer costs higher and higher across the industry. Guys like me won’t prevent this, but we sure do annoy those owners who want a bigger house or more water toys. Customer choice in service companies has become so trivial they pick the company out of the yellow pages with no more conviction that when they pick one banana over another. .   Not my customers. Hundreds of my customers came from flat rate companies no more than 10 miles from my office. I have removed a quarter of a million dollars in sales from them, from one city in less than 5 years with my little old time and materials company. 
    Certainly you have realized repair costs are so high in this age of recycling that most of the time it makes more sense to throw something out than pay to prepaid it. That’s because of greed. 

   Its no secret to anyone reading this post that I prefer T&M, but it’s a little irritating to see so many people justify flat rate because “the customer knows the cost before you do the work” So do my customers. I give my customers a QUOTE. I tell them what it will cost before I do the work and they decide what to do next. And 9 out of 10 times I’m cheaper. 

36 Steve Crossland, REALTOR in Austin TX July 30, 2011 at 7:43 am

Hi Mike,

You covered it well. Since originally writing this article, I have in fact found a good appliance guy. Another husband/wife team. She dispatches and does the books, he stays in the field doing the work. I pay a service call plus time and labor for any repairs beyond a quick service call repair. He has the ok, in advance to make any needed repair within pre-established cost parameters which are pretty flexible. This works well for the vendor because he doesn’t have to call me on every job. Just fix it and bill me. You’re the expert. If he recommends replacement instead, he calls to let me know.

If we think of the flat rate system in terms of risk, all of the risk, 100%, is shifted to the customer, as well as the inflated costs. None of these guys absorb their cost overruns if the job becomes harder or takes longer. I don’t dispute that this is good for the company charging the flat rates. But, as Mike pointed out, charging fair prices and making a profit are not mutually exclusive. I think flat rate system mainly allow inefficient and poorly run companies to remain in business instead of failing like they should. It’s the “union wage” mentality of home services.

For professional customers such as property managers, who send a constant stream of business to our vendors, flat rate is a rip off. I have a good stable of all trades and they all work on service call plus labor/materials. Over the course of a year, I save my owners and clients a tremendous amount in “overcharge avoidance” by using hourly vendors. And since they are all competent professionals, and we have a relationship based on trust, I’m an extremely profitable client to have because of the stream of work and quick turnaround on paying invoices.

Steve

37 Mike (ThermoDyne) July 30, 2011 at 8:10 am

Steve,

I may have covered it well but you my friend found a way to say it far better and in much less space. I am a bit long winded and VERY passionate about my relationship with my customers, so I have taken this whole subject a bit more personally than maybe I should have. However, your response has made it worth my time.

Thank you for confirming there are still, I guess I would call them “hand shake” type of people out there. If that makes any sense?

I now rest my case!
Best to you,
Mike…

38 Dean Landers August 3, 2011 at 4:32 pm

Dear Steve and Mike and all others,
Thanks for the back and forth on this issue. I’ve enjoyed the discussion.

Mike,
As you have suggested we are going to disagree on this issue. I can show you, as I have previously offered, using your own P&L info how you are undercharging for your services.
I read your comments regarding flat rate companies as somewhat disparaging. Charging flat rate or hourly is not a barometer of whether a company is operating in an honest and forthright manner.I can introduce you to many hundreds of extremely well run, successful companies that employee master technicians while operating with the highest degree of ethical standards who charge flat rates. From what you’ve said they are very similar to your own company in most ways! I suspect the only difference we would discover under close scrutiny is that they have placed a higher value on the service they provide.
I am curious what you consider to be a reasonable pay for a fully trained master technician. Would you share that number with me?

Steve,
I am glad you have finally found a small company that meets the needs of your property management clients. As I’ve stated earlier, there are many quality mom and pop companies out there, with many still charging T & M. In fact they still make up the majority of the independent appliance service industry, although that is rapidly changing.

I trust everyone will enjoy the remainer of the summer!

39 Matt Maguire Appliance Repair Tech October 27, 2011 at 10:43 pm

I was looking for more info on flat rate pricing after I had a bad service call that wasted my time and here is how it went I diagnosed it on the phone and needed to pick up the pressure switch that was the problem. I got there and replaced the switch and while checking the operation of the water level switch I noticed that the water flow was especially bad on hot. I called the customer up and showed them here is your additional problem. It needs an inlet valve. Customer says if it needs it then change it. The valve was full of mineral deposits on both hot and cold. He asked that I take a look at the dryer because there was lint every where in the laundry room and when I was done with that he had a question about his dishwasher. So I investigate the dryer and it was full of lint and also the vent tube going out side was very clogged. The dishwasher was full of deposits also and I gave them two bottles of dishwasher magic and told them how to use the stuff I also looked at the fridge, and sampled hot water heater water because the theme seemed to be mineral deposits. I charged 78 for pressure switch 95 for the valve 10 for dishwasher magic and 125 for labor plus tax. 2 hours on a Saturday and you would have thought I brought a gun. These people should never call for help. I went through all their Appliances and gave the best service as usual. They called back and said my master plumber only charges 95 an hour. And you “basically said are Appliances are shit” (I was sorry they bought Frigidaire) but really. Had to cut their bill in half cause I insulted her appliances that all needed maintenance?? Had I know I would have never gone and really putting a stop payment on a check is so wrong after work is done. I will stay home for that. I lost money. No wondrous I can’t retire. That’s it I’m getting the book. Its a great tool and I wont have to deal with tools.

40 Mike (ThermoDyne) November 3, 2011 at 5:01 pm

Get ready for some more wind from Mike…
Welcome to the conversation Matt. As you’ve probably noticed we’ve been hashing this subject over for a few years now. I seem to be the one tech, turned owner here that still agrees that Time and Materials is the fair way to make money, and what customers would prefer 10 out of 10 if they had both completed bills side by side. Since I am to the be the reigning champion of the T&M fight, I feel it necessary that I respond to your experience, despite my plan to take the high road and bow out as the winner of this topic. (Steve’s probably the only one who will think that’s funny) Anyway, before I digress.
I will start by saying; I think your particular problem was not based in the time and materials method of charging for work. Complete and thorough communication of your charges to the customer before you even run the call has to be priority one. Now, I wasn’t there but I’ve been running service long enough to know you could have walked into a no-win situation, and some trouble was inevitable. The key is there are only two ways to handle the no-win scenario when it comes to the customer.
Your gonna lose money either way… Pick your way…
#1 You can graciously apologize for not explaining the charges properly (even if you did), and you give them a discount that makes them happy. (Even if it hurts really bad). You will lose money, but you have to remember the good part: THEY TELL TEN FRIENDS ABOUT YOUR INTEGRITY!
#2 You can grumble and complain and argue with them about the charges, then they cancel the check or cause you to give in over a threat of lawsuit or something of that nature, forcing you to let the bill slide. You will lose money from the work you did PLUS referral work because don’t forget the really BAD part: NOW THEY TELL THIRTY FRIENDS!!!
Which way do YOU choose to lose money? I know which way I would pick.
In my humble, yet experience opinion, your mistakes started on the phone. As I conceited before, I wasn’t there, but I too would have tried to diagnose the trouble as you did. I may have even given them an example of how much a pressure switch installation CAN cost, “IF THAT IS ALL I FIND” but would immediately and firmly excuse myself from any grantee of any phone estimate even being close to a final price without having my eyes on the job…
Something else I rarely find in all the verity of equipment I work on (HVAC+R) is “two problems at the same time”. Either of those components should have caused a big enough problem which would have caused the customer to call for service. How did the machine develop both problems at the same time? This is how it looks to the customer when you have replaced a part you diagnosed on the phone, without even seeing the appliance, and then tell them they now need a second part to fix it. Of course when I said RARELY find two bad parts at the same time, I don’t mean NEVER, but the customer’s perception is all that matters here. Period… If you would have reserved final diagnosis until you had eyes on the appliance, you could have figured out the total cost of the actual repair and then given that to the customer.
Let me play the customer for a second. “Are you sure the other part was needed Mr. Maguire?”
I DON’T KNOW ABOUT YOU, BUT I’M NOT PRETTY ENOUGH TO GET A GOOD CUSTOMER REFERRAL IF THAT HAPPENED TO ME… Too much doubt for the average person. If I ever heard that, my answer would be, “You know Mrs.’ Johnson, although I’m very certain my diagnosis of the first part was correct, if YOU have any doubt, I will remove that parts cost from the bill. That way you will know I have not overcharged you by installing a part you did not need.” She’s probably going to agree to pay the whole bill, but even if she takes you up on your offer, how many times is this situation going to occur. And that’s some cheap advertising right there when she has coffee with her friends tomorrow…
Another thing: Phone diagnosis is a technician’s TOOL to be prepared for as many inevitabilities as possible, in hopes of making the first trip the COMPLETION trip. Not to give the customer a QUOTE for the repair. Furthermore, I really don’t see how Flat Rate would have helped at all here either. With either method of charging you had to UP the charges when the second problem was found. The customer pays more either way. How would flat rate have helped?
One other thing I don’t get. If you told them your hourly rate for a Saturday call was $62.50 per hour, and they piled on one appliance after another for you to look at. My question would have to be “Exactly what is your issue with making $62.50 per hour.”
Here’s ME at $62.50 per hour, a home owner with both the desire to utilize my professional service, and is throwing financial caution to the wind with multiple appliance service needs…… “Well Mrs. Johnson, I have finished looking at you range, refrigerator, water heater, dryer, furnace, toilet, coffee maker, microwave, blender, George Foreman, humidifier, denture cleaner, and the malfunctioning little bell on your grandchild’s tricycle handlebar, Will there be anything else ma’am?”
I don’t care if she gives me ten more things to check; I’m callin’ home and canceling my nooner with the wife. (Yes, hypothetically I completed all that stuff before noon, AND had a nooner planned) It’s good to me Mike…
The point is, if the customer need more work done while I am there, I will do it. They will get quality work on everything I am qualified to repair, and I will decline work where I am not, but why wouldn’t I provide service to a customer that requests it simply because it’s on a different appliance. With regards to their shock at the size of the bill you left YOUR customer, it seems to me they weren’t clear you were charging $62.50 an hour for whole time you were there.
I routinely clean up after my work and have more than once had a customer tell me, “Go ahead and leave that, I can take care of that so you can get off the clock”… They know how much I charge and don’t want me running up the bill with a remedial task which they can complete just fine by themselves. (Between you and me, I’m off the clock when the job is done, not after I’ve cleaned up and have completed the paper work.) When the appliance is fixed, I’m off the clock. This allows me to have a nice conversation with, and get to know my customers without them worrying about money.
Also, If you didn’t want to stay and work, why not tell them, “Ma’am, I would love to schedule a return visit when I have ample time to spend on all of your non emergency appliance maintenance. Then we can discuss proper routines for each, and maybe even schedule seasonal checkups, but I need to attend to the rest of my emergency calls requiring immediate attention today. Would you be available on Xday” etc… That way you can complete the bill, collect, and break up what would otherwise be a large bill with less perceived value because it’s harder for customers to compartmentalize the different services you actually performed as well as we can. (Hope that makes sense) Not to mention, YOU might make it home for YOUR nooner. (One has to decide one’s own priorities…)
By the way, what’s the difference if you work on one appliance for an hour or four for 15 min. each? It seems you think four per hour make you worth more than you stated hourly rate? That would be price per appliance. This is how a flat rate book works. The logic is simple. (Example) Flat rate proponents think the customer having four appliances broken at the same time cheats the service company out of charging four trip charges and diagnosis fees. That is called GREED. After all, if they happened on different days you could justify those charges couldn’t you. Heaven forbid the customer might have a little luck to go with her misfortune and have more than one fail at the same time.
Instead of switching to flat rate, why don’t you decide how much pay your time and skills are worth, then go out and EARN it? If you think your worth more than $62.50 per hour, than charge more. (You will discover quickly if the customer agrees with you.) I think this customer has already told you they don’t… You need to evaluate that fact, and fix whatever the issue is. Flat rate will not solve your problem.
The charging of separate flat rates for multiple “same trip” appliance repairs is only one of the many points that expose Flat Rate for the greed driven enterprise it had become.
>BECOME!< Not what it was originally designed to be. It was designed for the ease of conveying the repair cost to a customer and ensuring the same fair price, for the same job, was given to everyone. It speeds up the entire repair process and efficiency means profit. Unfortunately its existence has become an enterprise onto itself, which probably nets millions in revenue for its current producers and maintainers.
I have started my own flat rate manual several times with these customer bilking properties omitted, but every time I see the same thing. The more codes you have to develop to cover the growing range of possibilities one might find on a repair, the more and more it starts to looks like Time and Materials. So why not charge $95 per hour like the pro plumber your customer seems to love so much, and let the customer decide. After all, $95 per hour is about what the flat rate charges for your work on that call would have probably worked out to.
I’m still not sure why I have taken up the T&M torch like I have, because flat rate reeks of corporate gluttony. It only makes me look better by comparison. I guess I’m just saddened at how few techs seem to even like their job, let alone be satisfied with a fair wage for their time and efforts. If we all wanted to be rich, we should have all majored in marketing and joint the scores of those achieving wealth by selling Flat Rate programs to anyone who will buy into it, regardless of proper application…
Uh oh, that came out a little bitter… Sorry… They just need to stop trying to sell it as “good for the customer.”
Next, and Reluctantly, I have to make a personal observation or I would be ignoring one of the most important parts of the repair process. "YOU". How you handle yourself, speak, look, etc. has a very large bearing on your success in this and many customer relation businesses. I have a good friend whom I know is a great tech. I trust him completely to do his best for the customer. After the customers get to know him, they love him. But he maintained a very long rock star hair due and customers couldn’t help but wonder about his abilities. (Sad but true, perception is king) He has personal skills that rival the best PR guys, but customers have to see him at work and get to know him before they are confident with him. And he loves his job as I do, and would stay all day to help Mrs. Johnson if she needed. As for you; I don’t know you, but your writing skills are not great (which isn't a crime) But it does reflect on your abilities. It has little to do with first impressions since they don't see your writing until they get the bill. However if you present yourself in the same manor, you could have a problem with representation, and not billing. I’m not Michael Crichton, but if you don’t present yourself as intelligent and capable to the customer, how can they ever perceive a good value for the work you performed. I don’t mean to presume anything about you, because all I know of you is from a short letter. HOWEVER, I can’t help but feel you are very intolerant of your job. IF you don't like your job, you should quit. Customers are uncomfortable enough having strangers in their home (who will eventually be asking for their money) for you to also throw off a bad vibe.
Another observation: I have looked up the average flat rate for all the work you mentioned and I was right, it’s scary. It’s almost double what you actually charged them at T&M. For some reason you think that having a flat rate book would have convinced them to happily turn over almost double what they already complained about. There’s a disconnect here that I can’t understand, and I fail to see what part of this equation doubles the customers perceived value of your work. Flat rate will not bring you a quicker retirement. You will… If you communicate clearly ALL possible charges and assure them you will competently and efficiently repair their appliance, and at the best possible value, cost will almost become unimportant to them. The customer already KNOWS they have to spend money for a repair. Where they have DOUBT is if it will be fixed competently and at a good value for their money.
My customers know I will fix their appliance properly, as efficiently as possible and I will warranty my work for an amount of time that will ensure the work was complete correctly. Why? Because I tell them with a great amount of conviction and confidence. Then I make sure, come hell or high water, I deliver every time. If you’ve read this blog you already know how much I charge per hour, but I will remind you. $25 diagnosis fee within the city limits and up to $65 at our 100 mile service radius limit, Repair cost is $45 per hour, Materials slightly above standard mark-up. My calendar is full and my bills are paid… I’m 41 years old and I plan on a timely retirement.
Finally a conclusion
I only speak from my own experiences and don’t claim to be a genius, but I’ve been in this business more than 24 years and I feel that affords me very solid insight into the customer and at least a little credit in the wisdom department. That being said, my personal observation of your experience would be; there is no evidence that either flat rate or T&M would have benefited either party involved any more than the other. This seems to be a simple case of miscommunication which always brings with it the possibility you’ll lose money!
MOTO : Charge a competitive price for diagnosis and parts, charge what you think you’re time and expertise is worth, and make damn sure you leave your customer thinking you’re worth more!

I wish you luck…
Mike (ThermoDyne)
The customer is always RIGHT.
The customer is ALWAYS right.

41 Dean Landers November 16, 2011 at 3:34 pm

Hi Mike and everyone else who has contributed to this discussion.

I can’t remember if you have answered this in the past but are you a one man operation?
There are at least three very distinct reasons you as a business owner (especially with multiple technicians) cannot fairly or honestly charge by the hour. You will either cheat the customer or cheat yourself. I have already written extensively in this forum on this subject. I will not continue to make the argument here in this setting . I’ve recorded a webinar challenging the “by the hour” charging method. Feel free to call or e-mail me and I’ll direct you to the webinar.

Dean Landers, President, CSM, CAT
Landers Appliance
DLanders@LandersAppliance.com or 410 682-3232 ext 101

42 Mike (ThermoDyne) November 17, 2011 at 11:11 am

Dear Mr. Landers,

With all due respect, I don’t feel you have “made the argument in this setting” at all. And this is the setting you need to make it in… Not the money hungry, oversize management that drools at the sales projections presented in your seminars. I appreciate your invitation to you webinar, and will happily attend as my schedule will permit, but I’ve already heard you argue this perspective in several different venues. In fact I am quite certain we have talked face to face. I doubt the argument will be any different. I am a capitalist and I think you have a great product to sell, when it isn’t abused. However, it will never be for EVERYONE. Bad techs, for example, cost SOMEONE money. And the flat rate hvac company won’t let it be them. Who do you think pays for bad techs? The flat rate customer does.

By the way – The way I ensure my hourly rates are fair to every customer is to lean the “unfair” towards me. I will not allow any customer to feel they have been charged unfairly. Isn’t that what it’s all about? The perception of the customer determines what they think is fair. Not your book… You book is about a service monopoly so EVERY hvac company can be profitable, have a retirement plan, fully stocked new trucks, dental insurance, etc. If anyone got in this business thinking they would live in a mansion and wear white collars, they need to wake up and smell the Freon. Your book prevents the process of natural selection. The contortion of the flat rate process, which has its place, allows crappy companies to exist alongside good ones because the customer gets the same price no matter who they call. No greater value in a service stands out. It’s a crap shoot, LITERALLY. “What crappy tech will I get this time?” Instead of putting money into training, or ride along programs, they happily send it to you so the extra cost of having crappy techs goes onto the customer’s bill.

Quote: “There are at least three very distinct reasons you as a business owner (especially with multiple technicians) cannot fairly or honestly charge by the hour. You will either cheat the customer or cheat yourself.”

Response: WHAT?

I can state my reason why T&M is fair to everyone in one sentence. “I make sure the customer perceives a good value for their money by charging them only for the time I am on the job (which includes all operating expenses, etc), a fair mark up on parts (which covers stocking, procuring, etc), and they reward me with work and subsequent financial security for the rest of my families existence.

Fair for everyone!

If you have three reasons why you statesmen is true, I have missed them in this forum completely. Why don’t you restate them one more time in simple terms here? Don’t try to drag your opposition to a webinar designed to wow people. Persuade here.

Just, don’t suggest you made your case HERE.

If you really want to convince ME, start by trying to explain (Q1) why flat rate was going to help “Matt Maguire, Appliance Repair Tech”.

Then explain again (Q2) why the customer knows the price of the repair before it starts with any more confidence than with T&M?

Is there, or isn’t there a flat rate code for unforeseen problems to be added at the techs discretion, even after the initial price has been accepted? (yes, there is) And that is where the contortion of flat rate begins. Mis-diagnosis = “I’ll need more money Mrs. Johnson.”

Try to answer those two questions if you want to convince me. It might be good practice for your next seminar, because I know from experience I’m not the only guy you’ve run into that feels flat rate is unfair to the customer.

And don’t tell me the answers are in the webinar.
That would be the salesman’s answer…

Regards

Michael Yates
ThermoDyne
HVAC+R
Heating and Air Specialist
Office/24hr Emergencies 260-701-1623
Cell 574-340-9326
email – ThermoDyne@live.com
Web – ThermoDyne.US

43 Troy Claus January 7, 2012 at 4:08 pm

@ Dean Landers
Thank you sir! Well said. I am just starting up a HVAC company and I was very frustrated reading this property mgr’s complaints. Bravo sir. I wont to copy this to refer back to if you dont mind. Id love to post this on my office wall too. I am looking for my own book and am some what over whelmed.

44 Dean Landers January 9, 2012 at 1:09 pm

Dear Mike,
Sorry for the long delay in responding to your challenge. I disagree with your assessment that I have not addressed the issues you raised. If reading from the beginning of this blog starting several years ago I think I have made my case very clearly. But to your points/challenges/questions I will do my best to give my perspective one more time.
First, let me say that I don’t care what system of charging a company uses, if a company is unethical they will rip the customer off regardless. Neither flat rates or hourly rates will protect the customer from dishonesty!
I would also state that ethical, well run, professional companies all give the customer the benefit of the doubt regardless of what charging method they employ. Customers want value, which you have identified or “perceived” as you put it that customer value is the price you charge. I would strongly disagree. Look at any statistical survey in the market place about what customers are looking for from any service related industry and price is usually listed fourth or fifth. Customers want you to at all times be professional, show up when you say you will, fix it right, and treat them and their property with dignity and respect. The perception of value is based far more on this criteria than price alone.

I had stated earlier and you cut and pasted in your response:
” Quote: “There are at least three very distinct reasons you as a business owner (especially with multiple technicians) cannot fairly or honestly charge by the hour. You will either cheat the customer or cheat yourself.”
Response: WHAT? ”
Here are the three reasons:
1} Not all technicians work at the same speed. Some are slow and some are fast. I have four technicians who have worked for me for twenty plus years and there is a significant difference in the speed with which they work. And these same technicians have specific gifts, in that some are much faster at certain repair jobs than the others. Hourly charging methods fail to address this for the sake of the customer or the company!
2) Using the hourly method of charging for your services means that inexperienced technicians are entitled to charge more since it takes them longer to do repairs than a seasoned, experienced technician. Customers definitely would prefer experience over price!
3) There are a number of jobs that take the exact same amount of time to complete but have a tremendously different amount of exposure. Here is an example: A Whirlpool dryer support package Vs a Whirlpool refrigerator relay start kit. Make a list of potential exposure related to these two jobs, from recall rates, potential food loss, water line damage, leakage, floor damage, compressor failure, etc. Charging by the hour means that you have to average these costs across all your jobs so that in the end the dryer customer will pay more than they should and the refrigerator customer will pay less. Flat rates price each specific repair according to their costs. Customers are protected from being overcharged and companies are protected from undercharging.
I will stand by the argument that flat rate pricing is the only fair way to account for all the variations that go into the appliance repair business.
Bt the way, check out our web site http://www.LandersAppliance.com and read about the specific ways we as a company provide the added value that customers are looking for. Have a great and wonderful New Year!

45 Matt Maguire Appliance Repair Tech January 9, 2012 at 6:39 pm

If you get it you “get it”. Many times customers don’t understand the expenses of being a service provider. They think there is no value in an experienced Tech until they get the other kind. Hidden costs and time for example. The drive to and from, to parts store, vehicle, employment taxes, phones, ads, inventory, insurance just to name a few. Profit is why we do what we do. If you install a 15 dollar part and charge 150 bucks that is not a rip off. Although many customers would disagree. If that’s the case then I suggest you learn to fix stuff yourself. Flat rate is the only way to survive without making customers have the perception that their not being ripped off.

46 Matt Maguire Appliance Repair Tech January 9, 2012 at 6:55 pm

Oh yeah I have a lot of repeat and referral business. I just didn’t have the flat rate book. However I know what my competition charges and the market Ares what the market bares.

47 Terry Wright January 10, 2012 at 10:01 am

Matt,

As a consumer I understand that you have “overhead” costs that you need to cover as part of the services that you provide. We are in agreement that $150 to diagnose and change out a $15 part is not a rip off. My assertion is that the “Blue Book” crooks that came out to repair my appliance wanted over $300 to do a 20 minute job to replace a $20 part. When the tech was asked to show me the “book” he refused and dropped the price down to $262.

If I could find a repair service like Mike (Thermodyne) runs, they would get my business every time. As for the “Blue Book” crooks out there, I will buy a new appliance before I give any of you another penny of my hard earned money.

No one is saying that you shouldn’t be able to make a profit, but if in fact the “Blue Book” showed a price of more than $300 to diagnose and repair a $20.00 part, this is reason enough for me NOT to use “Blue Book” companies in the future.

48 Dean Landxers January 10, 2012 at 10:48 am

Terry,

To generalize as you have is your perogative but in my opinion it would be wise to consider all the other variables a company has to offer as well as the price AND to have the company actually show the blue book to you in order to varify the price.

There are crooks in every industry. I’m sorry you happened to run into one in ours.

49 BWG January 11, 2012 at 4:51 pm

As the owner of an appliance repair company, I find this thread very interesting, and would like to throw in my 2 cents. This discussion is not really about repair servicers, its about economics, and economics teaches us new lessons on a regular basis.

Flat rate pricing isn’t going anywhere. We use it, and I can’t really imagine a business savvy service person not using it. The reason is simple. “I need my guy to show up, fix the problem, and bill me a FAIR RATE for time plus materials”. This is a quote from the original post, and it says it all. What is a fair rate? That’s a good question. The answer is the market determines the fair rate, and the market is not just homeowners and property managers, it’s repair companies, technicians, retailers, the overall economy, the season, …you name it, it has some effect on the price.

Go to your local high school and ask what they are doing to help the career path of future service technicians. They’ll look at you funny, “What career path?” your either going to college with aspirations of a high paying white collar career, or your going nowhere. “Sounds better than fixing dishwashers and refrigerators I must admit”, another quote from the original post. Very few people want to do this work, and even fewer actually can. So your left with an industry full of hacks, knuckleheads, and guys trying to rip you off. Which means when you finally find someone who is professional and knows what they’re doing, expect to pay for it. The people and companies in this industry who know they have something to offer don’t need to work cheap, and that trend will likely continue.

50 Steve Crossland, REALTOR in Austin TX January 11, 2012 at 6:17 pm

> What is a fair rate?

I agree that the market should determine rates. But that supports my position that Book Rate Vendors are simply operating as a price fixing function. It protects the weak operators and provides additional enrichment to operators who would be competitive even without the book.

Different operators can achieve different advantages based on many factors. For example, in Round Rock TX just north of Austin, they have a free brush disposal service, for both home owners and commercial users. You just have to prove residency or business address. So, a tree trimming business based in Round Rock has a competitive advantage over the guys in Austin who have to pay dump fees to dispose of trees and brush. The tax payers of Round Rock fund the free brush disposal, so they justly benefit from the lower prices that the tree vendors can charge by not having a “dump fee” as part of the bid.

If there was a bookrate pricing guide for tree vendors, should the ones in Round Rock charge those customers the full book price, or should they adjust based on the external factor of no brush dumping fees? I think they should, and they do.

It is the factors that differentiate competitors from one another that should determine pricing, not a book that tells vendors how much to charge. Bookrate pricing to me seems like a copout. It’s closer to communism than Capitalism. It cheats customers.

Steve

51 BWG January 11, 2012 at 8:03 pm

You bring up some good points. Allow me to clarify. A “blue book” is nothing more than a guideline. Telling a customer, “This book says I just HAVE to charge you $350″ , is a cop out and definately bad business, and I wouldn’t advise anyone to to that. If I were to deal with a property manager who was great to work with, I would give them some sort of volume discount, depending on the circumstances.

As far as the brush removal example, my cost of doing business is not the customer’s concern. Their concern is how my price compares with the competition, and how my service compares with the competition. If everyone in my area has the same cost advantage, it will likely reflect in lower prices for that area. They may be less than “blue book” for another part of the country. However, if only my company has the cost advantage, than it is up to me as a business person to decide how to use it. If that seems greedy, picture a service person setting his prices by how much money you have in your checking account.

In my opinion, flat rate pricing can be fair, just like an inflated hourly rate can be unfair. Yes, it does put more control in the hands of the service company, which I guess is the whole point. Why should I not benefit from my own expertise and efficiency? This is how the rest of the business world operates, and now even the lowly repair man is beginning to realize that the market sets the price, rather than the price being what a bargain hunting customer thinks is an acceptable “blue collar wage”.

52 Matt Maguire Appliance Repair Tech January 11, 2012 at 10:39 pm

My customers enjoy my service and don’t mind paying for good service.

53 Carl January 12, 2012 at 10:32 am

If you are running a one man shop I do believe you have some legitimate points for charging by the hour. I think that the argument for charging by a flat rate is a stronger one but, you have a leg to stand on in the discussion. If you are running a company with multiple technicians the only FAIR way to charge your customers is with a flat rate system. When you have multiple techs on the road you are going to have too many variables (speed, experience, age, etc) to charge all your customers fairly and consistently.

The argument that I have against charging by time even when a one man shop is this. For example you need to replace the compressor in the refrigerator, as all techs know sometimes this can be a breeze for us (trained technicians with years of experience) and the job goes smoothly and quickly. Other times you run in to problems with the tubing, soldering of a joint, installation problems, and the unit just fights you the whole way through the job. When charging by time you give the quote a head of time and when the job goes faster than expected you will most likely have the tendency to knock some money off of the bill, you are charging just for your time right? When the job runs longer than expected you more than likely will stick to your original estimate because you feel this is the fair thing to do, and you also know when telling the customer the bill come out to more than expected you may have just lost your customer in the future. I believe that it is fair to yourself and the customer to charge both customers the same rate.

The argument that charging a flat rate is unethical or some how wrong just doesn’t hold water. We are an authorized service company for numerous manufactures and guess what? They all pay us on a flat rate system. When you go to your dentist or doctor does he charge you by the hour? No, they charge by the job just like the auto body industry, contractors bidding a job, and most all other trades performing similar work that requires a high degree of skill.

What is not known very well by the general public is, that our trade is in desperate need of good quality technicians. It seems that very few people are willing or capable to do repair work anymore. To become a quality technician takes years of training and experience.

54 Troy Claus January 13, 2012 at 10:23 am

I am a flat rate HVAC contractor. Other than that difference, Dito.

55 Mike (ThermoDyne) January 17, 2012 at 12:34 pm

Matt Maguire – I still get a vibe you hate your job AND your customers, but I’m still waiting on Dean to answer my question about you benefitting from the Flat rate book on that call. And obviously not all your customers enjoy your service. Hope Dean can help.

Mr. Wright – Thank you for the supportive comments you left. Hope you are well…

Steve – 1st and 4th paragraph: Amen brother.

BWG – Welcome to the conversation, but I hope Dean Landers didn’t hear you say the flat rate book is a guideline! It is most certainly NOT a guideline. It’s no more intended as a guideline than the price on your local gas pump is merely the recommended amount you’re to pay the attendant.

Speaking as a recovering flat rate technician working for a large HVAC company, try and tell your boss it’s just a guideline when you don’t charge exactly what the book says! A company that brings in the flat rate book is likely tired of techs not charging what management think should be charged and is using flat rate to halt the judgment calls made onsite by the techs who are staring down the angry customer holding their bill. A pissed off customer likely isn’t calling you back. Management thinking is, get the money now since we won’t be coming back. Tech thinking is, a happy customer will give us more money later. (Serves to say, there are those customers that will only be happy with free, and no one wins here) Obviously any of this only applies to sane customers.

If you ever see one of those motivational posters in a tech break room that says “ASSERTIVE”, they don’t mean for you to take it seriously! The last thing management wants is for you to mess with their yearend bonus. They can blame the economy or price increases for loss of revenue, but they themselves will be held responsible for out of control, bill discounting technicians. Flat rate removes the tech from the decision making process, and the customers are to be told they will need to call the office to discuss the bill. Most will pay the overinflated bill, and not ring your bell ever again.

Flat rate is to be followed to the number. You defeat its intended purpose if you don’t. Why not just charge time and materials and make sure your charging what your worth???

By the way: If all companies in one given market place used the flat rate book, there would BE no difference between you and your competitors in that market. How do you grow in a market where you look the same as everyone else?

Carl – Your compressor example is a great one, with the many possible variables. (I’ve tangled with some I thought would put me over the edge). Handled with the flat rate book, the price is set to consider ALL those possible variables. The customer pays that worst case price. On T&M, I give the customer the best and worst case repair cost, and if approve the repair will not exceed the worst case cost given”. Most of the time, the customer is surprised when I’m closer to the low end price.

AND: If you are an experience tech, and a job takes you say five hours. Then have the confidence to tell the customer so. (Lemons into lemonade) “Mrs. Johnson, despite every obstacle I’ve encountered during this repair, my experience with the many variables that can become a factor in such an involved task has lead to a record repair time, all things considered.” Pat yourself on the back sometimes; you probably have earned it…

In either case I’m confident enough to say, if I had trouble, then most techs out there would too. And like I tell Dean down below, isn’t risk part of the business. Win some – lose some, just do your best and make sure to keep all the customers happy.

Flat rate can’t take the risk out of the jobs, it just makes the customer pay for it. Since when was that an excepted philosophy? What happened to “Do a good job, because you have to pay the price for mistakes”. NOT ANYMORE! Now the Flat rate book says, We can screw up as often as we want because screw ups are already factored into every bill, just in case we do…

PS – If flat rate WAS used as a guideline, or a “Not to Exceed” price, I could see it being useful to quote a job you haven’t done in awhile. But it’s not intended for that at all. Terry Wright’s tech who knocked $38 bucks off his thermostat install probably got an earful back at the hive. I was never popular with my boss in the subject of “Bill Adjustments” either, but I saved and brought in many many new customers by reading and responding to the signs from a customer’s disapproving scowl when quoted ridicules charges, and he knew it! I put in a lot of light bulbs at no charge, programmed a few thermostats at no charge, took salt bags from an elderly ladies trunk down to her softener and filled it AT NO EXTRA CHARGE! I know, it’s madness as well as theft from the company. No fooling. I’ve been straight faced accused of theft by my employer for not charging for a thermostat programming…

Anyway Carl, in a perfect world, and used as a “guideline”, I agree it’s not a bad AID to pricing. But it’s not a perfect world.

56 Mike (ThermoDyne) January 17, 2012 at 12:46 pm

Dean

Don’t worry about the time delay; I played a three year long on-line game of chess once.

Two specific questions posed to you Dean:
(Q1) Why flat rate was going to help “Matt Maguire, Appliance Repair Tech”.
(Q2) Why the customer knows the price of the repair before it starts with any more confidence than with T&M?

I’ve read through your response several times and can’t find specific answers to these questions. I just got a recap of your well practiced point of view. (No offence intended, you know the material and that’s good.)

You: Customers are protected from being overcharged and companies are protected from undercharging.

Me: How is this statement anything but contradictory?

Your argument has been consistent from the start. You are obviously well practiced at dispensing the information, but have you ever really sat down and thought about its contradiction. One FACT you hold among the highest, is the superior financial security and required assets assured the Service Company that uses the flat rate program. In addition you insist lettered trucks, parts inventory, insurance, phones, retirement packages etc, are all benefits secured by the implementation of the flat rate book. However…

When reduced to a simple common sense observation, you can’t deny the following statement.

Flat rate customer’s pay more money for the same services as a T&M customer.

What other conclusion can you come to? 1 and 1 does not equal 3. I don’t see any third party benefactor in your equation, putting extra money into my bank account to pay for my employee benefits package. In fact the only third party involved happens to be YOU, who would cost me a percentage of my profits to pay for your flat rate book, its updates, and certainly its annual renewals.

More money comes from more work, or greater efficiency, and there is no solid argument for flat rate being any more efficient. It will have its days, and so will T&M. I don’t even recall you pushing efficiency as a big flat rate benefit. If flat rate companies make more money, IT’S COMING FROM THEIR CUSTOMERS.

Don’t get me wrong, Sell it to everyone you can. This is still (for now) a capitalist America and I would be no less motivated to sell something I believed in too. And as you said (paraphrasing) a bad company is a bad company, and it doesn’t matter how they charge. But monopolizing the field with a master pricing structure just eliminates the customers control over what service company should succeeds and which one should fail.

It comes back to this: All things equal (or as equal as humanly possible) no customer would choose to pay MORE, if they could pay LESS.( I am however considering putting a check box near the line total on my work orders that allows the customer to donate $20.00 to the technician’s retirement fund, but I am not hopeful this will do well.)

Now I’m still waiting for your response on the last two questions I posed, but here’s at least one more in response to this statement:

YOU: 1} Not all technicians work at the same speed. Some are slow and some are fast. I have four technicians who have worked for me for twenty plus years and there is a significant difference in the speed with which they work. And these same technicians have specific gifts, in that some are much faster at certain repair jobs than the others. Hourly charging methods fail to address this for the sake of the customer or the company!

Me: You have chosen this example as a reason to use flat rate. Try not to take this the wrong way but, I’m shocked, considering your overwhelming concern for company profits, that you have failed to either train, mentor or replaced the slow guys you have representing your company. And you’ve put up with them costing the company significant profit for decades. Why would you tolerate them being so inefficient? I’m making no assumptions here. Your words were “significant difference in the speed with which they work”. Why would you do this?

Now I don’t want to get off the track here, because I don’t disagree with you. If these guys are reliable and generally competent techs, I know how hard it is to replace them. I just find it hard to believe you can’t get the slower guys up to speed to save you some money. Maybe if they were more efficient, you wouldn’t have to use the flat rate book.

UH OH!? Did I just stumble back onto my original point?

July 29th, 2011 – “Find a competent repair company with competent technicians and repairs will be done right at a great value. Flat rate doesn’t make a company sustainable by increasing efficiency or making technicians smarter. Flat rate brings in more of the customers money for a repair which would cost less when compared to time and materials.”

On that note I should again rest my case, but considering my persistent talkative nature and recent dose of some pretty strong cough suppressant (I’m quite ill today) I will press on…

YOU: 2) Using the hourly method of charging for your services means that inexperienced technicians are entitled to charge more since it takes them longer to do repairs than a seasoned, experienced technician. Customers definitely would prefer experience over price!

ME: Customers prefer value & reliability! These attributes are not guaranteed by the flat rate book. The only guarantee I see the customer getting from the flat rate book is, no matter what flat rate company they call, or technician sent to their home, they are assured to pay the worst case cost for the needed repair identified by that technician. (Who may or may not be correct on the diagnosis)

YOU: 3) There are a number of jobs that take the exact same amount of time to complete but have a tremendously different amount of exposure. Here is an example: A Whirlpool dryer support package Vs a Whirlpool refrigerator relay start kit. Make a list of potential exposure related to these two jobs, from recall rates, potential food loss, water line damage, leakage, floor damage, compressor failure, etc. Charging by the hour means that you have to average these costs across all your jobs so that in the end the dryer customer will pay more than they should and the refrigerator customer will pay less. Flat rates price each specific repair according to their costs. Customers are protected from being overcharged and companies are protected from undercharging.

Here you have stated several points that affect the company’s financial bottom line. Compounding that reality, they are not so obvious to the customer, but must be considered by the service company to remain profitable. The problem is, if you are going to make customer “A” who just needed a light bulb replaced in their freezer, pay for the POSSIBILITY that customer “B” experiences a leak after your guys installed the water line to the ice maker; you probably should ever mention that to Customer “A”.

Who are we kidding?! Based on the bill Customer “A” received for the replacement of a freezer bulb, they already suspect their paying for something other than a light bulb replacement.

FYI – I called a Local Flat Rate Company here in Berne and they quoted me charges of $129.00 to come out and change a light bulb in a residential freezer, if the tech didn’t run into any obstacles. (Of course that’s not including the price of the bulb.) Obstacles were another $40. I assume they didn’t mean frozen pizzas.

Your 3rd statement also outlines the unknown unfortunates which you believe flat rate protects the service company from. Aren’t they a part of any business? This is why you need competent techs on your team. When good techs make mistakes that cost the company money you chalk it up as inevitable human error, and do your best to make sure they don’t make the same mistake twice. Everyone I work with has earned the right to a bad day once in a while. If these are normal occupational hazards, that come with the job, (the ones you mentioned are) Personally I think your nit picking with the “exposure” of different jobs. I assume I understand you correctly; you’re talking about greater potential liability on select appliances. This is also part of the job. Buck up and take the good with the bad. Besides the big mistakes are why we have insurance. The small ones we learn, absorb and move on.

I too factor most of the same things into my hourly rates as you do into the flat rate book. This is what determines the hourly rate. That being said: Still looking for a clear advantage for the customer in flat rate pricing.

My still unwavering conclusion is: flat rate is a product marketed to service companies, at a reoccurring service charge which generates a living wage for those who created and maintain it. God Bless America! I wish I would have thought of it. But let’s not kid ourselves. The customer’s well being is not the driving force here…

57 Matt Maguire Appliance Repair Tech January 17, 2012 at 9:06 pm

No I actually love what I do and o have done many things. I don’t like when people who have no idea what it costs to have someone in their home to male a repair decides that a labor rate is to high. Its a very small percentage of people though. At that point its nice to pull a book out to show the Value of the service they just received.

58 Troy Claus January 18, 2012 at 11:49 am

@ Dean
I read half of you rather long but extremely well thought argument and I am just not swayed. I have 14 yrs exp as a tech. I am a new start up 1-17-12. I don’t want to be know as the cheep guy. There are already a couple of those and they lack luster. I know you claim a high degree of craftsmanship but you don’t in my opinion value you work enouph. Quality in anything comes at a more premium price. I want to offer the highest quality service but guess what I want ppl to pay for It. No I’m not looking to gouge or stick It’s good to be King to anyone. Far from It. I want to be independent and help others when I can. I like flat rate pricing. It allows me to be efficient and consistent. Again I will read the rest of your side but I think maybe there is two good ways to do things depending on the contractor and his market and so forth good luck

59 Mike (ThermoDyne) January 18, 2012 at 1:01 pm

Matt,

Pulling out a book with the same price as the one you just gave them (which they already argued was too high) isn’t going to change anything. The customer doesn’t care what your book says. If you charge someone $129.00 to change a light bulb in a freezer, Or $300.00 to install a $20 thermostat, they’re going to feel robbed no matter what you show them.

If you think they don’t understand why a particular appliance cost so much to repair, try explaining it to them. But If you can justify either of those repair examples (actual charges from the flat rate book) and you’d have no trouble charging someone those prices I mentioned, then you and I (and the average customer) wont ever see eye to eye. Not only that, but when they call me next time because you overcharged them, you will never get them back… I PUT IN LIGHT BULBS FOR FREE and pick up five to ten more customers for that small gesture.

Unless you have a nice little pool of rich return customers who have too much money to care about VALUE, Flat rate will eventually piss off everyone you use it with. If your just looking for a quick one time sale, then show them the book and keep up the “shut up and pay up” attitude. However, If you want return customers, you better darn well start listening to the customer who tells you their point of view on VALUE.

Sure we have to make money, but once you have alienated yourself from your local market, what then? you gonna move?

No more money to be made where you live, cause there will be no more calls!

60 Steve Crossland, REALTOR in Austin TX January 18, 2012 at 1:15 pm

> Flat rate will eventually piss off everyone you use it with

I think this is an important point to consider, given we’ve entered the age of Yelp Reviews and Angies List, etc. A small gesture such as waiving a small item such as a light bulb might just tip a customer to feeling like they want to provide a positive online review.

I can’t imagine any flat rate book customer feeling so delighted by the final bill that they go online to write a glowing Yelp review.

Steve

61 Mike (ThermoDyne) January 18, 2012 at 1:32 pm

Troy,

I agree with you. There are market places for both charging methods. However, the arguments in this forum, I think I can fairly summarize, are:

1) Is Flat rate the only way to charge fair prices without cheating the customer or yourself?
(There are many in this forum who agree the answer is NO. You and I are two of them.)

2) Is Flat rate really designed with the customer’s well being in mind?
(I say No Way, as do others here.)

Dean Landers feels he has made his case for Flat rate being the only fair way to provide service as a sustainable service company. I say he is just pushing the Flat rate product into our industry to make money, like any smart entrepreneur should do.. More power to him, I’m also suggesting he’s ABSOLUTELY incorrect to suggest you’ll not survive without it… Sounds a little desperate to me…

62 Matt Maguire Appliance Repair Tech January 19, 2012 at 6:29 pm

I will say one more time. When you get it you get it. Your not open to the point of view so why beat the dead horse? Your way works best for you so do it that way. Are you a liberal? Is there only one way to do something? You talk about Dean knowing his product and Mike you know your objection well. I’d say it would not be benefic for you to change anything. Ask your four workers if I can help you guys 10 more k per year would you guys want
this? I’m sure they would say no we want to be the low price leader. Everything is perception. And if my customers called and I told them that they were going to pay 62 an hour they will look for a 20 an ok ok this is dumb. O quit the thread. hour Guy. What do you charge? NothingWell how much per hour? No hourlyper hour.

63 Mike (ThermoDyne) January 20, 2012 at 6:25 pm

MATT,
YOU: I will say one more time. When you get it you get it. Your not open to the point of view so why beat the dead horse?
ME: If you are referring to Dean’s point of view – No, I don’t agree that Flat rate is the only way to run a successful business… And PS, I think the DEAD HORSE is the one who believes in THEIR WAY OR THE HIGHWAY!
YOU: Your way works best for you so do it that way.
ME: I absolutely will, Thank you…
YOU: Are you a liberal?
ME: Ouch, that’s mean! Besides, have ya seen a lot of Liberal Capitalist lately???? (The answer is no by the way…)
YOU: Is there only one way to do something?
ME: No, this is my point. If you read this thread completely you would know this…
YOU: You talk about Dean knowing his product and Mike you know your objection well. I’d say it would not be benefic for you to change anything.
ME: My point exactly. I see I’ve gotten through to you. My long winded tendencies have finally paid off. I have bored you into seeing my side.
YOU: Ask your four workers if I can help you guys 10 more k per year would you guys want this? I’m sure they would say no we want to be the low price leader.
ME: I can’t be positive, but I think your suggesting my guys wouldn’t mind making another $10,000 annually. While you’re at it Matt, why don’t we agree they would like $20,000 more annually. Problem is still the same. “The extra money comes from the customers who feel over charged by the Flat rate companies” Me and the boys will just live within our means, be content with our current wages and the security of consistent employment, all due to our highly competitive prices in our market.

YOU: Everything is perception.
ME: Yup…
YOU: And if my customers called and I told them that they were going to pay 62 an hour they will look for a 20 an ok ok this is dumb.
ME: ??? Are you suggesting you don’t tell them your rates? I’m confused?
YOU: O quit the thread. hour Guy.
Me:???
YOU: What do you charge? NothingWell how much per hour? No hourlyper hour.
ME: If you asking my rates: Trip charges depends on distance to call. $25 to $65 from 0-100 mile radius. Hourly residential $45.00 / Hourly Commercial $55.00 / Thermal imaging hour $125.00 per hour on site / Thermal office reporting $75.00 per hour. I charge for time on site only, and only while I am expediting a repair. Clean-up, unless part of an install, is free and off the clock.
A local residential one hour repair minus parts will cost you $25+$45=$70.00 (I know! That’s a great price!) Would you like to schedule service for tomorrow, or would you prefer yet tonight.( Same price after hours.)
I run several of these call a day and make my money with volume instead of high prices. For example: One guy only 5 calls per day brings in $7000 a month in sales. And it’s more if there not all local. Are you suggesting 3 or 4 guys bringing in that much a month can’t support a viable, sustainable service company?
And just in case the IRS is reading this, those numbers are Hypothetical ONLY! 8o)
Have a nice day!

64 Dean Landxers January 23, 2012 at 10:09 am

Mike,
You frustrate me with your assumptive statements. Let me correct some of your misunderstanding. I haven’t made any money on selling the flat rate guide in over four years. Not one penny! All of the writing I do and most of the speaking engagements are not paid. I do them at my own expense because I believe in the core of my being that it is the best for our industry. When I did make money on selling the guide it did not cover my expenses spent in promoting it. Again, I do it because it is good for our industry. There are a few people out there such as yourself that are determined to stick with what you think is a better way to run yoiur business. You are certainly entitled to do that. This is America and that one of the things that makes this country great.

I did make my case for flat rates and you have not been able to counter my points nor have you tried. You only state that I know my product well. Make your own defense of your practices and stop taking shots at flat rate pricing using inaccurate information. Go through the specific examples I raised and tell me how you handle those situations.

By the way check with your doctor, dentist. physical therapist, hospital, nursing home, auto mechanic, body shop, etc, etc, and see how they charge. Even lawyers are now developing flat rate charges for various services. Why? Because it makes sense all around!

Sadly you have made my point more clearly than I ever could have by providing the info on your hourtly charges – I can tell by the rates you have listed above that you can not be giving yourself or your staff any reasonable benefits such as health care or a retirement plan, nor can you pay competitive wages for your technical staff. . You can’t afford to! As I stated in an earlier blog with a review of your financial statements I could prove to you very specifically that you are cheating youirself AND your staff by undercharging for your services.

65 Dean Landxers January 23, 2012 at 10:14 am

Steve,
Reality check – People want good service and are willig to pay fair prices for it.

Case in point:
My company has been honored with Angie’s List Super Service Award 3 out of the last four years. We’ve won Baltimore Magazines “Best of Baltimore” 14 times over the last 20 + years.

66 Mike (ThermoDyne) February 28, 2012 at 11:27 am

Dean,

Sorry, I’ve been very busy lately and haven’t had time to respond…

Congratulations on your many honors and awards. Obviously your customers perceive your service as a good value. Additionally I completely agree with your comment to Steve, as he will likely too. Who wouldn’t agree with that statement? However, the issue is flat rate over T&M not whether or not we all agree the customer wants a good deal?… This is a little obvious.

I feel like a broken record here but your original point, which has been the core of the debate for me, was (I’m paraphrasing) you can’t sustain a viable business charging by the hour, and you are cheating yourself, employees and the customer by doing so. Flat rate is the only way.

Forgive me if I seem increasingly irritated by your arrogance but GIVE IT A REST ALREADY! The job is done without flat rate all across the country every day. And yes, by successful companies. Besides, I never said flat rate didn’t have its market. As a matter of written record above, I give an example of where it would work quite well.

Matt Maguire Appliance Repair Tech suggests I quit kicking a dead horse… I have been waiting to see if either of you were going stop trying to bulldoze flat rate opponents or actually address the particular points made to both of you. YOU MOSTLY. (I think Matt has some problems flat rate can’t solve, and probably doesn’t like me much either for MY assumptive statements.) I tried to be candid yet tactful, but after he got offensive, I am no longer concerned with tact… I have little choice but to assume certain things about his situation because he too won’t answer specific points I pose to him. I’m done wishing him good luck on his retirement and instead wishing his customers good luck with his service.

Anyway Dean, your augments have only been designed to convinced others: to have more money in my pocket, and those of my employees, I have to charge more…

Excuse me for more candor but, NO KIDDING! Like I suggested to Matt, HOW MUCH IS ENOUGH? Wouldn’t we all like an extra 10 or 20,000 a year? The problem is getting the customer to provide it…

You will NEVER convince me that flat rate is the only way to do this. If times call for it, I can legitimately raise my rates and achieve the same increase to my bottom line you have with flat rate. The difference is; I can still maintain our promise to every customer that the repair price WE give them will be for their particular repair situation ONLY, and not the worst case scenario for all who might have that same problem. And a light bulb replacement won’t ever cost $129.00. (Just one more of many COUNTER POINTS I posted that you and Matt both choose to ignore).

There’s no difference than if I went to a customer’s house and said, “This job should only take 60 minutes, but it COULD take up to 90 so I will be charging you 90 regardless of how much time it ACTUALLY takes.” Explain that part of flat rate to a customer and see if they still prefer it.

Time and materials requires the customer pay ONLY for their job and not someone else’s. Let’s face it, when a competent technician is dispatched, most of the time-consuming variables in a repair are directly related to the individual customer. Appliance age and condition, location, proper or improper use, etc. If bolts are rusty, it’s likely due to one of those circumstances. Why shouldn’t that customer pay for the extra time it takes to get that hardware loose? The customer who takes care of their appliance, uses it correctly, replaces it when it gets old and decaying, should reap the benefits of a less expensive repair where those conditions don’t slow down a tech.

If I run into a 20 year old rusted refrigerator, buried in the corner of a mudroom, with duct tape holding the door closed, it’s likely going to take me longer to diagnose and repair it. Why shouldn’t they pay for whatever extra time it takes? They have chosen this location and detrimental environment. They are the worst case scenario the flat rate charges are based on. And if it takes even longer than allowed by that code, the tech is required to apply an addition code to cover the extra time.
—————————————————
I spent 15 years billing from a flat rate book. I know how it works and what employers require, and regardless of how you describe the book’s INTENDED use, I don’t know a single company that would VOLUNTARILY stick to the original flat rate quoted if significant extra time was needed to complete a job.
—————————————————
By the way: What is the reason you won’t directly respond to any of my points? I have posed specific questions and situations like those above which are real world and likely events, yet you insist on responding, on the offensive, with large generalities about me and suggest my company is DOOMED! (My word)

YOU POSTED: I did make my case for flat rates and you have not been able to counter my points nor have you tried.

IF YOU’RE GOING TO PERSUADE, YOU HAVE TO ALSO LISTEN.

My past comments to you, those on the 17th of this month in particular, are loaded with counter points. I’ve apologized for being long winded, but you should probably go back and absorb them completely instead of making statements that are inaccurate. It’s almost like your speaking to “THE ROOM”, instead of trying to change MY mind with answers to MY concerns. (I’m sure in your mind I’m a lost cause, so your still trying to convince anyone who might read this that I am wrong and have made your case). Repeating the same thing over and over again doesn’t constitute “you making your case”. I HAVE countered your points. You choose to ignore them. Specifically your two main claims of fairness to the customer and company sustainability…
——————————————————————————————–
(RECAP FROM A RECENT POST TO YOU): “One FACT you hold among the highest, is the superior financial security and required assets assured the Service Company that uses the flat rate program. In addition you insist lettered trucks, parts inventory, insurance, phones, retirement packages etc, are all benefits secured by the implementation of the flat rate book. However…When reduced to a simple common sense observation, you can’t deny the following statement.
Flat rate customer’s pay more money for the same services as a T&M customer.
What other conclusion can you come to? 1 and 1 does not equal 3. I don’t see any third party benefactor in your equation, putting extra money into my bank account to pay for my employee benefits package. In fact the only third party involved happens to be YOU, who would cost me a percentage of my profits to pay for your flat rate book, its updates, and certainly its annual renewals. (END QUOTE)
———————————————————————————————–
What do you call that, if not a counter point, regardless of whether you personally still make money from it? Instead of answering that point, you correct my assumption that you profit from selling flat rate! (Which you admit you did, but don’t anymore) Thanks for responding to my point. Wait, NOPE I guess you eluded it again…

Q: WHY DO YOU INSIST THAT FLAT RATE IS THE ONLY VIABLE METHOD? Thousands of us make money without it every day! Stop suggesting I get rich at the hands of a flat rate monopoly. As I mentioned before, My Company is made sustainable by hard work, dedication, unbeatable rates, and by running a greater number of calls at those rates.

(Sidebar)
There was a Hamburger chain started in the Midwest called Hot & Now Hamburgers. My brother and I installed the equipment for more than 15 of these locations. Their business model was to base profit on quantity sold over price per unit. They sold a double cheese burger for 30% under what the big three sold them for. They had lines into the streets during lunch and dinner hours. They grew to 150 locations in less than two years on that Philosophy. It was so profitable that PepsiCo bought them out less than three years later. Unfortunately, PepsiCo wasted no time changing the business model to match the “KNOWN” burger joint model, and they eventually filed for bankruptcy. They looked like everyone else! (And don’t try to use a fast food menu as a successful example of flat rate cause that would look a little desperate)

I have partially integrated this into my business philosophy because of the success it brought the original owners. So far it is working. And I don’t look like my competition. I stand out among some pretty big boys around here. Again, YES I WORK HARDER FOR MY MONEY.

(Back to HVACR)
Whatever formula you used to conclude my rates are too low, obviously doesn’t apply to my market. If the sales numbers I suggested to Matt above say “unsustainable” to you, maybe you should consider trimming a little fat off your company.

Quality and fair prices increase business, Efficiency further increases revenue. (Increasing revenue by charging unfair prices, in my opinion, is the unsustainable practice)

I’m still waiting for you to justify the $129.00 light bulb, or how about $245.00 to replace a $15.00 hot surface igniter which takes less than 10 minutes to install. (My local charge for this repair is around $124.00) Cheap? No, we call it economical. Putting me out of business? Nope…

Now if you still want to debate me on my prices being too low, I will agree they are defiantly on the rock bottom side of the scale. Just quit telling me I can’t raise them without flat rate. I can, and would raise them if/when needed. Right now it’s the smart and compassionate thing to do in our current market and economy, and people will remember that when things are good. But the debate for me is not about my rates, it’s about your belief in ONLY flat rate.

And as far as YOU being frustrated with ME, Your “Assumptive statements” about MY Company and its sustainability would have caused many to get nasty with personal insults (like Matt calling me a liberal.) I’ll refrain from that kind of commentary. What I CAN’T let you get away with is ignoring the points made by those who oppose you all the while proclaiming you’ve HEARD no counter points. I’ve been to so many dealer conventions, seminars, training classes; all either interweaved with sales pitches and persuasive proponents of flat rate, or filled ENTIRELY with the subject. It’s pushed hard. And I’m always the guy with questions that never find direct answers. Seems oddly similar YOU also choose to not answer my direct questions and then suggest I never posed them?

You also suggest that I’ve misunderstood the point on “fortunes made” by those who created, maintain and sell the flat rate book. You DID make money on flat rate programs. And if you no longer do, I can only assume your version failed, or you sold the product rights to another party in the last four years. The point I was trying to restate was, flat rate proponents aren’t out to protect customers from unfair charges. They are out to make money selling their product.

Incidentally, if you choose to do something for free because you have conviction to do so, then I have all the respect in the world for people like you who try to pay it forward. But a large amount of money is being made providing flat rate programs. And they don’t have my customer’s best interest in mind! This is one of your original claims that set me off… The customer is not charged more fairly.

If I am mistaken about you profiting, than why aren’t you making money anymore? Is there a problem with the product? And if it’s now free, where can people get it? Whether I misunderstand the specifics of your financial position or not is irrelevant Dean. The point is big money is being made by those who sell flat rate programs. I can’t find a single program that STARTS under $2000.00, not including add-on data bases, multiple techs, support, updates, excel compatibility, etc. etc. etc. “Flat Rate Plus” starts at $2500.00 and goes way up from there. You know how much training can be done with the kind of money it takes to outfit a medium size service department with flat rate? Probably enough to school your “SIGNIFICANTLY SLOWER TECHS” and bring them up to speed!

If you don’t have any direct answers to my questions, or refuse to respond to my counter points, that’s your choice. But don’t pretend they don’t exist. They are legitimate concerns of the customer and should be legitimate concern of yours, if you truly care about fairness to them.

Maybe you should reconsidering your obtuse and narrow minded point of view, or take Matt’s advice and just drop it. I can at least concede that flat rate has its place. You seem unwilling or just incapable of accepting the reality that plenty of service companies will continue to operate successfully without it…

67 Dean Landxers February 28, 2012 at 2:05 pm

Mike,
I have tried to answer your questions and believe I have. I am sure you believe you have answered mine even though I don’t believe you have. It is quite obvious that neither of us is going to change the mind of the other so I am content to let the discussion between us rest.
Best wishes to you and your business.

68 Mike (ThermoDyne) February 28, 2012 at 6:42 pm

That’s good Dean
Enjoy your rest… I will then respond to the “ROOM”.

DEAN’S FIRST QUESTION TO ME: I am curious what you consider to be a reasonable pay for a fully trained master technician. Would you share that number with me?

MY ANSWER: For me to answer this question (which I felt was barely relevant to the subject) Dean would have needed to give me his definition of MASTER TECHNICIAN. If he was referring to someone fresh out of school with a diploma that reads “Master Technician” on it, they wouldn’t stand a chance against most unaccredited guys in the field. And he knows that as well as I do… Furthermore, he will be expecting too much money and I wouldn’t hire him due to lack of on the job experience. However, If he was referring to a technician with about 8 to 10 years experience who can prove himself capable of handling the tasks he’s given; he should earn anywhere from $18 to $24 depending on the business’s location. $18 is closer to around here (Berne), and $24 is more what you might see 50 miles north of here in Fort Wayne.

DEAN’S SECOND QUESTION TO ME: … are you a one man operation?

MY ANSWER: No.

Those are the ONLY two questions Dean asked me in the entire post. My neglect in answer them shouldn’t have prevented him from answering mine. And one of them I thought was pretty well answered within the context of the conversation.

Dean may have forgotten, he came here to this post almost three years ago to defend flat rate. Steve Crossland was merely saying he was done with book rate venders because of the way they charge. Dean has since been confronted with questions about inherent problems with flat rate that are not so easy to brush off in a forum such as this. He is probably use to a verbal public forum where he can side step the hard questions and move on to the easy ones. Here, Instead of answering the negative points, he has spent the whole of this post evading direct responses to specific legitimate questions about negative aspects of Flat Rate. Here are some again…

Q1. How is flat rate fair to the light bulb customer, HSI customer, Garbage disposal customer and Thermostat customer? (All real world examples given in the post)

Q2. Explain how so many companies still survive on T&M, if Flat Rate is the only way to be fair to both the customer and yourself?

Q3. How will Flat rate help Matt Maguire, Appliance Repair Tech

———————————————-
Here are some I will answer:

(Q) How is a service company assured sustainability using the flat rate book?

(A) We’ll it’s not assured, but you make a lot more money when you charge all your customers the worst case scenario for any given repair, when only a small fraction of them have circumstances that warrant it. The rest of the money you overcharged all the other customers (who’s appliances did not require extreme measures) you keep!!! (Some might call it an insurance policy on your “significantly slower techs”) No longer will you have to worry about how slow some of them are. With Flat Rate, the customer’s bill is already inflated to cover that.

NOTE: Dean has the whit to turn this principal negative aspect of Flat Rate into a selling point!

DEAN LANDERS May 6th 2009, QUOTE “the customer is protected from unforeseen issues such as problems that are hard to pinpoint, poor manufacturer electrical diagrams and schematics, poor or non-existent technical support from some manufacturers, products that are difficult to get apart due to rust, corrosion, installation complications, hidden screw locations, and a myriad of other potential time delays in completing a diagnosis or repair” END QUOTE.

(Q) WHAT ABOUT THE CUSTOMER WHO DOESN’T NEED THAT PROTECTION? Wouldn’t they choose the cheaper bill which accurately represents the time spent on THEIR appliance instead of the maximum time a tech could spend on someone else’s? Wouldn’t a customer feel unfairly charged if they knew the real reason her bill is so high. Why can’t Mrs. Johnson just pay for a diagnosis, then (if she chooses the repair) a fair price for the part and for the time it actually took to repair HER appliance.

(A) No Mrs. Johnson, you perception of value is IRRELEVANT says the flat rate guy! You must pay for it anyway. It says so in the book.

(Q) Won’t customers notice the T & M guys charge less for the same quality for service? How do you stay competitive in a market where there are T & M guys who charge more fairly?

(A) By relying on wealthy customers who have the means to ignore such differences, the loyalty of your existing customer base who won’t question your prices, telling half truths about Flat Rate to those who do question them, and hope the T & M guy in town is convinced by the flat rate guys to switch over to flat rate.

(Q) Why can’t a company survive using T & M?

(A) Sorry I can’t answer this one. But neither can Dean…

69 Marti U. February 29, 2012 at 12:11 pm

I think there are definitely advantages to book rate for the company that uses it but I have learned a lot about how it works from the customers view also. I am a stay at home mom and I make the repair calls when something breaks. It’s obvious to me the book rate is primarily for the benefit of the repair men. Only in the rare instance that things turn bad on a repair call does it protect the customer from huge over charges. In my mother’s case however this is not true.
My mother had a part replaced in the back of her freezer. The repair man gave her a price from his repair price book and said it will not go over that price no matter what. She didn’t know how he was so sure what the problem was without checking over the refrigerator, but trusted he knew what he was doing. He spent a long time trying to get the back panel out of the freezer and finally had to bend it to get it out saying it was a common problem with GE’s. After replacing the part, which he correctly diagnosed and had in his van, he told her they would order a new back panel at no charge to her. Her refrigerator was only a couple years old so she was upset but satisfied with the offer, understanding that sometimes things go wrong. A few days later he returned to remove the damaged panel and install the new panel. This time he had no trouble taking out the panel as if he had learned the right way to do it which suggested to her it wasn’t a design flaw at all. When he gave her the bill it was higher than he had promised. He explained to her that the extra time it took to get out the original panel was not part of the original price because it was a design flaw in the unit which he could not anticipate. Confused because he said it was a common problem, she reluctantly paid the bill and later called the repair companies office. My mother has never raised her voice in her life so I know she was polite with them. They were rude and told her there was no justification for a refund or credit because they were not responsible for the way GE made their products, and she should be happy they replaced the back panel for free and didn’t charge her for a return trip. They made no money on the call and couldn’t “lose” money on it. This doesn’t convince me that book rate is for customer protection at all. They used the book rate to justify the extra charges even after she was quoted a price. Mr. Landers obviously believe in his book rate concept, but after hearing all the arguments for and against it, I will find a trustworthy company that charges me fairly for my repair and not the worst it could be. My mother would have paid the same if the repair man had been hourly, and she would have been ok with that. Yes a corrupt company will be corrupt either way, but an hour will always be an hour and they can’t charge you more than the time they spend at the rate they tell you. For me I’ll take my chances with fair and hourly rates. Someone who goes by what’s fair and not what a book dictates they charge, even if sometimes I pay for extra time due to my type and brand of appliance. I haven’t paid much attention to which way repair companies charged. I know now to look for hourly. If I want appliance insurance, I’ll buy it.

Thank you Mr. Crosland,
Marti

70 Rick Bishop June 2, 2012 at 7:38 am

You kept me interested to the end, very good write. I am an appliance repairman. Bishop and Son was founded by me in 2009. Since the beginning I have been trying to make some kind of sense of the whole pricing structure. A set hourly amount seems plausible. Although I have not bought into the whole flat rate thing, I understand it is a formula which varies depending on your geographics and demographics. But it also uses your company size and other such information to help establish your company’s overhead factor. Some jobs I have priced competitively close to what I know most companies are charging in my area.
When you take your car to the mechanic’s shop, they have been using a blue book to establish time estimates and prices for decades. I really don’t know just how long. I’m 53 and it was in effect when I was a kid I know for sure.
I do recall having my chevy pickup worked on when I was 19 years old. I needed it for work and so the cost of repair was like the double edged sward to the fact I was not making any money while the truck was down. My mechanic revealed to me what the time and price was for this repair by the book. The amount of time they allowed was about three times what the job would take him. Lucky for me he gave me the discount!
Just the same, I don’t want to gouge any one but I need to earn more than one man’s wage in order to stay in business. A few customers ask what my hourly rate is but most of my customers would be frightened off by the information. Hourly rate is only good when the guy charging you is giving you the product for the time spent.
You make reference to the plumber who charges you an honest price and who looks at these other things while he is there. Now that is someone after my own heart. He conducts himself like an honest professional. Not only do you get worry free service but he knows besides influencing his customers by his practices he will occasionally find extra work for himself.
As a young man I worked as a piece worker in Finish Carpentry. The piece rate prices were based on what was expected of a man to carry out a specific job. By investing in the best tooling and by studying all the moves involved with your job you could exceed their expectations and make some real bank. I’m glad that when my production was up that I wasn’t getting paid for the time I spent.
I think really what you have described here is the work ethic and honesty factor in your vendor. If he’s got both of those going for him you will get your monies worth regardless of his billing structure.
I read the part where you gave a dollar amount in regard to a service call fee but you never mentioned the hourly amount your plumber was charging? Personally, I do not charge a fee for simply showing up. I charge for diagnosing machines, Only if the customer declines the repair. The diagnostic fee is waived with your authorized repair.
As the owner of my company and being the honest person I am, I could be the appliance repairman you are looking for but we may not be within close proximity.
We are living in an age where those with good ithical values are scarce. I have written our creed on a page in my website that I believe sums it up; http://www.bishopandsonappliancerepair.com/never-compromise-personal-integrity-for-monetary-gain/

71 Mike (ThermoDyne) June 2, 2012 at 8:29 am

Mr. Bishop,

Your creed sums up perfectly the relationship I try to cultivate with every one of my customers. If we credit you as the source, may we use it for ourselves? I have spent a large part of this blog trying to say it better, but I’ve failed to sum it up so well. Either way, it’s well said! (And I also sleep well at night.)

Best to you…

Mike Yates
ThermoDyne

72 Dean Landers June 2, 2012 at 8:34 am

Well stated Rick! I love your creed!
The Major Appliance Service National Job Rate Guide was designed as a guide for the industry. Intergrity and honesty are the platform every business should stand on and also be judged by. Dishonest companies come and go (unfortunately sometimes reemerging under a new name). The companies that provide real value stand the test of time by retaining existing customers and gaining new ones through referrals because of a job well done! Keep up the good work. I’m sure you will be blessed for your efforts!

73 Rick Bishop June 3, 2012 at 4:28 am

Thank you to both of you, Dean and Mike.
You both give me honor!
Mike,
Although I am flattered by your request, please understand that Our Creed was written from my heart and is “Our Creed” for Bishop and Son Home Appliance Repair,llc. Words are used to express ideas, concepts and feelings. Perhaps you could pull from your own feelings and be inspired by my conceptualization and with a little practice your own words will come together for you. I have noticed many large corporations have come up with their mission statement. Well, Our Creed is my mission statement. I wish you the best with your company and feel free to drop me a line at bishopenterprise@gmail.com, any time. I am good with words and perhaps with some examples from you, I could help you with the presentation of your own statement.

Dean,
It is an honor to have happened onto this thread and to have received your communication! I am new to this industry but I know of you, your accomplishments and the United servicer’s Association which was introduced to me when I first began learning appliance repair in 2007.

It has been interesting in reading this heated debate. I am impressed by your pros and I can see that although your words have fallen upon deaf ears to those who oppose you still they will ever remain in their form of literary prowess in cyberspace.

How do I go about getting the publication for flat rate?

74 Dean Landers June 4, 2012 at 9:13 am

Rick, I have a Mission Statement that I developed over 15 years ago that came from the same place as yours, my gut! I read it aloud every month at our company meetings as it helps me and everyone else stay focused on the end goal of satisfying our customers with real value.
Congratulations on starting your own business. I pray you experience tremendous joy in the endeavor!

http://www.ApplianceBlueBook.com

Let me know if I can be of help to you or any one else you know that is in this industry.
DLanders@LandersAppliance.com

75 Julian June 13, 2012 at 9:54 pm

So many misnomers where to start. How about the beginning. The difference between flat rate pricing and by the hour pricing structure have absolutely positively nothing to do with the quality of service provided.

My history I am a home owner and have had servicers do work in my home. I spent 10 years in the parts industry and have developed relationships with many appliance technicians and have talked to them about business strategies as well as some of their rate pricing structures. All before becoming a technician. So I have an interesting perspective.

I have heard many customers whine and complain about the price of a 10 to 15 dollar plastic knob claiming that the knob should only cost 2 dollars tops. Then in the same sentence complain about the high gas prices not realizing that oil is what plastic is made of. The point is there is a disconnect between perceived value and real value.

So allow me to lay out some different business models that I have personally experienced.
1. Company A had a large add in the yellow pages has huge overhead and no “official employees” They have contractors to avoid having to pay the expense of having employees. They have no pricing structure. They pull numbers out of their head and it’s always high. Their contractors are on commission so the more they charge the more they make. They don’t have uniforms they don’t provide health care. The contractors pay for their own gas, vehicle maintenance etc. Fairly successful
2. Company B has a large internet presence uses the same contractor commission structure. They use flat rate pricing structure. Very successful
3. Company C uses word of mouth and small phone book ad made up of two people he has no business structure and is not the type of person most people would want in their home. Has no insurance always hurting for money. Makes up his flat rate prices and they are high. Struggling
4. Company D uses hourly pricing structure does a lot of work with property maintenance. Has really low rates too low. Is just himself working. No insurance, he’s so busy he’s turning away work. Does a quality job and under values his work. When he retires his company goes with him.
5. Company E uses craigslist to advertise. Knows enough to be dangerous. Doesn’t change parts if he can get away with it, he repairs. He uses the crystal ball flat rate method. Has to constantly change his phone number.
6. Company F uses a variety of means to advertise uses flat rate billing. Has employees has company vehicles, pays for gas, has insurance, retirement program quality technicians who have to pas a drug test and background check before being hired on.
successful company

Who would you rather have doing your work the prices will vary based on business model/structure as well as quality of work varies based on the knowledge and integrity of the person. The point I am trying to make here is Steve is trying to make an argument against flat rate billing by saying that flat rate people charge everything alacarte and that is not flat rate. And in the same note he expects a flat rate price. Well the disposal should only cost $180 dollars instead of $300 to install. If your pay by the hour technician charged you $180 to install a disposal and next week charged you $250 and said the pipes were deteoriated and it took him longer because he had to replumb some more pipe you’d freak out And i in a month you had him come out and do another one and he charged you $195 you’d look at your bills and say his guy is all over the place with his pricing. Same guy same job same service different costs different unexpecteds.

Someone posted..
The perception of the customer determines what they think is fair.
Infering that the customer determines what rate is fair. Fair is simply this cost/benifit. The guy who was pissed that he was charged $300 to fix his refridgerator to find out that the part costs 20$. You didn’t pay for a $20 part and 20 minutes of labor. You payed for an appliance doctor to come out to your house, diagnose, and repair your machine. That 20 dollar part that you probably had no idea what it was or how much it cost before he showed up. And you agreed to the repair. You could have easily have said no paid the diagnostic fee and done it yourself. At which point you take on the burden and risk if it isn’t the only problem, or if something else arises. Cost $300/ Benifit not having to buy a $1,000 refridgerator not having to go through the hassle or training to have to learn how to do the job yourself. What else did he do while he was there. Did he clean your condencer coils to make sure your refridgerator was running at its optimum levels. Did he defrost your evaporator and service your evaporator drain or at least cool down the thermostat and kick it into a defrost cycle.

What was his overhead Did he have a huge phone book ad or internet presence. All of these things play a factor in cost not just how they bill.

Steve
There’s a reason why your company that you used disappeared they undervalued their time and service by charging to little and didn’t have anything that was worth anything to pass on the man was the company. People who undervalue their work are usually busy so busy that they have no time and in the end have little to show for their work knowledge and skill.

These waters are too muddy with quality and service ethics bleeding into the flat rate vs hourly debate.

76 Mike (ThermoDyne) June 14, 2012 at 6:41 pm

Julian,

Don’t you see that Flat rate IS the mud in the water! Flat rate helps the unethical companies coexist with ethical ones. (When both use flat rate) The customer gets ripped off by both of them the same. The customers are left to throw darts at a board… No competitive edge for anyone, and all survive…

Enter the Time and materials guy who becomes everyone’s hero, charging only for the time spent on the job. (The way it’s supposed to be) But according to Dean, we’re all just lined up for failure. The truth is, the enlightened customer will pick the time and materials guy every time. Our charges directly reflex the repair and this can be seen right on the bill. Not mixed into a flat rate total with God knows what added. (he might not even know)

Let me throw a couple of quotes your way from this blog; First from Steve Crossland’s original rebut to Dean Landers.

“what I’ve observed is that the “flat rate” is only flat for easy jobs. Once a problem is incountered, the vendors want to add on to the price and blame it on something they failed to ascertain or notice before quoting the price. So, the flat rate floats up, but never floats down on easy quick jobs”

UNETHICAL!

Now one from yours truly;

Flat rate “was designed for the ease of conveying the repair cost to a customer and ensuring the same fair price, for the same job, was given to everyone. It speeds up the entire repair process and efficiency means profit. Unfortunately its existence has become an enterprise onto itself, which probably nets millions in revenue for its current producers and maintainers. I have started my own flat rate manual several times with these customer bilking properties omitted, but every time I see the same thing. The more codes you to develop to cover the growing range of possibilities one might find on a repair, the more and more it starts to look like Time and Materials.”

So why not increase your hourly rate to cover all expenses of running a successful business like it’s been done for years. (Because with flat rate you can have more than it takes!) And the more companies that use flat rate, the easier it is to inflate cost even more. And the customer pay for it all not understanding how it’s justified and believing there’s no alternative. And then guess what? We start thinking we’re Doctors and Layers and can have anything we want.

You already know what I’m gonna say don’t you? Yup… UNETHICAL!

Reality check people! IF YOU GOT IN THIS BUSINESS TO GET RICH, YOU’RE A DOPE! Give it try, maybe you’ll make it. But don’t be surprised if flat rate fails to deliver, and don’t blame us T&M guys.

So Julian, do you know a successful HVAC companies that charge T&M and would pass your sniff test as Industry survivors? For that matter, what’s your definition of a “Successful HVAC company”?

PS – Here a business model you missed.

Hourly pricing.
Word of mouth/occasional local radio ads.
Company owned trucks trailers etc.
Company paid gas.
Retirement plan and benefits.
Properly Insured
Highly experienced
Highly Trained
Well Supplied
Cutting edge efficiency
Growth of our customer base to 400 plus in our first five years
Average annual sales increase 20%
ZERO technician complaints

Yup, that’s us…

By the way, what is so wrong with hard work. So many people seem to think you aren’t successful unless you build an empire large enough you can watch it grow from your off-shore yacht.

How many time have you ever heard a customer say, “I just love the big town service I get from my service provider!”, or “I think it’s great how someone new comes out every time I call!”

Or my favorite, “$129.00 seems like a very reasonable price to change my freezer bulb; I’ll get my check book…”

Bye the way; Flat Rate vs Hourly >IS< the debate. There is no debate over Ethical vs Unethical. Unethical – BAAAD…… Ethical -GOOOOOD. Flat rate is only fair to the customer with the worst case scenario call, and only if the tech sticks to the rate they quoted. If you’re so against unethical treatment of customers, you should call it for what it is, unethical.

I guess you might argue that as long as the customer freely chooses to pay the bill it's not unethical, but every customer I've taken from a flat rate company is shocked an annoyed when the details of flat rate are spelled out to them.

And Steve explained exactly why his guy suspended his trips to his service area. (You assumed his business model was the problem) Being able to choose a life of "Fishing Guide" over repair tech doesn't strike me as a failure due to a bad business model. Its success, likely from adequate retirement contributions as a result of a GOOD business model, and treating people like Steve fairly for almost 20 years.

My business model has also caused me to reconsider our 100 mile radius. We have taken so many customers from the two "Big Guys" in town that we have less and less of a need to travel so far to fill our schedules. The profit margin keep rising as our fuel cost plummet and we're looking into building an even bigger building than we had earlier planned to buy. I am working day and night at times to cover the work load until it’s the right time to take on another tech. I couldn't be happier the way things are going.

…Not trying to gloat here, just reinforcing my point that Flat Rate is not the FAIR way to charge customers, which they recognize when it's explained to them, so how can it be the ethical way? (Or what Dean call the ONLY way)

Mike Yates
ThermoDyne

77 Dean Landers June 15, 2012 at 8:01 am

Julian,
I appreciate your outlining of the various company types. There could be another 6 or so addded to the list but yours is a fairly descriptive picture of our industrry.

Mike,
I’ve made my points already and believe they speak for themselves. I will not repeat them.

What I will repeat is something I’ve seen time and time again in working with many different companies over the years. If you have a set of ethics and stand on integrity the customer recieves a great value and will continue to support your business regardless of how you structure your charging system. There is no substitute for doing the right thing the right way to the best of your ability!

78 Mike (ThermoDyne) June 15, 2012 at 5:18 pm

Dean,

I wasn’t asking you to recap your points. I was responding to Julian points.

You’ve made it clear what you believe, but everyone who’s read this blog knows you haven’t answered MY questions. I even made it easy for you and narrowed my long winded comments down to a few direct questions. (The same type of questions I never get answers for when talking to a flat rate guy). You’ve avoided them by saying you ALREADY answered them, but made the mistake of choosing a written forum for spinning.
(All one has to do is READ IT…)

Regardless, We have already agree our fiercely apposing opinions are solidified. I’m just a little confused at the statement you just made to me about integrity. It’s a complete contradiction to the statement that set me off and got you in my cross-hairs in the first place.

You’ve maintained from the start that the flat rate book was the only way to have a sustainable service company and told me I couldn’t survive for long with the rates I was charging. Then your assumptions as to why my company was able to operate at all were completely wrong.

And then you told me this…

Dean Landers Quote Nov. 6th 2011
“There are at least three very distinct reasons you as a business owner (especially with multiple technicians) cannot fairly or honestly charge by the hour. You will either cheat the customer or cheat yourself.”

Now you tell me this?

Dean Landers Today
“If you have a set of ethics and stand on integrity the customer recieves a great value and will continue to support your business regardless of how you structure your charging system.”

What happen to the old Dean who says you “cannot fairly or honestly charge by the hour”?

???

79 Dean Landers June 18, 2012 at 9:35 am

Mike, Mike, Mike,

I’ve answered your questions and have clearly stated as best I am able the mind set behind using a flat rate system. I believe in it and you don’t. Therein lies the problem.

I am not now and never want to be trying to convince people who disagree with my philosophy in appliance service pricing. You are in business and can run your business any way you deem appropriate. You seem bent on wantring me and others to agree with your points. I don’t so there is no sense in continuing to hash it out to try and convert the other to our own position.

I wish you the best of success.

80 Mike (ThermoDyne) June 26, 2012 at 5:05 pm

You should be a politician Dean…

First just to clarify; I’m bent on pointing out your evasive and misleading argument.

YOU seem bent on arguing your point about flat rate with only a well rehearsed sales pitch, and without any real answers when questioned about its ethical use. When you get stuck with the hard questions, you side step and redirect. You do it in person, and so do all the other flat rate guys I’ve listened too.

I find it very annoying when someone refuses to give a direct answer to a direct question. It’s evasive, and that doesn’t look good in anyone’s book. To me it means one of two things. The answer is either unknown to them, or the answer is detrimental to them or their argument.

I have spent three years participating in this forum listening to you peddle flat rate and insist it’s the only way to charge a customer fairly. (Awfully inflammatory to those of us who charge hourly, especially in a public forum coming from a man who wields your credentials).

I have soundly defended an hourly charging structure from your attempt to right it off as unfair to our customers and part of a faulty business model. I have given you realistic questions and concerns regarding the bloated charges and unethical use of flat rate which reflect real customers concerns, real situations, and are even reflected in some of the comments posted by others in this forum. You have been asked direct questions about specific circumstances that make the flat rate look pretty unfair, and despite the written record above being absence of any direct answers, you insist you’ve answered all my questions?

NOW, after towing the flat rate line with all the crap about it being the only way to sustain a company, you have the nerve to deny it by saying,

————————————————-

Dean Landers 6/18/2012 – “I am not now, and never wanted to be trying to convince people who disagree with my philosophy in appliance service pricing.”

————————————————-

??????????????????????????WHAT?????????????????????????

SYBIL, CAN WE TALK TO DEAN? (Laughing hysterically now) Sorry Dean I couldn’t help that one, but……. ARE YOU SERIOUS?!

Everyone following this blog knows, THAT’S EXACTLY WHAT YOU’VE BEEN TRYING TO DO!

You’ve been pushing flat-rate LITERALLY to the masses for years. Telling people, me personally, we won’t survive without it. Someone’s getting cheated when you use an hourly charging structure, Inviting several people in this forum under your wing, etc. etc. etc.

AND…

Just so we’re clear, I’ve lost count of how many times you’ve suggested (Paraphrasing) our debate has no resolution, and that you consider our discussion closed. I suggested we agree to disagree long ago, but that doesn’t mean I’m going away. I will participate in this forum as long as it’s available to ensure flat rate is understood for how it’s ACTUALLY used, and not what you CLAIM it’s for. I’ll make sure that when you suggest MY methods of charging a customer aren’t fair, that I’m close by to correct you and protect the integrity of those of us who don’t use the book. (It’s now become my own little cause to champion.)

Incidentally, I never tried to convince you of anything. I knew who I was dealing with, and knew there was no point. But if you’re honestly done trying to convince me, then stop debating me. I have asked you all the questions I needed to prove my point long ago and haven’t directed a comment at you personally for months.

If you want to defend your point further to the room, it’s your time. You should start with answering my questions. Here’s at least one point you can’t argue with; THERE IS NO VALID REASON TO CHARGE $129.00 TO CHANGE A FREEZER BULB!

—————————————————————–

QUOTE: Dean Landers May 6th, 2009/CUSTOMER PROTECTION WITH FLAT RATE- “the customer is protected from unforeseen issues such as problems that are hard to pinpoint, poor manufacturer electrical diagrams and schematics, poor or non-existent technical support from some manufacturers, products that are difficult to get apart due to rust, corrosion, installation complications, hidden screw locations, and a myriad of other potential time delays in completing a diagnosis or repair.”

—————————————————————–

Good God Man! — What light bulb catastrophe has been factored into THIS flat rate code that could possibly justify $129.00 charge?

And that’s just one of many that are simply inexcusable. And don’t give me any crap about how it pays for health benefits and stocked trucks because flat rate isn’t the only way pay for those things.

Anyway, you’re definitely stuck in a hard place.

I’ll conclude with two points.

(1) You can’t win your flat rate argument if you refuse to give straight forward answers to valid questions. Any customer making a logical choice between the two methods would want to understand all the points of BOTH. Even YOU would smell something fowl if an advocate of one of them refused to clarify a specific point, (even if you felt you had already addressed it.)

(2) Regrettably for flat rate, honest answer to those questions will only serve to point out how UN-fair flat rate is.

I have been aware of these two specifics for awhile.

(I suspect you are too or we would have some answers by now.)

81 Dean June 27, 2012 at 7:59 am

Mike,
There is only one person “bent” on this post in trying to prove their point and it is not me.
My point has been and continues to be proven every day as more amd more businessmen choose to incorporate flat rate pricing into their business.

Arguing with someone forever and ever when it is obvious we disagree seems crazy to me.. I’ve written dozens and dozens of articles on job rates and have given over a hundred seminars on the subject. You can research and find everything I’ve written about the topic I am fairly certtain that even if you attended a seminar and heard all the information in support of job rates you would still hold onto your own perspective concerning hourly charges. That is your choice. I will not spend any of my time trying to convince you of another way to run youir business. Those who hear and agree use the job rate system. Those who don’t, don’t! It is your choice.

82 Terry Wright June 27, 2012 at 8:45 am

Dean, as a customer that has been shafted in the name of the “book” I was drawn to this discussion. As a person who has seen first hand how unscrupulous alliance repair companies use “the book” to screw their customers, I would also like to emphasize your statement, “Those who hear and agree use the job rate system. Those who don’t, don’t! It is your choice.” It is also the customer’s choice to NOT use a company who charges “book” rates. I think that Mike is very passionate about his argument and I would like to reiterate that as a customer, I deeply appreciate someone who operates in the manner and mindset that he does. If I had a choice to use Mike’s company or a “flat rate book” company, Mike would win my business every time. And I would be sure to spread the word. Satisfied customers are the best free advertisement that there is.

83 Dean June 28, 2012 at 11:58 am

Hi Terry,

Thanks for giving us a chance to discuss the customer’s point of view. I totally agree that it is ultimately the customers choice.
I would argue and can point to hundreds of thousands of customers, my own company and companies all over the country where price is NOT the deciding factor in making a decision on who one will use for service. Although it may start out as being a prime factor it never ends up being so.
I appreciate Mike’s passion as well but it doesn’t mean he or anyone else, simply becuase they use hourly rates OR flat rates, runs a good business and provides the customer a real value! Please don’t think I am taking a shot at Mike or anyone else, I’m not. While you and I may appreciate his passion and commitment to how he or other companies charge, it does not equate to delivering a quality servcice product. The proof is in the end product recieved.
In rating a service company, how important is a timely appointment, a professional, well trained, multi-disciplined technician, a well stocked service vehicle, a streamlined ordering process when special order parts are needed, a solid guarantee supporting the work and protecting the customer, etc? These are the things that customers are looking for amd regardless of how a particular company structures their rates, hourly or flat rate, Their charges are probably going to be high because in order to provide this level of service you have to pay people a decent wage including benefits as well as spending money in providing the necessary tools (training, inventory, vehilces, software, technology, etc) to deliver this level of customer service.

There is no excuse for a bad company to hide behind flat rates. Don’t confuse flat/job rates with a lack of quality. They are unrelated. If you read through this entire thread you would see other industry comparisons and how customers are likely to make a decision on who they would hire to provide whatever service they are looking for, and it is not focused on price, but on quality. I’m happy to repeat some of them to refresh the discussion but will wait for your repsonse before doing so.

84 Terry Wright July 3, 2012 at 6:23 pm

Well, Mike Thermodyne) asked the question, “What light bulb catastrophe has been factored into THIS flat rate code that could possibly justify $129.00 charge?”

And my own personal experience where I was charged over $300.00 to change a $20 part?

What justifies this kind of rip off? The book does. I’d buy a new fridge before I’d hire anyone who uses “the book.”

85 Dean July 5, 2012 at 12:51 pm

Hi Terry,
The book is a tool for the industry. It is not a tool to rip people off. The book is a guide and doesn’t pretend to or try to fit every situation. No book ever could. Real life circumstances come into play and common sense must be applied.
Let’s look at the $129 light bulb replacement cost mentioned earlier. There are appliances where the light bulb is easily accessible and others that require varying degrees of product disassembly or removal in order to replace. The price guide does not list jobs that require virtually no labor. So if a light bulb needs to be replaced and can be done so without disassembly it is assumed the company would not charge labor. It is unethical to hide behind a price guide in such instances not to mention sheer insanity to offend a customer’s common sense in charging for such a simple, easy job! Customer satisfaction is the life blood of every business!

I don’t know the specifics around your $300 repair using a $20 part but let me draw on a familiar setting as an explanation. When you go to a restaurant and order a salmon entree that comes with one side for $19.95, you could purchase five times as much (or more) fish and vegetables of equal or greater quality for the same price. If you ordered a bottle of beer for $5.50 it could be purchased for $1.50. Yes, you can absolutely buy the parts cheaper yourself. The Internet affords customers the ability to purchase parts as cheap or cheaper than service companies pay for them. You are certainly going to pay a premium for the benefit of having a service company research, order and/or stock replacement parts in order to complete repairs. I don’t know of an industry or business that sells the part to the end consumer for the same price they pay for it. There are real, tangible expenses involved in parts management. I won’t address the knowledge and expertise required in repairing modern household appliances.

If you compare the prices charged by any of the national or even large regional appliance service organizations you would see they are in line with the blue book. If you compare the quality of service received from most small independent appliance service companies with those same large organizations you would find we provide a significantly improved customer experience, from speedy scheduling and parts acquisition, personalized service, longer warranties, multi-disciplined technicians, and owners who are usually available to discuss and resolve issues, if any should arise. Integrity and character are traits customers look for when deciding who they will do business with.

I will repeat something I’ve already said using other words: people want a quality service experience. Customers decisions in who they want to do business with is not singularly attached to how the service provider structures their rates. It has to do with the real value received. If the service delivery value exceeds expectations then the price charged is far less significant. If the service delivery value is below expectations than no matter what price is charged, customers will feel taken advantage of.

86 Rick Bishop July 6, 2012 at 5:25 am

What is it about flat rate that could turn it into a tool of deception, corruption, power and riches, that hourly doesn’t also have the same potential propensities for?
Who among us either doesn’t know or has never accepted the fact that big department stores prices are structured for the purpose of making a profit, and further prices are marked up to help offset losses due to shoplifting?
I have read arguments and rebuttals on this sight written by utter fools. Who is not aware of the labor unions? OOps! I forgot to give you time to change hats. So… Is everyone now wearing their “Professional worker hat?”
The same people who would complain about prices charged by an American company with workers who live right here, and have families, will more than likely go right out to Walmart to purchase the most recently produced electronics or other , “blow your skirt up”, item because it is so cheaply priced. Multi-skilled Americans who come to you and offer their expertise right in your own home should be brought under scrutiny, but the multi- billion dollar corporations that bring you low prices are just part of the status quote. Meanwhile these corporations are destroying our economy. Few people are in touch with true value in our Country any more. True value is what each of us should be offering as a matter of pride and it is what we should expect to pay for genuine American blood, sweat and tears from those of us who are work-a-day-slaves to our government and to the ideals of this country.
I for one, could rip you off using hourly labor where the rate is set too high. If I were without ethical values, I could either charge too much or I could slow down my production just to keep that hourly wage coming in., if my cash flow were down then I could just be there as a body count, and for my check!
The hourly worker must be policed by his superiors to make sure he doesn’t cheat on his time and to assure he doesn’t stop to rest too often or for too long. The hourly worker is expected to meet his quota or he will be replaced.
A man who works by piece rate must be policed to make sure he isn’t cutting too many corners on quality for the product he produces.
I have observed throughout my life that most people need to be policed because left to carry out their own agenda their greed will corrupt them. Also most of those who assign supervision over their workers do so out of greed.
When I was a young man I worked for my dad who was a General Contractor in the new housing construction industry. Among many other things my dad told me throughout his life, I will always remember his take on Builders and bidding jobs. He said that the builder already knows what it will cost each trade to get the job done right. Only a corrupt and greedy builder would ever accept a low ball from a bidding contractor. Why would you hire someone to do a job and not pay them enough to complete it?, he asked. He continued with his answer, ” The builder’s purpose was to use up what ever resources the contractor had available and then after saving lots of money and bankrupting the contractor the builder would hire another contractor to come in and finish the job. My dad made a point of never working for those builders.
I’ll get on the bandwagon against businesses that charge too much or who do poor quality work, display bad business ethics, etc. But I am here to say right now that I have encountered many abusive customers, some who were successful in robbing me of monetary value in my services.
Stand for what you believe in! A company that doesn’t make profit will go out of business. Supporting businesses which are conscientous and offer true value in service should be supported. This should be our patriotic duty.
It is just wrong to expect a good wage for what you do and then try and beat the next guy down. Everything in the Universe experiences entropy and all deeds will eventually be reckoned before God.

87 Terry Wright July 6, 2012 at 9:09 am

Rick, as strong of an opinion as I have about the appliance repair company who ripped me off, I have never attacked anyone else on this board with personal insults. I appreciate this forum to offer my experience with Flat Rate Book vendors and although I may not agree with Dean, I would never call him or anyone else a “fool.”

By the way, your statement, “I have read arguments and rebuttals on this sight written by utter fools.” In this context, the word sight should be spelled site. Now I suppose that I could call you a fool for making that misspelling, but I will not.

Thank you Dean for allowing me to voice my opinion on the subject. I steadfastly maintain that I will never use Flat Rate Vendors and although we may disagree, I respect your opinion and appreciate your civil and comprehensive response.

88 Terry Wright July 6, 2012 at 9:22 am

Also, thank you Steve Crossland for this great forum. I’ve only posted a few times but have read many pages on many different subjects which provided great insight. Thanks and keep up the great work.

89 Dean July 6, 2012 at 1:42 pm

Rick,
I appreciate your passion. Bare in mind that our responsibility to our customers is to educate by way of words and deeds. Terry represents our customer base and has provided us a means of explaining our position in a way he can understand. Although I have failed to convince him of my position, it doesn’t mean we can’t be friends. He just won’t do business with me based on my charging structure. That is okay. I am all about full disclosure and respect and value the customers right to make their own decisions in who and why they do business with me or anyone else whom they are paying to provide a service.

Terry,
I’m really sorry that you were taken advantage of by someone in my industry. If I can ever be of help to you with advice on any of your appliances in any way please contact me.

Have a great summer!

90 Rick Bishop July 7, 2012 at 1:39 am

Thank you Terry,
For your kindness and the English lesson!

91 Steve Crossland, REALTOR in Austin TX July 7, 2012 at 6:30 am

Well, one thing I’ve learned in this thread is that service repair people are a more loquacious bunch than one might have imagined. Maybe the book rate has to compensate for the time lost to chit chatting with customers! :)

Many tradesman/industries have estimating formulas and rules of thumb. That’s expected and understood. But the Flat Rate Book is not an estimating tool, it’s a charging system, designed to benefit the vendor, not the customer.

And I agree with Dean. If someone doesn’t like it, don’t use that vendor. I don’t. I’m not mad at him or anyone who runs a book rate business, but since those rates are not competitive in my market, they just won’t get any business or referrals from me. And I think that’s a missed opportunity given the number of houses I take care of and the number of referrals we provide to current and past sales clients.

I do have a new appliance guy, again. 1 man show with a well stocked van and proper insurance. He worked for 7 years for a big brand flat rate appliance company. He knows all the parts house people and how to work on everything. He now earns a higher after-tax income while charging customers a lot less than his old company did. Seems like a win/win/win for him, me, and my clients.

That said, this particular guy is articulate and able to produce professional looking invoices and manage/schedule himself efficiently. I guess he learned that running calls for the bigger company. I see a lot of guys try to go solo who crash and burn because they are poor business-people and quickly become overwhelmed by the paperwork and logistics of trying to run a business while being the sole producer of billable hours. It’s not easy to be a mom and pop. I’ll grant that.

But if the flat rate company owner is charging those high repair costs while paying employee techs as little as possible, then it hurts not only the end consumer but also the serviceman who’s being exploited.

Steve

92 Terry Wright July 7, 2012 at 11:13 am

Thank you Dean. I do appreciate that gesture and the fact that you believe in your business model. It may work for some, not for others. You have advocated your position very effectively. While we don’t agree, I do appreciate the opportunity to have the information that you provided. I’m sure that others will benefit from the discussion here. I will concede the point that my particular situation may have been an anomaly. I will apologize for painting all “Book” vendors as thieves. That is probably not the case. I’m certain that most people would have realized that I was painting with a broad brush.

Steve, well put. I don’t think that I could say it more precisely than you have. Glad to hear that you were able to find a vendor who works for you, and with you. As you have pointed out, no one is against anyone else making a profit. We just want someone who we can rely upon to give good advice, good service, punctuality and most importantly, someone who treats the customer with the importance that they deserve. Without the customer, the business wouldn’t exist. Granted, I’m sure that there are difficult customers out there. It is also the choice of the vendor not to take repeat business from people who are difficult. But it is incumbent upon the vendors and their tech’s to provide the best service for their customers if they wish to be considered for work in the future. You’ve articulated that point well. Continued strong relationships between vendors and customers is the winning model. How some people get there is more at issue. I suppose that there is no “right” way but only opinions about what “right” is. It is far more clearer what the “wrong” way is. For me, the “wrong” way would be the feeling which the customer is left with after the service was rendered. If they were left with the feeling that they were just “hosed” that was definitely the “wrong” way.

I very much appreciate being part of this discussion and wish you all well. Thank you again.

93 Mike (ThermoDyne) July 7, 2012 at 6:13 pm

Hi Steve!

That’s the nicest way I’ve ever been told I talk too much! But I am a self aware man and will take it as a compliment. Hope your well. I have some comments brewing on the office computer which will be posted soon, but I haven’t seen the office much lately with the triple digit weather we’ve been having.

Be well.

Terry,
Thank you for the kind words.
Mike…

94 Rick Bishop July 13, 2012 at 1:00 pm

Terry,
Please allow me to apologize to you and anyone else who took offense to my words. I should not join in on any argument after dragging in at the end of many successive long days.
In contrast to my earlier words, I have read many intelligent wrights from the authors on this blog in respect of their opinions.
Thank you Steve Crossland for opening the door on this argument.
Mr. Dean Landers,
Thanks for the eloquent way in which you keep it all grounded. Your words are rich.
Rick Bishop

95 Robert October 21, 2012 at 6:56 pm

Ignorance is the biggest problem in appliance repair, that is ignorance of the customer in truly believing anyone can repair an appliance. After 15 years in the profession I am still learning as appliances are changing quickly and requiring better technical skills. I have 16 years of education and 2 years of trade school on top of that and have the knowledge to know the skills required to repair appliances today put a truly trained appliance repair technician in the highly skilled trade. I would challenge Steve to put together a tool bag and attempt to diagnose and repair a front load washer or a spark ignition Whirlpool gas range. The problem in this industry is that it is not regulated and Steve could put a ‘”Appliance Repair” sign on his car and call himself an appliance repairman. Only after being thrown out of a few homes he’ll seek other employment but the damage to the industry is already done as people begin seeing all appliance technicians as a “Steve”, thus hurting the reputation of superior technicians.
Just for example,I had a tech travel to a customers home and completely disassemble a cooktop and diagnose the need for a spark module. The trip and diagnosis required a total of 1.15 hrs. The cust. watched over his shoulder and continuously asked questions. The est. was 175.00 including the part which was 27.00. The cust. agreed to the est and the tech reassembled the cooktop and left. The part was ordered and when the part arrived the cust. came to the shop complaining about being ripped off on a 27.00 part stating he could do the job himself. This is ignorance of the profession. Our company sent a qualified tech with 35 years experience to this customers home exhausting a total of 1.5 hours not to mention the required return visit as the part had to be ordered. In sum total, this job had it been completed, would have required a total of 2.5 hrs. with travel time not to mention the mileage, truck, insurance and techs hourly wage. According to the customer this was highway robbery. NOTE: This same customer was ready to buy all four igniter switches for his cooktop when he came to our parts counter but our parts professional advised that the electrical parts were non returnable and that his diagnoses sounded incorrect. We helped this customer from the beginning but due to his ignorance we were “ripping him off”.
Dean Landers’ is right. This is a low paying business but it is strictly free market and I believe in free market capitalism but after 15 years in business working 6 days a week I still cannot retire because we cannot charge rates that other industries charge such as plumbers and electricians. I definitely would not open an appliance repair business if I had it to do over……and yes Steve, I do run a tight ship and manage every dollar tightly but when cost of gas, insurance, workers comp and other expenses keep going up and your rates remain flat for several years there is little profit at the bottom. I would suggest that Steve find a retired handyman since he wants to get repairs at cost.

96 Steve Crossland, REALTOR in Austin TX October 21, 2012 at 7:19 pm

Robert,

Not sure if you’ve read through the entire thread but I’m not an appliance repairman. And I never said I don’t want to pay fair prices. The discussion is about fixed versus hourly rate charging.

Thanks for chiming in.

Steve

97 Rick Bishop October 22, 2012 at 1:23 am

Hello Steve, Robert, Dean and others,
I would like to include my position on this discussion again, as it hits home on a personal note for me.
Apples are apples and oranges are oranges but when it comes right down to the wire and your customer has already beat you down to the lowest price you can bear, and then it is a diffficult machine or a condition which is not common, this is when you get to hear the sighs of discontent and the comments and questions like, ” Are you sure you know what you are doing?” or ” Are you sure you can fix it?”
The longer I am in this business I begin to realize how ludicrous it is that people who only wanted to beat you down on price suddenly become professionals at determining whether you will be successful in repairing their appliance, yet they don’t know enough about it for me to explain the process to them. And by the way; I have always been successful in the repair, even when it cost me money!
I love technology. It is the ocassional difficult machines that come along that I live for! It is not my intention to cause any undue waiting for my customers.Although they have the option of calling the manufacturer’s authorized repairmen, from what I have seen there is no saving on time. Now let’s talk about flat rate! Every manufacturer who sends out a tech has their rates. Many charge just to have the tech show up at your door. The price then goes up from there. Then of course there is the wait time for your appointment. Some manufacturers are very tight with technical information. They think that their proprietary behavior will make them more money. their technicians bash the rest of us and boast that only they should ever touch one of their machines. These are pretty strong words coming from someone who works for one manufacturer and only knows those machines. Meanwhile the factory represented repairman is charging the customer sometimes more than 200 per cent over what we independent companies would. So if you are loud and boulsterous you should be rightfully paid more money?

Steve, you have been in the business for a long time. You are knowledgable in your field, but what is most important is you have gained practical knowledge in actually running and operating real estate and property management. Is this correct?

You should now take a cut in pay, but travel more in order to fulfill that which we expect of you. Each location you arrive at will only take you a minimum expected amount of time. Don’t dilly dally. Don’t waste time talking to prospective customers who don’t fit into your schedule, and if it comes down to it, don’t waste time stopping for lunch.Oh, and if that McDonald’s drive through isn’t on your route then don’t go out of your way. You can eat on your own time. Just remember that meeting each and every one of our expectations is the only thing important!

I have never gone into a grocery store, loaded up my cart, gone to the checkout counter and then dictated prices. On the day that I can do this I will pass my savings onto people like you,Steve.Because I know you could really use the break! I don’t tell the IRS what they are entitled to take and I always have to pay whatever the utility companies are charging. I have never been given an option in that regard, although they have been very kind in their words while telling me I was about to be shut off.

As for me, I think you must really do some soul searching to know where you have been hurting other people.
Just be kind and be fair. Dean Landers is a good man who has spent a great deal of time pondering over issues of right and wrong. He is also an enterprising man whom I admire. Regardless of the size of his company, the words on his website represent his fairness and his concern for his customers. This blog has gone on for too long and there have been some really ridiculous and abusive partakers in it.
An apple is an apple- an orange is an orange. So you really should learn not to mix the two.

I admire your prose, Robert! And I am amused by the response.

98 Mike (ThermoDyne) October 22, 2012 at 8:56 am

I was going to wait until I gat back to the office tonight to chime in, but I gotta tell you Rick, I think after those words to Steve, who has done nothing to deserve them, “abusive” is not a word YOU should use to describe others.

I also find the examples you gave of prices at the geocery store and electric bills are very amusing! No I haven’t negotiated at the grocery store over the price of a food item. The price doesn’t change at the register when it’s scanned by the little laser. (Much is the way an extra flat rate charge is added when things go ari on a service call.) Also when I am sent a bill by the electric company, I am charged for exactly the services I used and not a penny more. Even if my neighbor buys a hot tub that uses extra electricity, his extra cost isn’t factored into my bill. (Much like flat rate does when factoring in other customers equipment brands, conditions and locations.)

I have to go now. Are little T&M company matched last years sales back in July and I am VERY busy charging some VERY appricieative people by the hour to bring them great value for their money…

99 Dean Landers October 22, 2012 at 7:13 pm

Hi Mike,
I agree that we should always maintain a respectable attitude toward one another, even when we disagree. Opinions are a wondful thing. Everyone is entitled to have one.

I would suggest that your understanding of the blue book is lacking. The whole idea of job rates are to provide an upfront price and never change it regardless of whatever occurs during the repair. If someone is using it differently they are not using it as designed.
The blue book assigns cost to the products and brands where they are actually incurred. This is considered a sound business practice in most if not all types of industries and businesses
Have a great day. :>)

100 Dave November 19, 2012 at 8:33 am

Sounds like what he is looking for is a slave. A cup of coffee was cheaper 20 years ago also

101 JR January 5, 2013 at 8:45 am

This blog has been interesting to follow. We own a service and sales company that has used both flat rate and time and material pricing over the 43 years that we have been in business and have found that it really comes down to customer service. Dean has made the point over and over that the flat rate guide is just that…a guide and should not be considered the final word on any repair job. Common sense should never be left out of the equation when it comes to good customer service, price is only one piece in the customer experience pie, percieved value in the repair performed, respect of customer, their home and their time, timely repairs, good customer communication are some of the other pieces to the overall service experience. If we as servicers do well in all of these areas we will always have repeat business.

102 Mike (ThermoDyne) January 5, 2013 at 9:59 pm

JR,
 
  With all due respect, particular people in this post have repeated many things over and over and over AND OVER again. This does not mean they “MADE” their point. 

    Some in particular have insisted that flat rate was developed, and is managed, for the protection of the consumer. Furthermore, those of us who charge time and materials will not only fail, but will cheat the customer out of their hard earned money on the way to our inevitable demise. My argument, I think you will find, is that the flat rate book was designed to increase company profits by bilking the customer instead of increasing profits by providing a higher quality of service than your competition, increasing operating efficiency, employing trained techs who complete calls in a timely manor, and providing a GREATER OVERALL VALUE FOR THE CONSUMERS DOLLAR THAN YOUR COMPETITOR… And despite your opinion that the flat rate book is a “Guide”, (or others opinions claiming the price given to the customer “UP FRONT” is not suppose to change after unforeseen circumstances occur), this is in fact NOT the way the book is actually used in the field. So we can stop arguing about the intent for the book, and observe the actual use. Bilking the customer!

Only one of a hundred examples;
 
  Would you care to explain to our customers why the book tells me to charge them $535.00 to replace a  blower motor with a “Universal” replacement (Usually about $45-55 my cost)  which in 25 years has never taken me more than 60 minutes to change?
 
    If you agree $535.00 is too much for a non OEM blower replacement, please explain how I use the flat rate book to “guide” me on that call to a reasonable price that leaves the customer with the perception of value…  How does the tech adjust that price to something more reasonable? The answer is THEY DON’T. Its not allowed by service managers. Otherwise techs would do it all the time. 

ALSO – If common sense is to be left in the equation (which I think should be the LEADING factor) why not charge the customer based on their actual repair needs and particular circumstances (ie. time and materials.) To me this is the obvious way to provide the customer with a fair price for their particular repair. To apply a combination of all the other POSSIBLE variables which other customers MIGHT experience, rounded up to the highest repair price, is unfair to all the customers who have normal uneventful standard repairs.
 
   Tell that customer what it really cost to put in a blower motor and see if they ever call you again… 

ALSO – I’m done listening to others in this blog who preach to me about operating cost, insurance, stocked trucks and tech training etc. Yes they are realities, and we deal with them everyday. There’s also such a thing as an “honest days work” and bringing the customer a good value for their money. The FLAT RATE BOOK is no more responsible for bringing these things to the customer than any other charging method. It’s being used to provide a monopoly on pricing in any given market so the service companies who use it can inflate the prices unilaterally. They use it to increase revenue without actually doing anything to earn it! This is why T&M guys like me are constantly called low ballers and generally bad mouthed by flat rate guys. 

    I installed a blower two days ago; 3/4 horse, universal, and it took me most of an hour as it had a blower mounted control board (which had to be disconnected to a point to remove the blower housing). I charged $328.86. I make enough profit on this call, and the many others like it we run every day, to be a competitive place for techs to be employed and a competitive service provider. All done for more than $200 under the local flat rate guys. WHO’S GOING TO GET THE NEXT CALL, THOSE GUYS OR ME?
 
    No, I don’t have a mantion, but I didn’t get into this business to be rich. Those who are trying to get rich are in this field for the wrong reason.

    If you haven’t read this entire post I wouldn’t blame you, but if you do, or already have, you will see my consistent arguments for time and materials, and my opponents inconsistent defense of the flat rate book, acompanied by the public record of his controdictions. I don’t mention his name because it will only invite more implications that I simply don’t understand the flat rate book, my customers, and have an overal lack of business sense. 
 
Have a nice day…

103 Dean Landers January 7, 2013 at 10:03 am

Happy New Year Mike! It is nice to see you haven’t lost your zeal for your perspective. I assume the example you are using about the blower motor is related to an HVAC repair and not one I am familar with.

I understand there are zealots on both sides of this issue. If you and your customers are delighted with your company and the level of service you provide regardless of the pricing tool you use than congratulations are in order! Keep up the great work!

104 Mike (ThermoDyne) January 10, 2013 at 4:28 pm

Dean,

Happy new year to you as well.

Your statement about my Zealotry did not contain enough context to determine whether you consider yourself my Zealot counterpart. Certainly your own importunate contribution to this post could be seen as Zeal, don’t you think?

Yes the call was a furnace, and I know you probably didn’t personally have anything to do with that industry, but my observations of the actual way flat rate is used is far more accurate than you might want to admit, or I’ll grant you maybe you haven’t experienced from my perspective as a tech.

At the three major mechanical contractors I worked for in my years when the book was employed, techs got fired for straying from the book. Techs aren’t supposed to think. They are supposed to do what they are told and charge what the company has determined is fair. Calls to the office to adjust a bill for a customer are not tolerated for long because it affects the bottom line always in the “Less Revenue” way.

Soon the tech is tired of being yelled at by the customer, but far more tired of taking heat from the office, and ultimately afraid of losing their job. This will inevitably lead to “I’m sorry Mrs. Johnson, the bill is what it is, and I can’t do anything about it.”

Yes policies can be implemented to try and avoid this kind of thing, and procedures written up to make everyone feel warm and fuzzy like they have it all figured out, (I’ve seen it all) but there is no way to figure in every variable into the book, and in the end the boss says CHARGE WHAT’S IN THE BOOK! so someone is going to get screwed… Usually it’s the customer. But what can they do really, except go to the next repair guy that uses the same book and charges the same rates (which are still too high). I know you have tried, but I can’t ever see being convinced that mess is better for anyone. The customers end up bending over and taking it because what else can they do. Unfortunately this leads the service provider to think they are happy and a customer for life, when they are fed up with everyone in town.

Then someone like me shows up…

That’s what happened here where I do business. I’m like the guy in the red cape to my customers. I don’t even advertise anymore. HONESTY CHECK: What does that really tell you? How wrong can I be about my convictions? Our popularity isn’t because we’re the next new thing in town, we’re the better thing, and people talk.

Yes, Flat rate brings in more money to the corporate coffers, but does having more money always mean you provided a better service to your customer and your future existence? I think No…

Have a prosperous year…

105 Carl January 11, 2013 at 10:59 am

I can’t help but laugh when reading all of this because, the topic was brought up by, a property manager, and in all my dealings and knowledge of property managers, they charge their clients a flat rate for their services.

Mike,
I do believe both ways of charging can be fair and unfair in certain examples. I just find charging a flat rate to be the most consistent and fair. At my place of employment we trust our technicians to do what is fair for our customers and the business, I am sorry to hear you worked at other kinds of establishments. Since you seem hell bent on beating a dead horse, I ask you to answer these questions on your flawless system.

If you have a new technician how does he charge similar rates to you? Since the lack of experience will take him longer to do the job? Does he call you about every job for an estimate? How does this work with mutiple techs?

Should the customer pay more for you doing a new job (new product with a new design of the unit) that you come to find out later you could have completed faster now that you gained experience by working on more of that model?

106 Dean Landers January 11, 2013 at 12:59 pm

Hi Mike,
Yes. I see us both as zealots on opposite sides of the same issue. I stopped trying to convince you of my perspective many, many months ago :>)!
I do think I’ve made my point and I think you have made yours. We just happen to disagree. I think the discourse has been healthy for us as individuals as well as for our industry. Hopefully whatever method people decide to use they do so wholeheartedly with the understanding that it is about the quality of service they offer and value provided to the customer and not the method of charging that is ultimately most important.

I don’t know of one appliance repair company that uses the blue book as you were exposed to it on the HVAC side in your early days. I can assure you in all my writings and teachings on the subject I have never suggested total adherence. Exceptions are to be expected. That is not to say there aren’t any companies operating in this manner, just that I don’t know of any.

BTW This may surprise you but flat rates do not necessarily bring in more money as you have suggested.

I admire your passion Mike. Have a great and wonderful day!

107 Mike (ThermoDyne) January 16, 2013 at 3:36 pm

Carl,

First of all, I don’t think there’s anything in this blog from anyone that suggest flat rate is bad for all markets and all services. I think dentistry, for one, would be a good place for flat rate. Certainly there are only so many circumstances one can be confronted within the confines of a customer’s mouth. Tax preparation is another good one. There’s probably a bunch more out there. And on the other side, I’ll bet even Dean could agree there are markets out there where flat rate isn’t the right method. I don’t think he is blindly pushing flat rate at EVERY industry… I THINK I’m right there…

As for your questions about my “Flawless System” I will answer them directly. (By the way, if you want your point of view to be taken as non-bias, than you should refrain from sarcasm towards a particular side.) And for the record I said “BETTER SYSTEM” Not “FLAWLESS”. It’s not accurate to imply I suggested otherwise. On the other hand maybe you intended to display your true position. To reiterate my point of view, I AM saying Flat rate is flawed and unfair.

Your questions:
Q1) If you have a new technician how does he charge similar rates to you?
Answer: Since the lack of experience will take him longer to do the job? A tech with inadequate skills to complete a particular repair is pulled off the call and replaced with one that does, or he will stay and will be joined by that tech.

Q2) Does he call you about every job for an estimate?
Answer: If you’re suggesting every job (even a majority of jobs) he goes on would be out of his range of experience, you’re talking about someone I wouldn’t have hired in the first place. If I had someone that green, he’d be with me all the time, and then sent on calls as we felt is competence level warranted it. My son would be a good example of this if he chooses this field. But I won’t hire someone who isn’t at least MOSTLY qualified already.

Q3) How does this work with multiple techs?
Answer: I’m not sure exactly what you mean here. I have two very strong HVAC, water treatment, installation guys, I am the only HVAC+R guy, and we have a couple of labor only type guys that assist on installs or moving heavy equipment.

Q4) Should the customer pay more for you doing a new job (new product with a new design of the unit) that you come to find out later you could have completed faster now that you gained experience by working on more of that model?
Answer: In extreme cases, which are rare, I might contact factory tech support for tips on a particular type of problem and at that time also have them advise us on the expected time of repair. We won’t exceed this time when we produce a bill. But for the most part, once you have solved whatever mechanical mystery that slowed you down in the first place, you can usually look back and see for yourself how long it SHOULD have taken. That is as fair as you can get. As far as being faster as you gain experience on that particular repair, a quality tech really doesn’t need more than once to learn and retain how to repeat a special repair technique in a reasonable time frame.
————–
In an attempt to stay true to my long winded disposition, I will elaborate a bit more below on your points and questions:

The techs that do work for me are handpicked for particular calls that come in based on their abilities. Meaning I don’t send one of my HVAC guys to diagnose a commercial Ice Machine problem. I’d probably find him a few hours later rocking back and forth in the corner of the kitchen sobbing. (Sorry guys) Some of them are only qualified for HVAC work. One has no experience with commercial refrigeration, in which case he and I run those calls together. There are some calls like waste oil furnaces where I am the only guy that runs them. They are too few and far between to bother training any of my guys to do them. Liability is also too high for my taste so I do them myself.

In the case of a “NEW” appliance with a longer learning curve, we cap the hourly charge at the factory validated repair time no matter what is needed to complete it. We then explain to the customer that it’s not likely anyone will be as familiar with a brand new design as they would be with a 20 year old design, and will charge them only for the time it would have taken to repair the item minus time spent on the learning curve. This total disclosure when running a call on a newer design is ALWAYS received with immense gratitude and appreciation for our honesty.

New appliances are part of the job and are dealt with as needed, but they hardly represent more than 1 in 200 service calls and don’t justify charging every customer a repair that has another customer’s appliance learning curve factored into it. Not to mention, the savvy techs of tomorrow (like the ones WE have today) use smart phones and tablets to acquire any information on any new products we run into including troubleshooting and disassembly tips, all on-site and immediate. That’s also a pretty impressive and confidence building scene for a customer to witness. There nothing wrong with learning. Just do it with full disclosure and be prepared to replace something if you break it. Oh, and try not to break anything!

Additionally: As a factory trained tech on all Kenmore source brands, we routinely received our new product training up to a year after the first of a new product design landed on the customers door step. By then we could already tell the instructors what parts we needed to stock on the trucks to accommodate the common malfunctions the new design had.

As far as how property managers charge, flat rate may be the best way to handle this. Far be it for me to answer for Steve Crossland, but I would think that the duties and work load of a particular property, once established, are probably pretty consistent. (Not saying easier Steve by any stretch) Therefor what would be wrong with this form of charging? So I can’t say I understand your comparison, and you may have a legitimate gripe about property management rates etc., (I would love to hear what Steve had to say on this point) but I would also like to hear JUST ONE situation where flat rate is more fair to a customer than Time and Materials.

AND I don’t have to be “Hell Bent” on this subject to hold out for some straight answers. If holding feet to the fire is “HELL BENT” you and I have differing definitions of HELL BENT… A better word to describe me is indomitable.

Besides, I’m not sure why responding to each post in opposition to my point of view, makes me “Hell Bent”. Last I checked that’s the universal procedure for discussing a controversial issue. And if it’s such a dead horse, why is this the second “Most Commented” on blog at this site? I’m not having a conversation with MYSELF here…

108 Ted February 18, 2013 at 4:12 pm

I would like to respond to this thread briefly as the owner of a appliance repair business.

We use flat rate pricing for our business. Here are the facts.

We are the highest rated in our major metropolitan area on yelp Angie’s list google maps ect ect.

Flat rate pricing can be abused just like hourly pricing it doesn’t matter what model you use it’s the ethical background of the company.

To respond to Mike directly, he would be out of business in my market in months.
A master or senior tech in our area expects at minimum $38 a hour with a FULL benefits package.

Maybe your business model works in whatever rural area you are based in as evidenced in the comment that working on new equipment is 1 out of every 200 calls.

Over 40% of our business is on machines 3 years or newer and we are paying for constant training tech lines ect.

You talk about your hiring practices as if you have some great pool of appliance repair techs to choose from.

Here you are lucky to find someone who doesn’t have a criminal background to hire, and if you do manage to find someone of value you have 5 major companies all competing to hire them.

I’m sorry if I seem to be personally attacking you but I find your generlizations about flat rate pricing and companies that use it to be horribly offensive. We are a honest and ethical company that puts our customers first. However I refuse to give my employees a lower quality of life thru either low pay and cut rate insurance ect, than they deserve.

As to the OP who runs a management company and wouldn’t use a flat rate company, your loss.

We have great working relationships with all the top Managment companies in our area going the extra mile to meet there special needs and demands.

We value this relationship and show that through unbeatable customer service and lower pricing than any of our “hourly competitors” can even come close to matching.

It doesn’t matter what “system” a company uses to charge. What matters is the quality of the company you choose

109 Mike (ThermoDyne) February 23, 2013 at 6:12 pm

Ted,

I’m not offended by your remarks, and no personal attack can be inferred when it’s obvious you have missed the foundation of my argument. And when you suggested I have “generalized” about Flat Rate, I think I spit coffee out of my nose. I have been EXCRUCIATINGLY specific about my point of view. Ask any poor sap that’s managed to hang with us for the last three years… But I digress…

——————————————–

Quoting you; “It doesn’t matter what “system” a company uses to charge. What matters is the quality of the company you choose”

——————————————–

If you actually believe any part of that, explain to me why I would fail in your market so quickly?

You can’t! Your “opinion” that I wouldn’t last in your market is based on nothing more than our repair rates which you yourself seem to understand, “works in whatever rural area you are based in”. If I was in your metro market, I’m sure my rates would be higher. Technicians in our market make from $15 to $25. Nowhere near what the felons in your area make. (Sorry, that was uncalled for). And don’t give me crap about finding good people either, join the club.

In any case; what does market value have to do with T&M vs. Flat Rate? We’re talking about giving the customer a repair price that directly reflects the work completed. My point is charging the customer only for the repair THEY required, without padded the bill to protect the next guy. Let the next guy pay for his own rusty hardware or poorly designed cutting edge product with no “ease of repair” considerations. Of course the true reason for padding the bill has nothing to do with protecting the customer, but we’ll get to that later…

The argument is not the amount you charge for your services. Charge whatever you want… Pay your guys whatever you want… If your market supports higher prices, than more power to you.

The price of a repair, the cost of a good employee, and the cost to provide them good “FULL” benefits is all relative to your market. If I worked in Beverly Hills I would probably want to charge $200 for a travel charge. Who knows!? I would if I could, and I would sleep just fine at night believe me. Why shouldn’t I charge what the market will bear?

The comparison made in this post between Flat rate and Time and materials has NEVER been the price of the repair against the market place. The argument is that Flat Rate factors in of all the possible negative variables you might find on EVERY call for a certain type of repair, for EVERY customer you have, billing every call like the worst case scenario.

The flat rate method of charging rarely represents the actual work completed on MOST calls. It does however bring in a whole lot more money because you’re charging MOST customers for time and resources not even needed on MOST calls. So of course it’s popular with owners, and viciously defended when guys like me point out its faults… And I shouldn’t call them faults, I happen to believe it’s completely by design. Of course the whole thing works best with a nice monopoly. What choice does the customer have? Call you, or call one of the other companies in the area that charge flat rate. Great choices!

BUT! — If there was a T&M company in the area that charged a fair hourly rate, ONE WHICH PROVIDED THEIR EMPLOYEES WITH STOCKED TRUCK AND INSURANCE AND BENEFITS, ETC ETC ETC ETC, the educated customer would rather pay for their own needs (good or bad) than pay for the next guys “insurance policy” protecting him from the dreaded rusty bolt and lack of tech assistance on the state of the art high tech widget he thought was a smart buy! That could be compared to paying more for YOUR car battery because the next guy might have a hybrid.

While we’re sort of on that subject, let me add some clarity to another of your misconceptions. The 1 out of 200 calls refers to NEW DESIGNS, not new equipment. And even then I think Carl and I were both referring to drastic design changes that can really throw you. The exchange between Carl and me was in response to his question…

——————————————————

QUOTING CARL—
Should the customer pay more for you doing a new job (new product with a new design of the unit) that you come to find out later you could have completed faster now that you gained experience by working on more of that model?

——————————————————

And if 40% of the appliances you work on are 3 years old or newer, it sound like you’re in a very wealthy area, or have a nice deal with new construction growth. Otherwise it appears people are leaning towards buying new instead of fixing old. WOW, COULD THAT BE BECAUSE ITS GETTING TOO EXPENSIVE TO CALL A REPAIR MAN ANYMORE??? (I think I just had an epiphany)

I’m not allergic to money mind you; I just believe it should be earned. When a company has a tech work an 8 hour day, pays him for an 8 hour day, but collects 12-16 billable hours in that same day from that one tech. I call that unethical, and the money hasn’t been earned. The customers have overpaid for those services, and would have spent less at T&M for the same repair. (I of course don’t mean your company in particular. I’m sure you give back the extra 4-8 hours you bilked from that day’s customers to the tech for his timely repair)

If you think your worth more money, charge more money and stop hiding behind a flat rate. —- Tell me I’m wrong. —– If you use Flat Rate, you’re probably billing out close to twice what your guys actually work don’t you?

If you run a law practice that way, you go to prison. What is so different about the appliance service industry that makes it ethical…

Of course you aren’t obligated to answer that charge. Besides, you probably could guess there’s only one answer I would believe anyway. I’ve been through all the flat rate management training and used the product myself. it’s no secret why it’s so popular. But ethical it’s not!

I would suggest you go back and read the post with an objective mind, (but I’m betting you won’t). If you do, look for the two common denominators. All but one customer who responded to this post prefer time and materials over flat rate. All the owners like flat rate… Why? It brings in more money! I know there are some companies who share some of the overcharge with the tech in exchange for timely repairs. Maybe you’ve heard about this. Does not make it any more ethical….

I’m not going to restate any more of what is already on record, it’s obvious you either haven’t read the entire post, or are so blinded by your superb social media report card that you couldn’t see the nose on your face if your “Google Maps” depended on it. (No personal attack intended) I’m just horribly offended that with all the pro flat rate people on this post I’m still waiting for JUST ONE hypothetical where flat rate is “more fair” to a customer than Time and Materials…

JUST ONE…

110 Rick Bishop February 24, 2013 at 6:06 am

Ted,
Well spoken!
Thanks

111 Dean Landers February 27, 2013 at 4:50 pm

Mike,
Here is my two cents … again :>)
I’m sure you already understand what I’m about to say … Anyone that uses an hourly rate actually has to develop an average. This is most effectively done using a cost of doing business calculator (CODB). The CODB is actually based on all the averages within your company. Averages are exactly what Job Rates are based on! The biggest problem I’ve seen in MOST service companies who charge hourly are owners not taking the time to calculate their CODB, at least not regularly. As a result their profit margins begin to thin and since they aren’t paying attention, before long they have cash flow problems, etc. Hourly and job rates are both based on averages. As I’ve stated before, in the hourly method, your slow techs charge more than your fast techs. Is that fair to the customer? In job rates it is all averaged so that regardless of fast or slow everyone pays the same. I think it is a substantially fairer method for everyone involved.

112 J March 7, 2013 at 4:28 pm

Im sure you will not use my service either. I use the flat rate system but also have my hourly rate. Have a trip charge diagnostic flat rate too but if my customer needs prevenitive maint checks i ad them in 1/4 hr intervales. The repairs are flat rate and if their are no more repairs to be done my custo obligation is trip charge plus flat rate repair plus 15 min preven maint ck for time at laboe rate. Its a great method and i will not go back to full t&m billing. Thanks, J

113 Mike (ThermoDyne) March 20, 2013 at 11:51 am

Hi J,

Do you mind if I give you a sample repair call, and you can tell me the total cost for the repair?

If not, here are the details…

Mrs. Johnson needs you to replace the compartment bulb in her freezer, say 2005 GE Side by Side. She’s removed the food for you and has provided the replacement bulb. She’s 5 miles away. And if you could break it down to individual charges that would be great…

?

Thanks,
Mike…

114 Dean Landers March 20, 2013 at 12:09 pm

Hi Mike,
J can answer this question himself.
I have answered this question before. Although we do not list light bulb replacement in the blue book because we assume the customer would be replacing it themselves (and we would walk a customer through the process over the phone on how they can do this themselves), we would simple charge the service charge, which would be a flat $79.95.

115 Mike (ThermoDyne) March 20, 2013 at 2:00 pm

Dean,

The sample call was meant for J, but since you have joined in, What about the rest of the charges? What would the trip/diagnosis be? and then total?

116 Dean Landers March 20, 2013 at 2:24 pm

Hi Mike,
The service charge is for the trip and diagnosis and is $79.95. In the case of almost all refrigerator light bulb replacements there would be no labor charge since it is usually easily accessible and straight forward. And, as I stated most of these customers would be given instruction over the phone in how to replace the bulb themselves. If the bulb requires the removal of screws and a rear panel, there may be a labor charge of $29.95 in addition to the service charge but I can’t remember a product less than 20 years old that the bulb is not readily accessible to the customer.

117 [Harry[ Frantz Service Co March 28, 2013 at 8:55 am

Whew! Hatfields & McCoys-pistols at dawn anyone?…Mike, ya gotta listen-really listen, to what Dean Landers is trying to teach you. There is absolutely no advantage-to you, in charging T/M. You’ll always undervalue your service-always! Given that; why do it? Can only think you prefer to wear a hero hat and live on atta boys. Big deal!, Not redeemable at the supermarket. I’m of the Dean L’ school of thought, I use flat rate, know my codb, get plenty of atta boys, and make way over your salary of 60k/yr. Been doing this a looong time, still love the work. I don’t cheat anyone-give fair value at a pro rate and live on my rec/repeats; but if one can’t make a very good living at this-why bother? I don’t believe the Blue Book prices by exception, rather, it’s a composite of parts, time, expertise and risk- on average. And as an owner operator you can put the book away and check everything else in the house for free if that’s what you want to do. Nothing wrong with that as long as it’s a managed decision on your part and you feel there’s some kind of roi for it- beit just cust goodwill. I don’t care how you charge it’s nomb, but just seems silly to me when someone in ‘this our thing’ is so rigid in their thinking they end up cheating themselves and their families.

118 Mike (ThermoDyne) March 28, 2013 at 5:31 pm

Naturally you’re of the “Dean L’ school of thought” if you use flat rate Harry.

I see nothing rigid about insisting a customer is charged fairly. Obviously this is a concept you either can’t grasp or is simply not a standard you are willing to commit to. Your statement “There is absolutely no advantage-to you, in charging T/M” makes it clear who your worried about, and it’s not the customer. But you go ahead and pile on with your condescending and dismissing attitude if it helps you sleep. Your owners’ perspective and boasting about your long running success and superior income is lacking the same consideration for the “ACTUAL ARGUMENT” that all the other flat rate guy’s have chosen to ignore in this post.

And if you want me to learn something, why don’t you start with a solid explanation as to why a properly establish hourly rate for services is destine to only devalue a service company. Or better yet, why flat rate is “…the only way to be fair to everyone…”

Tow the line if you want Harry, just don’t pretend there aren’t unanswered questions here about flat rate guys grossly overvaluing THEIR services…

119 Carl March 29, 2013 at 8:39 am

Mike,

What questions do you think are going unanswered here?

Also to respond to your post to me earlier (about six post ago) I never claimed to be unbiased on the issue.

I am not sure how all your technicians work at same speed and with the same knowledge, to ensure that all your customers get charged the same rates for the same component failure.

You also say that if a technician is struggling on a call you would pull him off the job. I just don’t understand how this is reasonable solution for the customer, buisness, or the technician. If one of my newer technicians take 1 hour to do a 30 minute job the customer pays the same rate for the job. With time and material the customer will pay more. How is this fair? And don’t tell me that your greener techs are so good that they know they should have done the job in 30 minutes and charge accordingly. Newer techs have to learn on the job and by themselves in most situations to gain confidence and knowledge.

120 [Harry]Frantz Service Co March 30, 2013 at 9:47 am

Mike, Your rigidity of thinking that only a well thought out T/M rate is reasonable while a Flat Rate can never be; well thought out, advantageous to the cust’, and in all cases must be a ‘ripoff’, is silly, unreasonable and ill informed. The reason being; in most if not all cases of charging T/M a servicer will tend to devalue his time and expertise. Completely forgetting his codb and what it took to arrive at his/her level of service. She’ll start deducting time spent driving to the call, going out to the truck for a part, looking up the part, writing up the invoice-on n on. That’s all bookable time, and should rightly be charged for, it’s part of the job and part of the codb. A knowledgeable and successful servicer will, of course, not fall into that trap. Sadly, most servicers are *just* good techs. It’s quite possible you don’t fall into this catagory. I hope not. But it becomes too problematic to chance it as costs continue to go up and one still values ones time at a past rate, which since we haven’t changed we will still vaue that time on a bygone era. It’s human nature… In the dark days, before the Blue Book, which successfuly brought to the forfront this whole issue, many servicers did little but buy themselves a job. Money in one pocket-money out the other, any left over they figured they made money.Thanks to flat rate, Blue or whatever, many more servicers are able to fully partake of our bountiful consumer economy plus ‘mama’s’ happier….Re; your statement, “…..who i’m worried about……” of course i’m worried only about myself and how i can be more successful-i’m in business to maximise profits-why else would one be in a for profit business? My cust’ are just that-my cust’. While i may be on cordial terms with them they’re not my personal friends. I’m an invited contractor into their home. My only responsibility to them is a complete and safe repair. I do a good job, they’re happy, they pay me my flat rate, i leave-end of relationship until they need me again.

Using Flat Rate approach, whether ones own or anothers- such as the Blue Book, lets our hero satisfy a cust and make a decent living while doing so.

121 Mike (ThermoDyne) March 30, 2013 at 6:13 pm

Carl,

First:
If you’re going to paraphrase something I said, how about representing my whole statement and not just what you think will help your point.

My original statement you paraphrased referred to a tech that finds himself outside of his technical ability on a service call.

I SAID,

– “A tech with inadequate skills to complete a particular repair is pulled off the call and replaced with one that does, OR HE WILL STAY AND WILL BE JOINED BY THAT TECH.

OOPS! You left that part out didn’t you?

Probably because that part makes it a PERFECTLY REASONABLE SOLUTION for the customer, business, and the technician and would also make further sense to leave the less experience tech to observe the correct repair technique, allowing him to take advantage of a learning opportunity. (I would only pull him if I had a scheduling demand.) but that’s what you chose to fixate on…

——————

Your statement to me:

“If one of my newer technicians take 1 hour to do a 30 minute job the customer pays the same rate for the job.

My statement back to you:

According to Dean and the flat rate book, in your example using flat rate you would charge the customer an average of the two techs, which is 45 minutes.

HOW IS THIS FAIR if it only takes a trained tech 30 minutes? After all, this is what the flat rate book is supposed to provide all service company who uses it!

Well trained tech, well stocked trucks, yada yada yada… Why are we talking sooooo much about new techs? Aren’t all flat rate companies spending the extra revenue generated by book rates to train their “NEWER” techs and bring them to the necessary level of expertise??? (A feat only achievable with the extra flat rate revenue) Better yet, spend some of that flat rate money and just pay for “More experience techs” Instead of lining your bank account… I hired well trained techs and don’t have to worry about slow ones.

——————-

You ask:

“What questions do you think are going unanswered here?”

Here are some AGAIN! Starting with one of many examples of unethical padding of a repair bill…

(Q) How is flat rate fair to the light bulb customer?

Here is a real world situation from my past:

Freezer bulb is burned out in a side by side. The single Philips screw for the light shield is above the ice bucket deck. You have to remove the ice bucket to get to the screw. Most customers don’t know this, have the inclination to investigate, or even want to take a chance they’ll cause more problems than they already have. (I’ve been out on far too many calls where the customer couldn’t get the ice bucket back in because someone tapped the actuator pad while the bucket was out for cleaning.)

ANYWAY, for whatever reason they are not adept enough to replace it themselves, and just too stubborn to call Dean’s free DIY phone support… So they call a service guy for the burned out bulb.

Now here comes the service guy for a flat rate trip/diagnosis charge of $79.95. He spends less than five minutes changing the bulb, and charges what Dean says is the minimum service charge of $29.95. These are both Dean’s numbers (which are too low, by the way, to be current flat rate prices but are still ridiculously high enough to make my point. Dean only questioned whether the service charge would be added or not.) My answer to that is directly from flat rate training… You don’t lift a screwdriver to do ANY repair without adding a service charge to the bill which appropriately represents that repair… He wrote the Book, HE KNOWS HOW IT WORKS!

- NOW HOLD ON TO YOUR SCREWDRIVERS BOYS CAUSE THERE’S MORE! -

The established charge from the example above doesn’t include THE BULB, so technically the tech is supposed to use the “bulb replacement” flat rate charge to cover the cost of the bulb which includes the time to install it. That charge becomes $49.95 if done correctly not $29.95. (Fat rate training, in addition to management says, “If you list materials on the work order, you better have charged the associated flat rate charge for its installation!”) I think I even remember an “OR ELSE!” after that statement.

“FORTY NINE DOLLARS” Mrs. Johnson yells, “FOR A BULB!?”

(How many more bulbs you figure your gonna change at Mrs. Johnson’s house?)

Anyway. If billed properly (according to the book) the customer now has a bill for $129.90 for a bulb replacement which took five minutes to complete. You are taught to follow that book to the letter and minus a call into the office for a flat rate charge intervention by management, the only discretionary deviations allowed by a tech is adding EXTRA charges for extra work… like another $29.95 for “CUSTOMER INSTRUCTION”. This practice is heavily encouraged by management. I can still hear it, “GO AFTER THOSE ADD-ON’S GUYS”

Now, if you were willing to offer the customer in that scenario a 55 minute credit on their next service, or look at another appliance they’re having trouble with for the remaining 55 minutes, I might say you’re giving the customer what they paid for, making the company money, and retaining a customer for future work. But that is not the case. Another appliance requires another diagnosis charge, and then the flat rate for that repair is added. This way the company can bill out more hours than have actually been spent on the repair. THAT SHOULD REALLY PISS OFF ANY TECHS OUT THERE THAT STILL ONLY GET PAID 8 HOURS A DAY, BUT HAVE BROUGHT IN 12 TO 20 BILLABLE HOURS IN REVENUE FOR THEIR EMPLOYER.

There is nothing about flat rate that was designed to protect the customer. The claims of protection from rusty bolts, poor designs, Dean’s significantly slower tech, or Ted’s felons are the product of clever marketing people. Bravo gentleman!

Dean has been quoted in another on-line posts how a new tech may take 35 minutes to clean Sub-Zero condensers, and an experienced tech can complete it in 20. Then he states, flat rate is the averaging of those times out at 25 minutes which becomes the established flat rate charge. Now I won’t make a big deal about 35 and 20 not actually averaging out to 25, but I will ask this: If the job can be done in 20 minutes, why wouldn’t that be the established rate for the repair. Why is the “SLOWER” tech factored in at all??? That’s what I would charge if it took 20 minutes. Not 25… Then if you want to give incentives to your techs for meeting that time, do it…

Is this not just an effective a way to motivate your techs to produce more legitimate billable time in a day?

BUT!!!, as I said before, increasing productivity is not what the Book is actually for. Increasing the potential for billable hours in a day is… Bill out 12 to 20 hours a day – Pay techs 8…

Despite the claims that Flat Rate protects the customer from inexperienced slower techs, it does NOT. When the slower techs time is averaged into the time it SHOULD take, it DOES penalize the customer for the slower techs… This is simple math, and the double standard is amplified further by larger more involved repair codes and added charges when additional problems or misdiagnosis’s are discovered.

Carl, here are more questions of mine you apparently overlooked:

(Q) How do so many companies operate successfully on T&M if Flat Rate is the only way to be fair to both the customer and yourself? – This one was for Dean because he is adamant that I will fail if I don’t rush right over to Flat Rate and bilk my customers. (Full disclosure: I may have added the bilking part)

(Q) How will Flat rate help Matt Maguire, Appliance Repair Tech? – (I suggest you refer back to 10/27/2011. My question: “With either method of charging, you had to UP the charges when the second problem was found. The customer pays more either way. How would flat rate have helped?)

This leads to:

(Q) Why a customer knows the price of the repair with Flat Rate before it starts WITH ANY MORE CONFIDENCE THAN WITH T&M? – I believe you, Carl, also hold the opinion that customers are protected by the flat rate “up front” pricing…

(Q) Why is it a felony when a lawyer over-bills in this manner, but it’s not unethical to use it in the service industries?

And here’s a new one that’s recently gaining momentum:

(Q) Why are there more and more lawsuits surfacing (and being won) against auto repair shops over-billing with the CORRECT, intended usage of the Mitchell and Chilton’s flat rate books? ——–

Don’t argue law with me, I don’t care. Legal innocent doesn’t mean moral innocents anyway. I simply mention these things because my argument on the ethical use of Book rate repairs or “flat rate” is anything but isolated to this blog or this field. It’s simple and unethical padding of the bill. The uneducated and the Business owners are the ones that continue to argue otherwise.

Mill those questions over a bit, but don’t dare answer them. That would really catch me off guard.
and maybe reread the post again…

===============================================

Harry,

You need to spend some time reading this entire post too before you comment on… well, at least on my viewpoints.

You are the one who is ill-informed…

—————–

Quoting you:

“Mike, Your rigidity of thinking that only a well thought out T/M rate is reasonable while a Flat Rate can never be; well thought out, advantageous to the cust’, and in all cases must be a ‘ripoff’, is silly, unreasonable and ill informed.”

——————

I don’t think my argument was ever reasonable vs unreasonable. I think I said “FAIR” and stated flat rate was NOT.

Now, here is what you apparently haven’t read from me:

01/15/2010 – Somewhere between big city and small town is the line between Flat rate and hourly?

11/17/2011 – The contortion of the flat rate process, WHICH HAS ITS PLACE, allows crappy companies to exist alongside good ones because the customer gets the same price no matter who they call.

01/17/2012 – If flat rate was used as a guideline, or a not-to-exceed price, I could see it being useful to quote a job you haven’t done in awhile.

01/17/2012 – in a perfect world, and used as a “guideline”, I agree Flat Rate is not a bad AID to pricing.

Those are just a few excerpts from this blog where I’ve shown flexibility when it came to the use of Flat Rate…. There are more…. but now that you have been enlightened, you can stop cluttering up the debate with fabricated viewpoint that don’t resemble mine …

I’ve spent my share of time on every side of this issue. I’ve used both charging methods, as well as a combination of them. I’ve been a tech, owner, customer, and been in this field my whole life where in addition I’ve spent time learning from OTHERS with time on all sides of this issue. You can’t dismiss a person’s experience, wisdom, and argument by simply making false statements about it and repeating the same crap over and over again. You don’t prove your point by trying to drown the others in rhetoric. I am still waiting for anyone to justify the Flat rate charges of legitimate situations which fuel customer decent. AS ONE SHOULD EXPECT WITH A $129 LIGHT BULB REPLACEMENT.

Charge however much you want for your services, but charge only for the time you provided. Proportional fee for time spent. And with trustworthy, educated and well trained techs, the argument of slower tech and faster tech – is so overemphasized for what seems to be the centerpiece of the flat rate proponent’s argument. The frequency of overcharging a customer with the use of Flat Rate dwarfs the frequency that a slow tech unintentionally runs up a bill. And if a customer perceives that service value as too low, they can call in just like with Flat Rate.

My argument summed up in one sentence:

To utilize a billing system that has the systematic overcharging of every customer intentionally factored in to every call is unethical, and all the stocked trucks, training, big salaries, benefit packages, and anything else Dean suggests will fall from the heavens if you implement Flat Rate, can’t make it honest business …

122 TEA July 15, 2013 at 6:25 pm

I think the point will be moot pretty soon. Gone are the days of the butt crack appliance repairman. Since the beginning of this thread, appliances that are currently on the market have become even more dependent on electronics.. If you want an hourly company to work on your French Door Samsung with two ice makers, three evaporators, variable speed compressor , (no more simple start relays) five fans and four boards, be prepared to pay handsomely. It takes quite a bit of time just to figure out what is causing the problem. The light bulb example is also becoming obsolete as the bulbs have been replaced with LED bulbs controlled by one or more boards. Generally, if a bulb goes out, it ain’t because it’s a bad bulb..

Even removing an Ice Maker has become akin to major surgery these days and in some instances, improper removal will destroy the machine. No I don’t mean the ice maker, I mean the entire Fridge. .Now it takes a highly skilled technician to find even the smallest of problems…and somebody has to pay for that training.

As a lawyer who owns an appliance repair company and a real estate management company (who also taught the real estate law classes required by agents to become brokers) I am in a pretty good position to understand all points made.

With my real estate management company and prior to owning the repair company, I wanted the cheapest quickest repair company I could find. More often than not, my appliances were not of the hi tech variety. So I understand what Steve is saying. But that was a one-sided view. I wasn’t thinking about the repairman or his skill level. Heck, the appliances were pretty dumb, simple devices. All I cared about was my bottom line.

With my appliance repair company, we are a flat rate service. This ensures my company can provide the customer with the best trained and professional techs we can put out in the field. Could that be overkill if the problem is a tripped breaker? Certainly, but we are human and many times will waive the cost. We are also the highest rated repair company in our area. None come even close.

Wanting to understand the repair business in its entirety, I recently went to a national training sponsored by United Servicers Association and I met Dean. He is just as caring, gracious and knowledgeable in real life as he comes across here. The other thing I noticed was the techs attending the training session were nothing like what I assumed. They were highly trained, highly skilled, extremely professional, very articulate and truly cared about their customers. Steve, it would shock you to no end. I have a Juris Doctorate degree, very computer literate and can wire a house to code, but I had to hang on just to capture the concepts presented in many of the training sessions. If you had experienced it, you would have probably stated, “well , these guys are worth every penny they charge, but I just don’t think I can afford it.” Although I would disagree with your ability to afford a flat rate service company, at least I could understand your sentiment. I’ve been there.

I also have discovered people will pay for your services and cost is secondary. This is true in the legal profession as well as appliance repair service. with all things being equal, ie two repair companies with equal ability and equal reputations, of course most people will seek the least expensive one. But the least expensive ones are generally out of business quite soon. At least in my area.

There is no right or wrong answer to this debate. Some want to prioritize customers first with the idea it will grow their business, Others want to prioritize their business first with the idea it will allow them to provide better service for their customers. Both methods work. Mike, If your heart is not in it to charge more….don’t! Otherwise you may lose your passion for the business. and subsequently fail. Dean wants to uplift the industry. Not to line pockets, but to make sure it commands the respect it deserves which includes proper remuneration compensate to the skill level now required.

There is nothing insidious about either approach but i believe the hourly rate for major appliance repair will soon be outdated.

123 Curtis November 24, 2013 at 2:06 am

In start up of appliance repair business,

I have tried to read some of this post and my head hurts. I was a well trained Industrial maintenance tech, still am, just got tired of working for slave drivers and blamers. Have worked union jobs, and non union jobs. There are many diffrent types of people with diffrent perspectives, and in the work force all are classiefied in four catagories. E= employee, B= business owner (big or small) I= investor and S= specialist. A property manager can be called a S if he so desires, but in reality he is just a higher paid E employee. The CEO of the large corporation, who gets a 9 million dollar performance bonus, for flying around on a plane doing dog and pony shows is just an Employee, he owns nothing and can be fired.

Being an owner of a start up appliance business, means for us one man show’s and apparanty don’t need much more skills than a plumber, to fix and trouble shoot the inverter, that replace the motor or the solid state device that replace the simple switch. Thoes kind of comments make me laugh and say if it’s that easy why dont you fix it, why are you even calling an appliance repair person. Sounds like you can train a monkey to do the simple repair. I hope you are a good trainer. Even with my 18 years of mechanical and electrical skill in several industries, i have to find out how to get the darn cover off the newly, engineerd design. It is by no means the same old plunger, or float device in a toliet. We have to wear the other persons shoes. I am off my point.

Most americans have a job, mentality, they work for someone else and don’t have to deal or do all aspects of the job. Supervisor are hired to drive the slaves and keep cost down. I have tried to go and work for a motel manager/owner and he wants cheap free labor. He pays minimum wage. People like this are poor masters over servants, people and slaves. You if you work for someone else are a bond/ free willed servant. No one is forcing you there you get paid a flat rate. By the hour is a flat rate, salary is flat rate, that you agreed to work for. CEO’s get a performance bonus, some employees do to, even a waitress gets a bonus called a tip. How well do you tip, a percent of your bill or however you feel like based on their performance and your cashflow in your wallet.

Start any business, I dare you, especially if you are calling yourself a manager, or think as a employee you can run a business better than whoever you use to work for.
You just became the E the I the S and the B. I is investor. You have to have CASH FLOW and bettter know how to make it and keep it flowing. You will have to still deal with the people, just like the ones at the factory, doctors office, auto repair place, some will be customers, and some will be jerks wanting slave labor, and free stuff thrown in at no cost.

Dang, go to wal-mart and while you are buying a pack of gum, see if you can call the manager over and see if they will throw in a couple of rib-eye steaks for free, you’re a good customer buying gum.. While your here, check this for free after all I paid for you to come here, I want to squeez your guts out, and get all my monies worth, cause your stupid anyway, if you had brains like me you would get a real paying job, like being a manager.
The person or couple who is trying to put beans on the table and will work for nothing will never have any life, joy or peace. I showed up to fix a ladies roof, her eating stake in a big home wanting to beat me up and act like she could not afford the extra 100.00 for the rotten boards i could not see under the sofit. Thoes are the crooks, and the life suckers of anyone who thinks they want to work with people.

I see people who have started a business, get sucessfull, build a big house, and then turn around a pay low wages. They have forgotten what the bottom looks like and have now become selfish, self centered, slave drivers, haughty kings, rulers.

So go start a business on your own, a service business and then report back here. When you have to wear all the hats, your mind will change (e,b,i,s) S is a specialist (accountant, lawyer, doctor. Companies hire them because they cant do it themself or within their company.. Why doesnt a big sucessfull property management just hire some one to be the repair person??? You would have to.. pay him hourly even when he was not working on an appliance, get him trained, and keep him trained, teach him how to find, parts, locate parts and fill out the paper work, pay for his insurance, workman comp. Oh that’s not cost effective.

To be honest when I started this business I knew it would be a challange to learn all the stuff I didn’t think of, and it is more than I expected. People have a comfort zone, and as long as their bills are paid they are comfortable for the time. Many small business owners are comfortable with the little they have. That is fine until they can’t doo it any more, they have not made enough to save and invest for when shit happens, at old age. High paid employees do the same, they spend every dime, and brag, I made 85 k this year. What are you going to do when they shut down that factory, or fire you?

I know like this post it’s all over the place. I am trying to figure out what to charge my self. I think I have a fair price, and reasonable but after putting 40 in the gas tank to go out, then spend time at night ordering parts, researching and finding out the changes, or updates, Training myself, going doing the work, and come back with a profit of 20.00 for 3 hrs min time work. I’ll be broke. Oh by the way rich dad poor dad has a lot of truth about real business. That’s what I’m quoting with the E,I,B,S, find out who you really are, ask if you want to be wealthy, healthy and wise, WITH GOOD VALUES TOWARDS PEOPLE, ALL People, or educated with intellect, degrees a mile long, a fleet of trucks, large building with your name on it, but still poor, or working for another person with no freedom. The ones who have their own business are on the way to at least freedom, may not have it all figured out, may not want to be wealthy, just comfortable, but at least you are a person of faith, and standing on your own two feet. Even then we all must stand where the other person stands and try to understand each other. Most of us are stubborn mules and asses. We also hate to admit we were wrong, blind and did not see the otherside of the coin. That’s pure pride, and the worst type of evil that ever hit the face of the earth. Yes we all have it !!!!

124 Mike (ThermoDyne) December 7, 2013 at 5:03 pm

Well Curtis,

I found us in total agreement at some points, then polar opposites, then just plain confused for a while, then experienced brief moments of clarity, then asked myself if I was supposed to medicate before I read your comments. Then the realization hit me that we had something very close to my heart in common………… Both of our heads hurt…

Sorry for poking fun but I have read your comments multiple times and I’m still not sure where you stand on the ethical use of Book rate billing. However I will take this opportunity to comment on Tea’s opinion.

Tea,

I know it’s been awhile, but we’ve been very very busy. What makes you think the days of the butt crack repair guys are gone? Naturally the guys you saw at the seminar were the best those companies had in their ranks. Why would a service company send anyone else? Those seminars are expensive.

Small towns are still full of butt cracks. And I live only 50 miles south of the 2nd largest city in Indiana and there are plenty of cracks showing up there too. And more than that, Smelly, unkempt, and lacking the gift of passable grammar. Despite all that, I think they will have jobs for a long time. Enough of them know what they are doing well enough to keep their jobs, and are capable of learning additional skills as new products come out. And while I’m talking about skill, how many people do you know who have destroyed a refrigerator trying to take out an Ice maker?

I also disagree with “…it takes a highly skilled technician to find even the smallest of problems…” An average tech, with average skills, can cruise through weeks of repair calls without running into a single head scratcher. Then when the big one hits, all he needs is a phone and the ability to tell a well-trained tech on the other end what he sees. I, with average deductive reasoning, started out this way when I was 17. Basic electricity and a guy on the “RADIO” (at that time) was all I needed to get through most every day. After four or five years in the food service industry I had seen most everything, and had developed skills to fix most of the rest with hands on.

And I don’t mean to be smart, but what about being “a lawyer who OWNS an appliance repair company and a real estate management company (who also taught the real estate law classes required by agents to become brokers)” means you’re in a pretty good position to understand all points made? Understanding the technical aspects of this industry should be at least 50% of the requirement to claiming such a position. You already seemed to have at least a small degree of naivety. I base that on your observation of techs at the seminars, and how you describe Dean’s personality when you met him. If he was a Jack Ass, do you think for one second he would ever let you see that at one of his seminars? He’s a salesman. And he’s a good one.

By the way, as a lawyer, how do you resolve the ethical conflict of billing out for more work than your techs actually performed? Flat rate books typically have a little number next to the code which represents the time required for that work. Add up all the codes for the day and subtract the hours paid out to the techs for that same day. Yup, there’s a lot left at the end. It’s called padding. It’s unethical, and illegal for a lawyer to do it… So far no one will answer to this point. Will you please explain how I am supposed to do bill out more hours than I earned and maintain a high level of integrity, or for that matter avoid a lawsuit when my customers finally found out what “book rate” really represents?

125 Dean Landers December 7, 2013 at 9:18 pm

Dear Mike,
I see you are still at it. :>)
I actually agreed with your first paragraph. However, two things you said require a response.

I assume, based on your comment about a “highly skilled technician” that you and or your techs are only working on the most basic of equipment without much variety of brands or product if you find you can go weeks without consulting a manual and doing a fair amount of research far beyond making a call to a manufacturers tech support hot line. The products on the market today are far more complicated than any you or I worked on when we were 17 years old. Gaggenau, Aga, Sub Zero, Viking, Jenn Air, Bosch, Dacor, and the more common brands such as Whirlpool and GE require a tremendous amount of technical information to process through a diagnosis.

I have never seen an appliance flat rate book that includes a time reference. It defeats the entire idea of using flat rates.

Have a Merry, joyful and all together blessed Christmas Mike and all!

126 Mike (ThermoDyne) December 8, 2013 at 10:00 am

Dean,

You forgot Middleby Marshal, Cadco, Crescore, Moffat, Oscartielle, Lockwood, etc.

My suggestion that it’s possible for an average tech to get by with basic electrical knowledge and guidance does not imply we don’t get the same variety of calls you do. I’m sure we run FEWER calls than many companies represented in this thread. And it is true that our office is located primarily in Bryant and whirlpool/Maytag country, as it applies to furnace and washer/dryer calls, but the food service industry brings us every bit the complicated calls that the rest of the guys out there get. We service a 100 mile radius. We run service calls in the top 6 largest cities in the state, and everywhere in between. I see hicks and sophisticates alike, and the 40 year old, as well as the brand new equipment. I’ve worked on equipment only a few months off the factory floor, and install many of them new. The fact is, manufactures want their equipment to ultimately not fail, but when it does they want techs to be able to fix them quickly and have all the information they need to do so. Their reputation depends on it. And techs freely speak about the equipment that’s a pain when customers ask for recommendations on brands names to buy. I’m sure you would agree that the commercial market isn’t near as stingy with tech assistance as the residential market. And after all there are still only a few things I need to know to make a pretty good diagnosis even on a new design. Where the power goes in, and what’s the thing do? It still comes down to a little physics, basic electricity and an understanding of basic controls. Most Solid state stuff is not field reparable. (Although I do share some proprietary repair secrets with our guys like how to fix ECM motor controls in the field saving customers $1000’s every year in control or motor replacements.) And some nifty little factory authorized fixes on some Raypak Hi Delta boilers that would otherwise end up in a control board parts order and down time. (Raypak boards cost lots of green) But even without the smarts to make component level repairs, it can be quite simple. Is there power going in? Does the board output what it’s supposed to output? Is the bad board the cause of the failure, or a result of another failed component? I’m not suggesting it’s easy, I guess what I’m saying is many Butt cracked techs represent some of the higher end guys in the field and Tea shouldn’t assume the well-dressed well-mannered guys aren’t the same Butt crack guys, just 20 years earlier… I learned my trade under some big Butt cracks. (Have some fun with that one at my expense, it’s my Christmas gift to you…)

Who knows, I may still have a Butt crack in my future. So might you!

In any case, have a great Christmas and New Year’s. After all it’s our fifth one together!!!

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