Successware is working with our partners to bring you content relevant to our industry. This content was previously published by Profit Rhino on their website.
Flat Rate vs. Time & Materials Pricing
One of the most crucial parts of your HVAC, electrical, or plumbing business is determining what pricing model you should use – flat rate pricing or time and materials pricing. Both have pros and cons, and we are here to help you decide which model is best for your business.
First things first – if you aren’t familiar with these pricing models, here is a brief description:
- Flat Rate Pricing: One all-encompassing price for a job that includes your hourly labor rate and the cost of materials needed.
- Time and Materials Pricing: The cost of labor hours and materials cost are billed as separate line items and show up as individual charges to your homeowner.
Pretty simple. Both pricing methodologies have pros and cons, and we are here to break those down so you can make the best choice for your business and technicians.
Flat Rate Pricing Pros & Cons
- Pro: No surprises to the homeowner when that final invoice arrives. If a project takes longer than initially quoted, the price doesn’t change.
- Pro: Better control of your profit margins.
- Pro: Productivity is rewarded for your technician. The more jobs they complete in one day, the more profit for your company and possible commission for your technician.
- Con: No system is ever perfect, and your technicians may run into a job that is not listed in your pricebook, which could cause a delay in getting your homeowner pricing and beginning their assignment.
Time & Materials Pros & Cons
- Pro: This type of pricing allows flexibility to your total invoice because you can easily modify your scope of work if a job is going to take longer than initially quoted or need additional parts.
- Con: Homeowners may pay more than they initially thought if a project takes longer.
Now you have all the advantages and disadvantages of each pricing model and can make your selection! Rest assured, whatever pricing model you select, Successware can accommodate. You can invoice via flat rate pricing or time & materials pricing from our platform and mobile application.
With Successware, your business can import your own pricebook via Excel or integrate with one of our partners, like Profit Rhino. Check out our Did You Know | Pricebook blog for more information on the benefits to our pricebook module.
To learn more about flat rate pricing vs. time and materials pricing, check out Profit Rhinos blog titled Flat Rate or Time & Materials – which pricing should you use?
Disclaimer: This content was provided in partnership with Profit Rhino. It does not necessarily represent products or services available through Successware.