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    By Mike Katz

    Mike

    When discussing a new or unfamiliar application of a concept, one of the most effective ways we can explain the concept is through an analogy. If chosen well, a good analogy will successfully compare elements of the unfamiliar concept, to elements of a very familiar situation, offering clarification and understanding.

    An unfamiliar concept for many contractors and homeowners alike is flat rate pricing. For decades the status quo was to price using a time and material method which shows clearly the separation of what is charged for labor, and what is charged for parts used. Being used to seeing this breakdown, some homeowners question how flat rate repair pricing is determine, and feel the need to be shown the breakdown feeling this is the only fair way to know what they are being charged.

    What these same customers do not realize, however, is that flat rate pricing is already used all around them, in situations they experience throughout day-to-day life. The key is using one of these situations as an analogy; like how pricing works at your favorite restaurant.

    Just like the way flat rate repair pricing rolls all elements of a repair’s necessary time and parts involved into a single unchanging price, the price you pay for your meal includes all elements that go into preparing and serving it to you for your enjoyment. If we imagine ordering a cheeseburger, we’re not billed with a breakdown of pricing for the bun, ground beef, lettuce, tomato, onion, cheese, and condiments. That same bill does not include additional charges for the time we took before being ready to order, the time our burger took to cook, or the time we took to eat and ask for the check. The price we pay is presented in the menu up front, and was built to accommodate all possible combinations of fixin’s and eating speeds.

    Time and material pricing goes against our natural instincts as consumers, because the price homeowners pay is variable, and unknown until the work is completed. The objections received towards time and material pricing are a direct result of these unknown variables, and the quotes that are provided in attempt to estimate final costs. It’s easy to argue against any time and material quote, as no one wants to pay more than they were quoted for a repair, and when time is a factor, every minute you’re perceived to not be working will be shaved off the final bill. Instead, we’re conditioned to know exactly what we need to pay for exactly what we’re getting in return. Just like our cheeseburger at a restaurant, flat rate repair pricing allows the same expectation to be met by your service business by presenting a single, unchanging, all inclusive price for the proposed repair, prior to the start of work.

     

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