There are many misconceptions about how flat rate pricing works. It is rumored to be one price for the entire industry, set far too high for the purpose of gouging customers.

Neither could be further from the truth. In fact, flat rate users have full control of the prices they are setting.

To derive prices is a rather simple pricing formula for services that, in essence, is used to compute time and materials repair prices. However, with flat rate pricing you are provided with an average repair time, which allows you to provide a “quote” in advance.

Here’s what the standard flat rate pricing formula for services looks like:

As you can see, your hourly rate gets plugged in as well as your part mark-up. Your flat rate provider, meanwhile, will contribute the average repair time and, most importantly, the current part cost.

Where this becomes advantageous is the removal of most customers’ sticking point: the hourly rate. Most consumers are unaware of what it costs to run a company and compare your hourly rate to how much they earn per hour. To a person that earns $18/hour, a repair charge of $120/hour may seem exorbitant when not taking into account overhead such as rent, trucks, insurance, payroll, inventory, etc. (Coolfront has created a handy guide to describe the pricing process just for this purpose!)

Showing an overall flat rate repair price helps your customer see the value of the service you're providing!