# Should the "$99 drain opening" gimmick be illegal?



## Tounces (Aug 18, 2013)

Now - before everyone goes nuts, hear me out.

First off - this isn't meant to apply to a specific price point - it's meant to apply to a specific price tactic.

Namely - a loss leader. A price that is lower than what a call actually costs, in an attempt to upsell customers something major, and an attempt to drive small businesses out of business, who aren't able to compete with a national corporation.

As far as legal status goes - there's actually a precedent for this.

For example - if Wal-mart attempts to sell a product for below what the product actually costs them - the federal government goes after them. It's called "Predatory Pricing", or Undercutting, as a way of creating a monopoly. 

The company I work for has a "$88.00 Drain opening", even though a call costs the company around $200 total. They make up for this by charging upselling digs as much as possible - where the profit margin is very large.

Personally, even though I work for a company that uses it - I wouldn't mind seeing loss leaders go away entirely in the industry. It hurts the value of what we do, by making customers think that's the normal price.


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## PlumberDave (Jan 4, 2009)

How does that work with free estimates? As an employee I hated the darn things, But now as an owner they work really well. Folks don't call if they don't have a problem. Some call it "sales" I call it "recommendations". How many times do you see PB stops in a house? failed expansion tanks, rotted out enameled steel sinks. Sloppy loose faucets? And a few times nothing at all seems amiss. You don't even have to go looking for anything, just chat with the folks feeding your kids, they tell you all kinds of things, some of it plumbing related. People are awesome we all have stories.


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## plbgbiz (Aug 27, 2010)

Do you really want to pay the real price for a turkey in November. Loss leaders are part of the very fabric of our economic system.


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## Tounces (Aug 18, 2013)

The issue with Loss Leaders and Undercutting - is it allows larger businesses to drive smaller businesses out of business, or prevent them from starting up all-together.

Basically it eliminates competition through unfair business practices.

And yes I'd happily pay full price for a turkey if it meant loss leaders would completely go away in the plumbing industry and businesses could fairly compete with each other.

Loss leaders negatively affect my bottom line, because it lowers the over-all value of our services. I realize upselling can still make up for it in other ways - but that doesn't mean it's not harmful. Especially when a loss-leader makes customers question why the prices on everything else is so much higher. Or they get smart enough to only get the loss leader and nothing else, as they are starting to do, and Landlords have already been doing for some time now.


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## Tounces (Aug 18, 2013)

Free estimates are not an issue.

It's not a loss leader if you aren't doing any actual work. The customer is getting nothing with a free estimate other than finding out what the work will cost. It doesn't devalue the services any, and it doesn't undercut competition.


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## Rotorooter1277 (Jul 8, 2012)

I second the notion that $99 drain opening should be illegal. It's a complete bait and switch tactic that completely gives our industry a bad name and reputation. We recently experienced one of these companies moving into our area and do get calls asking if we will honor their price. 
I laugh and explain to them it's impossible to offer our service with overhead, gas, insurance etc at a price of $99. 
Sometimes they call us back other times maybe they fall for the scam and spend thousands digging up and replacing their sewer lines.


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## plbgbiz (Aug 27, 2010)

Isn't a price tag at the store a free estimate?

Loss leaders come in many forms...

Car rebates, no-interest car loan, no-interest credit cards, credit card points, frequent flyer miles.

Yep, better crack down on all that illegal stuff.


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## dhal22 (Jul 30, 2010)

There are 2 primary loss leaders in my book. Hoping for more work (Ie: a sewer repair) or obtaining a long term customer is an honest loss leader. The other is going in upselling every job regardless of what you find or you walk out is a dishonest loss leader.

Doing a drain cleaning for $145 with a full size sewer machine, hoping for a bigger repair is one thing. Showing up with a 1/4" cable drain gun, running it down a 3 or 4" pipe for a few minutes then claiming the house needs to be repiped is a dishonest loss leader. And I hate doing a $145 drain cleaning.

David


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## Tounces (Aug 18, 2013)

plbgbiz, do any of those other things you mentioned eliminate the ability for smaller businesses to compete, and devalue the related industry?

It's about fair competition.

How is anyone supposed to start off on their own, when businesses in the area are advertising $88 drain openings for any line? (in hopes of pushing a $14,000 repair).

The only real advantage that a small plumbing shop has in starting off, is that they have a low overhead, so they can afford to charge less than the big brand name businesses and still make a profit. Lacking things like Pipelining systems and Pipebursting or even the heavy equipment to do deep digs, they can't afford to do a loss leader. And since they won't have the advertising dollars of the national shops - they're also likely to need to charge a fair price, not just barely over margin.


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## Tounces (Aug 18, 2013)

Btw - you do realize that undercutting actually IS illegal, right?

Also - how objective are you? Is your company using Loss Leaders?


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## Tounces (Aug 18, 2013)

dhal22 said:


> There are 2 primary loss leaders in my book. Hoping for more work (Ie: a sewer repair) or obtaining a long term customer is an honest loss leader. The other is going in upselling every job regardless of what you find or you walk out is a dishonest loss leader.
> 
> Doing a drain cleaning for $145 with a full size sewer machine, hoping for a bigger repair is one thing. Showing up with a 1/4" cable drain gun, running it down a 3 or 4" pipe for a few minutes then claiming the house needs to be repiped is a dishonest loss leader. And I hate doing a $145 drain cleaning.
> 
> David


Consider yourself lucky you can get $145.

I have to charge $88, and set up a "free" Camera. 

I can't realistically even go to another company, because the $88 openings have made is so other shops get drastically fewer calls.


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## Unclog1776 (Feb 5, 2013)

I've got two of the 99 dollar guys in my area. Three years ago I also had two but they were different. I am 325 for a mainline and keeping two trucks moving all day long. People around here seem to agree that 99$ to fix anything is a red flag


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## Tounces (Aug 18, 2013)

Pretty sure we have at least 6 in our area.

Even 99 wasn't cheap enough, which is apparently why we went to 88.

It's like a race to the bottom.


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## Drain Pro (Nov 3, 2013)

I've got all kinds of gimmick company's in my area. 49.99,49.95,99.00,39.00,etc. I couldn't care less. They have little to no impact on my business. If anything, they only enhance my reputation. First of all, they rarely ever leave with just there scam price. Secondly, they're generally dishonest and there mechanics don't possess the same skill set as me. They may get into a customers home or business once, but generally never again. And third, they weed out the bargain hunter customers. Whenever a potential customer scoffs at my estimate I always suggest that they call one of those cheap guys. They'll certainly get a bargain, actually much more than they bargained for.


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## plbgbiz (Aug 27, 2010)

Tounces said:


> Btw - you do realize that undercutting actually IS illegal, right?
> 
> Also - how objective are you? Is your company using Loss Leaders?


Mr. T...
Feel free to quote chapter and verse of any state or federal law that states selling something at or below what was paid for it, in hopes of gaining customers to buy other services that are priced for profit...is illegal. There is a big difference between using loss leaders to get in front of a customer as opposed to predatory practices designed to bankrupt someone else's enterprise.

As a matter of fact I do have a few loss leaders:
Free estimates are a loss leader. 
$49 diagnostic calls are a loss leader. 
$135 minimum for cabling a building sewer is a loss leader. 
$0.00 video inspection after cabling a building sewer is a loss leader.
_*EVERY*_ T&M shop that depends on material markup to meet budget needs is using their labor rate as a loss leader (okay, that one really should be illegal :laughing: )

This is just the beginning of where the rubber meets the road in getting a successful business off the ground. It takes finesse, savvy, cunning, and a fair measure of luck. Can an up and coming OMS get it done and be successful? Well of course they can. I did not start with cameras, a jetter, and pipe bursting equipment. Hell, I didn't even have a drain machine for the first year. 

I was so shocked to learn that there were bigger and more established companies doing shiot work for less than I could. And yet, over twenty years in business and there are still many shops in my market bigger than me offering better loss leaders that I choose not to follow. But yet I am still here and still moving forward. Richest, biggest, most successful Plumbing Contractor? Geez, I am not even on that radar but I am doing okay.

So you asked how is anyone supposed to start off on their own with a loss leader dude in their backyard? Quite simple really. First of all, break your risk meter and throw it in the trash. It will not do you one bit of good as an entrepreneur. Second, learn to appreciate the difference between illegal and unethical business practices as compared to smart business practices. I know from the outside looking in you may think they are all the same, but they're not.

Now let's get back to this loss leader issue of T&M shops that mark up material to pay the bills...all in favor of making T&M illegal say aye! :laughing::jester:


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## Tounces (Aug 18, 2013)

"This is just the beginning of where the rubber meets the road in getting a successful business off the ground. It takes finesse, savvy, cunning, and a fair measure of luck. Can an up and coming OMS get it done and be successful? Well of course they can. I did not start with cameras, a jetter, and pipe bursting equipment. Hell, I didn't even have a drain machine for the first year"

But let's be fair here. You started before the whole "$99 drain gimmick" existed, no?


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## Tounces (Aug 18, 2013)

Drain Pro said:


> I've got all kinds of gimmick company's in my area. 49.99,49.95,99.00,39.00,etc. I couldn't care less. They have little to no impact on my business. If anything, they only enhance my reputation. First of all, they rarely ever leave with just there scam price. Secondly, they're generally dishonest and there mechanics don't possess the same skill set as me. They may get into a customers home or business once, but generally never again. And third, they weed out the bargain hunter customers. Whenever a potential customer scoffs at my estimate I always suggest that they call one of those cheap guys. They'll certainly get a bargain, actually much more than they bargained for.


See, the funny part of this is, is as I said, I work for an $88.00 drain company, and I believe in doing quality work regardless of price, because I hate doing **** work.

I think I'm not unusual - I imagine for most companies, the quality of the work depends more on the tech than the company itself.


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## plbgbiz (Aug 27, 2010)

Tounces said:


> "This is just the beginning of where the rubber meets the road in getting a successful business off the ground. It takes finesse, savvy, cunning, and a fair measure of luck. Can an up and coming OMS get it done and be successful? Well of course they can. I did not start with cameras, a jetter, and pipe bursting equipment. Hell, I didn't even have a drain machine for the first year"
> 
> But let's be fair here. You started before the whole "$99 drain gimmick" existed, no?


You're right I did. When I started it was a $35 gimmick.

Trying to chase the drain cleaning specials is a tough way to get off the ground Tounce. Finding your path to exceptional service is the key for a OMS starting out. If you focus more on the value you can deliver rather than the dollar you can charge it will be easier.

Don't get me wrong, the dollar you charge is important. It's just that if you obsess over the smoke and mirrors of marketing methods, you will lose sight of things that are much more important to a new business. One of the many advantages a OMS has is simplicity. One of the drawbacks to loss leaders and marketing ideas, is that they are not so simple. That makes them a bad fit for the new guy. 

Keeping it simple will benefit you greatly. Spend more time on what you can do, not what you cannot do.


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## plbgbiz (Aug 27, 2010)

Mr. T, drop a line to PZ member Will. 

He is a OMS and is making it work in the modern era. He started without much of anything for tools or a truck and even relocated to another state. All without side jobs by the way. Hard work and smartz. He competes very successfully against loss leaders and wins.

It can be done, and Plumbing Contractors like Will prove it every day. :yes:


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## jc-htownplumber (Feb 29, 2012)

The big one in Houston has a $69 drain cleaning. At cont. Ed one of the employees told us how they work. 

Drain must be easily accessible in the ground 
By clean out accessible only 
Anything done outside is no longer a drain. It's a sewer line. 
Must be able to get the stoppage in less than 15 feet


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## Tounces (Aug 18, 2013)

Well, with a wife and 4 kids to support, I plan to be as prepared as possible before starting out. 

At least to the extent of having the 3 primary machines, a van with some sort of logo on it, and a type of uniform. 

I know a general contractor who is a friend that can do digs for less than half of any company around here if I run into broken lines.

I still think the "$99.00 gimmick" should be illegal. It's harmful for legitimate competitors AND customers alike. It's a form of bait-and-switch. It won't prevent me from starting up - but I'm sure it will make starting out more difficult than it would otherwise be. The best I can do is possibly offer a longer warranty than the 30 days that the loss leader offers, although that opens up the potential for abuse.


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## Tounces (Aug 18, 2013)

jc-htownplumber said:


> The big one in Houston has a $69 drain cleaning. At cont. Ed one of the employees told us how they work.
> 
> Drain must be easily accessible in the ground
> By clean out accessible only
> ...


See the company I work for doesn't even have limitations, except for pulling a toilet, which is $88 more. It includes up to an hour and a half of work, and a 30 day warranty. Not only that - it includes driving anywhere within our area - which can be up to 2 hours away from our base.

The warranty, of course, is just a 2nd chance to make a sewer sale...


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## HSI (Jun 3, 2011)

Hey Mr Tounces congrats on the business move. Hope the best for you. 
I started about four years ago as a one man shop here in Phoenix, Az. Keep in mind this state is still behind the nation with the economy. We are a border state to Mexico which results in cheap labor, the ROC is underfunded and don't do a hole lot, non licensed techs fill Craig list doing service cheaper than I can start my truck.

In the mid nineties I had a plumbing business and was subbing to a company that made me a great offer to work for them that I jumped on. I was out of actual plumbing for thirteen years before jumping back in. I am a union contractor in a state that is 90 plus percent non union so my cost are a lot higher than most and I'm still here. 

It's a tough road and everyone out there has their own angle. Stay your coarse and charge your price. You will not get every job. You will not be able to handle every job. Your prices will get beat constantly. What you want to offer is the best service to and for your customer. They buy you. Give them what they want. 

Worrying about other companies that charge more or less is not worth worrying about. It doesn't pay your mind or bills so let it be. Offer your customers what they want and don't give it away. They will pay. That's what you are there for and they expect it. 
Don't ever feel that if you make a profit even a big one that you have overcharged. You haven't. Does your doctor feel bad for driving his new Caddy and playing golf two days a week. Of coarse not and neither should you. BTW you saved more lives this last week than he did. 

I now have a service plumber working full time with my second truck ready to be put in service in the next month or two. I have two guys working on a hospital project. I added a jetter this year, a scissor lift with trailer ( used), second truck (used) and it's paid for. Probably jumped way to quick paying for it all but were recovering.


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## plbgbiz (Aug 27, 2010)

Everybody that has any aspiration of striking out on their own or has started but still second guessing themselves, needs to read and re-read HSI's shared wisdom of experience.


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## Tounces (Aug 18, 2013)

Yeah - I know that I give good service to my customers. Some of them I even keep in contact with. 

I guess my main concern is one of advertisement. 

Until the customer has actually met me and word of mouth can spread - I will have almost no advertisement other than being listed on google and Craigslist. 

And from the perspective of a customer seeing those $88 advertisements, it may be hard to get calls.


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## Tounces (Aug 18, 2013)

I don't suppose you know the name of those threads HSI posted that in, do you?


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## bigjuplumbing (Jan 17, 2014)

Dont try to compete. Dominate !!!!!!!! Knock on every door you see , shake every hand you meet. Out hustle out work out service . Good luck


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## plbgbiz (Aug 27, 2010)

Tounces said:


> I don't suppose you know the name of those threads HSI posted that in, do you?


 I was speaking of his post just before mine in this thread. He spoke volumes in those few words.


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## dhal22 (Jul 30, 2010)

There are customers that are looking to save every cent they can, if they fall for the $99 special, you probably don't want them anyway. We do $145 internet specials (with limits) and are willing to weed through the price shoppers and snag the occasional repair job. 

I see nothing illegal about the $99 or $68 specials.

David


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## Cajunhiker (Dec 14, 2009)

You know why a Cadillac, Lexus and BMW cost more than a Chevy, Ford and Dodge?
Because they are better. 
Same applies to your plumbing company.


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## Tounces (Aug 18, 2013)

dhal22 said:


> There are customers that are looking to save every cent they can, if they fall for the $99 special, you probably don't want them anyway. We do $145 internet specials (with limits) and are willing to weed through the price shoppers and snag the occasional repair job.
> 
> I see nothing illegal about the $99 or $68 specials.
> 
> David


It's a grey area of the law. If pricing is considered predatory, it can be illegal. Generally it's predatory if it's below marginal costs.

It becomes even more grey applying to a plumbing company, since one might claim a call does not "cost" anything other than gas, even if it realistically costs around $200 in ads.


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## Hoosier Plumber (Nov 28, 2013)

Tounces said:


> It's a grey area of the law. If pricing is considered predatory, it can be illegal. Generally it's predatory if it's below marginal costs.
> 
> It becomes even more grey applying to a plumbing company, since one might claim a call does not "cost" anything other than gas, even if it realistically costs around $200 in ads.


Our industry is priced based on what it takes a particular company to operate. No two companies are the same, therefore no two companies will charge the same hourly rate. 

While I'm certain our government would be interested in finding a way to further regulate and control us they really have nothing to go on because we are all priced based on very subjective reasons. 

Its a dead subject and further speculation only causes frustration. Be best to move on and focus on what is within your sphere of control and influence.


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## Tounces (Aug 18, 2013)

Well, it was an opinion debate, really, it's not like I have the resources to do anything about it legally.

It's not going to stop me from starting my own business. 

Nowadays, thanks to the internet, I can actually compete on some level with larger businesses.


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## plbgbiz (Aug 27, 2010)

Tounces said:


> Well, it was an opinion debate, really, it's not like I have the resources to do anything about it legally.
> 
> It's not going to stop me from starting my own business.
> 
> Nowadays, thanks to the internet, I can actually compete on some level with larger businesses.


Not thanks to the internet. Yes, thanks to your own drive and determination. 

Today is the internet and yesterday it was the PennyPincher magazine and flyers. Pay phones became cell phones, and YP added on .com.

You are the catalyst for all of it. These are only tools just like a pipe wrench is only a tool. Worthless if not in the right hands.


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## Tounces (Aug 18, 2013)

While I am not disagreeing with you - 

The decline of the phonebook is a MAJOR help for me. Because that still used to be the source of the majority of all customers for immediate-response type businesses. 

And the phonebook has always been stupidly expensive to advertise in.

At the current rate Phonebooks will all but cease to exist within the next few years.


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## plbgbiz (Aug 27, 2010)

Tounces said:


> While I am not disagreeing with you -
> 
> The decline of the phonebook is a MAJOR help for me. Because that still used to be the source of the majority of all customers for immediate-response type businesses.
> 
> ...


That was a myth.

The number one source for immediate response is for the customer to already know of you and not go to the book/internet/mobile phone/flyer/magazine in the first place.

NETWORKING Mr. T. You wanted the silver bullet and I gave it to you. It is the single most powerful asset a OMS has ever and will ever have. PERIOD!


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## Tounces (Aug 18, 2013)

plbgbiz said:


> That was a myth.
> 
> The number one source for immediate response is for the customer to already know of you and not go to the book/internet/mobile phone/flyer/magazine in the first place.
> 
> NETWORKING Mr. T. You wanted the silver bullet and I gave it to you. It is the single most powerful asset a OMS has ever and will ever have. PERIOD!


Right but....that's the one I don't have. So I have to rely on other methods.


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## plbgbiz (Aug 27, 2010)

Tounces said:


> Right but....that's the one I don't have. So I have to rely on other methods.


Then you will struggle.


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## Phat Cat (Apr 1, 2009)

Plumbing companies give consumers what they want. Like it or not, a certain percentage of customers fall for gimmicks.

Rather than worry about the other company's gimmick, come up with a gimmick of your own!

Looking over Big Birge's website . . . I can see why they are rising quickly! A cheap price didn't capture my imagination, but Big Birge did! Who wouldn't want to help them succeed? An attractive couple with a 'fun' outlook, bordering on corny! Works for me. :yes:


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## plumberkc (Jun 23, 2011)

If it bugs you that much, don't do main lines. I've managed to get by without doing many, most of my customers don't have an issue with it.


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## SchmitzPlumbing (May 5, 2014)

nice intro rodeo clown :laughing:


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## Phat Cat (Apr 1, 2009)

Rodeo Rooter



> An intro is requested from all new members. In case you missed it, here is the link. http://www.plumbingzone.com/f3/.
> 
> The PZ is for Plumbing Professionals ( those engaged in the plumbing profession)
> 
> ...


If you are just dropping links, you won't get much out of PZ. There are better ways to build your web presence. 

If you want to share with other professionals, kick back, relax, and drop the 'oh so sanitized' posts. It will definitely be a better experience.


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## 1manshow (Jul 15, 2014)

here in so cal i have seen some plumbers advertising 39.00 and 49.00 $ clean any drain . some of these characters even have the numbers on a vehicle wrap or customized signage.these kind of practices really hurt the small plumbing companys.if I cant get 150.00 out of a service call than i am literly operating at a loss.


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## Gargalaxy (Aug 14, 2013)

1manshow said:


> here in so cal i have seen some plumbers advertising 39.00 and 49.00 $ clean any drain . some of these characters even have the numbers on a vehicle wrap or customized signage.these kind of practices really hurt the small plumbing companys.if I cant get 150.00 out of a service call than i am literly operating at a loss.


Good point but will be better if you wrap and costumize your intro.


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