Pros and Cons of Upfront, Flat-Rate versus Hourly Pricing
We are often asked what our hourly rate is. The answer is that we don’t charge by the hour but by the job or task. When hiring an electrical or plumbing service company, you will find that many companies charge upfront or flat rate prices rather than hourly rates plus materials. This is very common with service companies because we frequently run into unforeseen obstacles that may make a job take longer. Prices are based on nationwide industry averages and consider the common issues we encounter.
What is the Difference Between Flat-Rate and Hourly Pricing for Electrical or Plumbing Service?
There are a number of important differences that you may want to consider before making a decision that you might regret later.
Flat rate or upfront pricing means that you will be quoted the final price in advance which includes all parts, labor and sales tax as well as the materials needed to complete your job. All of the other normal costs of doing business are also built into the price quoted. No matter what pricing model a company uses, they still have to cover all of their costs of doing business in their pricing in order to take care of their customers and employees and to remain in business and hopefully grow and make a fair and reasonable profit..
Hourly pricing involves an hourly rate plus parts, materials, taxes and overhead added on. With an hourly price, the customer never really knows how much a job will end up costing. Sometimes a flat rate price may sound higher at first for certain tasks. With hourly pricing, you are agreeing to an estimated amount of time which may or may not be accurate and is subject to change based on any issues that may be encountered as well as the skill and speed of the technician who completes the work. You cross your fingers and hope that you have a good idea what the final cost will be. All too often what sounds like it might cost less, ends up costing more. We hear these stories all the time.
A Closer Look at Fixed-Rate Pricing for Electrical and Plumbing Services
One of the main reasons that consumers prefer fixed rate pricing is that it eliminates the uncertainty of not knowing the final price tag. You know exactly what the final price will be and what to expect. For the company, it gives technicians an incentive to work efficiently and finish in a timely manner.
Hourly pricing is the opposite. You will not know the final price until the job is complete. With hourly pricing there is no reason to complete work as efficiently as possible because that means less pay.
Essentially, it’s an incentive to work slower and make the job take longer!
The disruption and stress of having repairs done in your home is made even worse by not knowing how much the job will end up costing. If they are running into obstacles, take breaks, go to get parts or work slowly, it can be very stressful to watch the price tag climb with each passing hour.
With hourly pricing, the final price can often be a lot different than the quoted price, but even worse, the exact same job will cost a different amount depending on the skills and experience of the person doing the work. We don’t believe this is fair to either the customer or the company. With upfront pricing, you know the price and don’t have to worry about how quickly or slowly the work will be completed. If it takes longer, you are protected and if it’s done quickly, you can get back to your life and the more efficient a company is operated, ultimately that can be reflected in the companies pricing. Another consideration is that if unforeseen issues arise as is often the case, you are protected and won’t pay more than expected. If a 4-hour job stretches to 6 hours, the price stays the same. If a job takes longer than expected, the company takes the hit, but we are incentivized to get work done as efficiently as possible. That is one reason why sometimes the upfront task for a small task might seem a bit on the higher side but is actually priced correctly because we know the types of issues that frequently arise. Sometimes a seemingly small task is far more involved than expected. Upfront pricing is protection to the customer from unpleasant surprises. With flat rate or upfront pricing you know the final cost in advance.
Flat-Rate Pricing is Best for both You and Contractor
At Point Loma Electric and Plumbing, we believe that up front flat rate pricing is the most fair and transparent pricing structure for everyone. When you are having electrical or plumbing problems, the last thing you need to worry about is not knowing what the final cost will be. Our goal is to provide fair pricing, efficient service and the 5-star service that you deserve. If a technician is a slow worker, the customer should not be penalized because the job takes a longer time to complete. On the other hand, a very experienced and fast working technician and the company should not be penalized because of their experience and speed. Shouldn’t the more experienced technician charge more, not less? Upfront or flat rate pricing is fair to everyone and encourages efficiency, not working either slow or trying to hurry. No surprises, you know the final price before we start.