# Going from hourly to flat rate



## Pro Plumber (Jun 16, 2010)

I have been in business for several years now. I have always charged hourly for most job except for water heaters, water closet and drain cleaning. I have recently decided to go flat rate on all my services. I mainly do residential repairs and was hoping to get some advise on which program works the best and was the most plumber friendly from guy's that have already done the transition.. I know of several programs (Nspg and Aptora) that can assist me in this transition. I'm just not sure which one to go with. I want the ability to adjust pricing where ever I feel fit. Maybe something that adjusts material pricing automatically. Anyways I hope to get some friendly advise from you guys on what you guys feel works best? Any advis is much appreciated.


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## DesertOkie (Jul 15, 2011)

Don't you know what you charge for the things your changing to flat rate? All my flat rate book was is a hourly charge for "most case scenario" some times you win some times you lose.


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## Pro Plumber (Jun 16, 2010)

The thing here is I have hired several employee's and I am trying to make the billing part of it more uniform between me and my employees. Besides there are many customers that prefer to know what the cost to a project before they commit.


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## HSI (Jun 3, 2011)

We use Aptora and it is ok for the most part. It is obvious that they are set up for the HVAC side as the plumbing side lacks in areas. To offset where they lack they have a great miscellaneous section. I use this section about 50% of the time. The software is simple and the phone support is wonderful.
We had Success Systems before we switched to Aptora and I was not happy with them. If I had purchased the software and had control of my own books it may have worked out better. The price was on the high side with Success Systems.


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## Pro Plumber (Jun 16, 2010)

I spoke to NSPG today and I'm not sure what to think. One thing for sure for $3500 I will make time to task out all my usual service calls into flat rate system myself. Thanks for the feed back HSI. Any and all feed back is much appreciated.


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## Plumber (Jan 18, 2009)

Pro Plumber said:


> I have been in business for several years now. I have always charged hourly for most job except for water heaters, water closet and drain cleaning. I have recently decided to go flat rate on all my services. I mainly do residential repairs and was hoping to get some advise on which program works the best and was the most plumber friendly from guy's that have already done the transition.. I know of several programs (Nspg and Aptora) that can assist me in this transition. I'm just not sure which one to go with. I want the ability to adjust pricing where ever I feel fit. Maybe something that adjusts material pricing automatically. Anyways I hope to get some friendly advise from you guys on what you guys feel works best? Any advis is much appreciated.


I have my own in pdf format and its pretty darn good. What's nice is the pdf format--it is really easy to change the price or add/delete items. It's based on 90/hour.

I've been thinking of selling it as is.


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## Plumber Jim (Jun 19, 2008)

I made mine own with filemaker pro. I created a database table with material with the cost and a global variable for the markup and hourly rate then another table with the tasks, The tasks you can add or delete and then add parts to a task from the material table. works perfect. best thing is I did it my way and didn't have to pay to have someone else tell me what to charge.


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## HSI (Jun 3, 2011)

Pro Plumber said:


> I spoke to NSPG today and I'm not sure what to think. One thing for sure for $3500 I will make time to task out all my usual service calls into flat rate system myself. Thanks for the feed back HSI. Any and all feed back is much appreciated.


The Aptora set up was about $1200. It took me about a half day to set up and print my first book. I used it for about a month and cut it down to about 85 pages and that is where I have stayed. The first of the year I will make some other changes and print a new book. 
If you have all the info from past jobs and kept good notes you could create your own system and save some money. It would require a lot of time as well. We needed something to hit the ground running so Aptora worked well for us.


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## Pro Plumber (Jun 16, 2010)

Thanks guys for all the info. Every bit helps. I am extremely busy and don't have much time to put together something that I can use any time soon. I kind of want a good structured format that I can adjust and tinker with. Aptora sounds like it will provide this for me. Without breaking my wallet. I'm hoping to get more feed back on other flat rate systems. I am mostly interested in a system that is easy to use.


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## LabattPlumbing (Nov 22, 2011)

HAPPY HOLIDAYS FROM THEMASTER:laughing:


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## plbgbiz (Aug 27, 2010)

LabattPlumbing said:


> How the hel can you lose by charging hourly?...


Here are three common reasons why shops that charge an hourly rate can be operating in the red:

*1. * Many people starting a Plumbing Business choose an hourly rate based on "the going rate" rather than their actual cost per billable hour to operate. The super scientific approach that many take of _"I'll call everybody in town to get their rate and charge a little more than the cheap guy and a little less than the expensive guy" _just doesn't work in the real world.

*2.* Many who charge an hourly rate keep that rate low by charging large markups on materials fixtures. If the customer just needs repairs today and not a lot of materials or fixtures, then the hourly guy is in the red as soon as he shows up at the job.

*3. * A Professional Plumbing Business that can provide the same finished result in 2 hours that a less experienced or capable company would need 4 hours to complete, will make less money per job.

These are only 3 general items. There are countless variables such as your actual cost per "billable" hour to operate, your established budget (you do have one right?), and market forces in your area.

In general though, basing your revenue solely on the clock is very naive. Can you imagine a restaurant charging you based on how long it took for you get your meal? Or what if Wal-Mart gave you a 20% discount if you didn't have to wait in line at the checkout stand? Both businesses have a specific number of billable hours to figure into their budget just like Service Plumbers but to charge an hourly rate would be financial suicide.

That said, if a Service Plumber is charging an hourly rate based on their specific and properly calculated cost of doing business per billable hour then they are going to do just fine. Usually that number is usually much higher than consumers are used to seeing so it becomes very difficult to obtain consistent work. Of course there are exceptions to every rule. Maybe you are the exception. :thumbsup:

I'm not big on name calling and personal insults but if a Service Plumber has an hourly rate based on the going rate, fear, it won't work in my town, or any of the countless other excuses...then I guess the title in your post might fit and they should wear it.


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## Pro Plumber (Jun 16, 2010)

Plgbiz I appreciate all feed back. So what flat rate systems have you tried? And wich one do you prefer? And what is the correct formulla for figguring actual cost per "billable" hour to operate? I think I know, just want a experienced answer?


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## plbgbiz (Aug 27, 2010)

We have used Randy Hilton's "Up Front Price" for many years and have more recently been using a streamlined version that I prepared myself.

I ordered Aptora. It should be delivered tomorrow. I prefer a fully loaded package to taking my time to build a book on my own. Most people that complain of the cost and vow to build their own, end up with nothing.

It is more critical if you have multiple trucks in the field.

Here is a simple look at figuring your billable hour rate:

Billable Hour = One hour spent on a job turning wrenches

Divide ALL of your expenses by the number of hours you actually invoice customers. The answer is your billable hour rate. The common assumption of billable hour efficiency in the Service Plumbing industry is 50% or 4 billable hours per day per vehicle. When most people hear that number they freak out but it is usually not far off when you take a critical look at your numbers. Averaging 6 billable hours per day, per vehicle, 5 days a week, every week is awesome for a company that really works at it. Most don't. Again every company is different and the type of work you normally do is a factor as well.

Plug that number into your FR software and you're done. Print a price sheet and go to work.

Now this is a WAY OVER SIMPLIFIED description. There are a lot of nuances and exceptions to the rules based on your specific operation but that is the basic process.


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## plbgbiz (Aug 27, 2010)

JungleFever said:


> ...The key to making money is knowing your * job and actually doing it....


Very true sir. I applaud your financial success. :thumbup:

Problem is many plumbers go from wrench turner to business owner or a hybrid of both without ever adjusting their job description. Sounds like you got it all figured out though.


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## SlickRick (Sep 3, 2009)

I said it couldn't be done in my neck of the woods, but I have been shifting that way since the day I made that statement.... I ain't stupid.


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## plbgbiz (Aug 27, 2010)

SlickRick said:


> I said it couldn't be done in my neck of the woods, but I have been shifting that way since the day I made that statement.... I ain't stupid.


Every market is different and the approach to giving a price to a customer before starting the job is different based on some demographic issues.

But in my never-to-be-humble opinion,
I still maintain that given the opportunity, most consumers would rather have a "to the penny" price before the work starts. It really is not near as involved as many FR preachers make it sound though.


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## plbgbiz (Aug 27, 2010)

Pro Plumber said:


> I spoke to NSPG today...


BTW: I've known and known of Gene Burch (NSPG founder) for many years. You will rarely find a better ambassador of our great trade or smarter business man than Gene. I purchased his Numbers Cruncher software many years ago. You would do well to have an actual break-even calculator. Numbers Cruncher is really good for that.

There may also be a few freebies on the net somewhere. If you have the opportunity, call and talk to Mr. B. He can give you some practical info on transitioning to FR if that is your goal.


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## Will (Jun 6, 2010)

I am also thinking of making the switch to FR, but 80% of my business is Remodels(bid) and Drain Cleaning (T&M with add ons). For now I'm just going hourly on service calls to keep it simple, but I"d like to go FR one day. I agree customers like to know the price before work starts.


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## Pro Plumber (Jun 16, 2010)

I know of aptora and NSPG. Is there any other flat rate system that any one have had experienced using. I know i'm going the flat rate direction but for the most part I want to make sure that I buy into a program that is highly recommended by my fellow plumbing contractors. This is a huge step for me and I really appreciate the info from all. :thumbsup:


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## Mxz--700 (Jul 8, 2011)

Yeah, I know, " here it comes" lol. Anyway,All my work is in the suburbs of NYC and have seen many people go under using the ripoff flat rate systems. Horrible way to go, but hey, whatever works in your area. I could give so many instances of customers claiming never to use flat raters again,especially when we are usually half the price or even a quarter. I have seen quote of 1000 to change an upper thermostat only on an electric water heater and 800 for a relief valve and auto vent on boiler.scary how many customers these guys lose. And usually WE are known to be a little high. Usually most of these Guys are on commission though. Just did a 8" center set faucet that the customer supplied with new Wolverine 17 gauge trap and new ridged supply's for $250 and she was quoted $600 by a local flat rater. Been in business around a half century so got to be doing something right...


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## plbgbiz (Aug 27, 2010)

Mxz--700 said:


> ...I could give so many instances of customers claiming never to use flat raters again...


Just like many FR shops could give so many instances of customers claiming never to let a T&M guy ride the clock at their house when business is slow or while he's trying to learn how to do his job.

The problem is and always has been that some plumbers are not professional, not experienced, and not honest. The problem is not and never has been the pricing method a company chooses to use.

Blaming FR is like saying nobody should drive because Uncle Bert just got a DUI.

Now, how 'bout that intro...:whistling2:


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## HSI (Jun 3, 2011)

Mxz--700 said:


> Yeah, I know, " here it comes" lol. Anyway,All my work is in the suburbs of NYC and have seen many people go under using the ripoff flat rate systems. Horrible way to go, but hey, whatever works in your area. I could give so many instances of customers claiming never to use flat raters again,especially when we are usually half the price or even a quarter. I have seen quote of 1000 to change an upper thermostat only on an electric water heater and 800 for a relief valve and auto vent on boiler.scary how many customers these guys lose. And usually WE are known to be a little high. Usually most of these Guys are on commission though. Just did a 8" center set faucet that the customer supplied with new Wolverine 17 gauge trap and new ridged supply's for $250 and she was quoted $600 by a local flat rater. Been in business around a half century so got to be doing something right...


 Not sure where the people in your area get their flat rate system from but the one I use puts me about $7 less than your price. Maybe you should send your customer a refund check since you overcharged them. :thumbsup:


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## Mxz--700 (Jul 8, 2011)

HSI said:


> Not sure where the people in your area get their flat rate system from but the one I use puts me about $7 less than your price. Maybe you should send your customer a refund check since you overcharged them. :thumbsup:


Lol, the average home price is about 800,000 to a mill. So I don't think so. Like I said they are on commision. We are about 160 an hour.


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## Pro Plumber (Jun 16, 2010)

One thing for sure is are trade has been infiltrated by handyman and unlicensed so called journeyman's. Both flat rate and hourly rates don't work if the plumber doing them don't have the proper training or experience. Sadly but true the best new construction plumber may be far from being a decent service plumber. Only experience separate the two and some p.r. skills. Trouble shooting skills and running pipe are two different things and not all plumbers can master both.


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## MSilver (Nov 15, 2011)

Pro Plumber said:


> One thing for sure is are trade has been infiltrated by handyman and unlicensed so called journeyman's. Both flat rate and hourly rates don't work if the plumber doing them don't have the proper training or experience. Sadly but true the best new construction plumber may be far from being a decent service plumber. Only experience separate the two and some p.r. skills. Trouble shooting skills and running pipe are two different things and not all plumbers can master both.


Agree 100%


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## Mxz--700 (Jul 8, 2011)

plbgbiz said:


> Just like many FR shops could give so many instances of customers claiming never to let a T&M guy ride the clock at their house when business is slow or while he's trying to learn how to do his job.
> 
> The problem is and always has been that some plumbers are not professional, not experienced, and not honest. The problem is not and never has been the pricing method a company chooses to use.
> 
> ...


Unfortunately the customer is letting the dishonest plumbers "ride the clock" by paying such a ridiculous price for flat rate that the tech KNOWS ahead of time he can ride the clock. Personally I have never seen an instance of it anyway( way too busy and want to keep on schedule). 

Isn't my profile an intro?:whistling2:


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## RealLivePlumber (Jun 22, 2008)

Mxz--700 said:


> Isn't my profile an intro?:whistling2:


No.


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## Associated Plum (Nov 4, 2008)

plbgbiz said:


> BTW: I've known and known of Gene Burch (NSPG founder) for many years. You will rarely find a better ambassador of our great trade or smarter business man than Gene. I purchased his Numbers Cruncher software many years ago. You would do well to have an actual break-even calculator. Numbers Cruncher is really good for that.
> 
> There may also be a few freebies on the net somewhere. If you have the opportunity, call and talk to Mr. B. He can give you some practical info on transitioning to FR if that is your goal.


Gene, maybe part of NSPG or at least I know he sells the program, but I believe Mike Conroy is the developer and owner.

We have used NSPG for about 10 years. We have changed it so that anybody could pick up the book and find the correct price without guessing as some of the 1 page books I have seen. We have about 750 tasks, but there is no mistake what that task is being used for. I know some are going to say this is too large and overwhelming to the plumber, but until you see our book you are only guessing.


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## plbgbiz (Aug 27, 2010)

Associated Plum said:


> Gene, maybe part of NSPG or at least I know he sells the program, but I believe Mike Conroy is the developer and owner....


Yep. :thumbsup:
My mistake.


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## plbgbiz (Aug 27, 2010)

Mxz--700 said:


> ...Isn't my profile an intro?:whistling2:


Nope. :no:


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## Associated Plum (Nov 4, 2008)

Mxz--700 said:


> did a 8" center set faucet that the customer supplied with new Wolverine 17 gauge trap and new ridged supply's for $250 and she was quoted $600 by a local flat rater. Been in business around a half century so got to be doing something right...


 
And you furnished the faucet and trap @ that price? We get more than that for a low end Delta faucet alone


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## plbgbiz (Aug 27, 2010)

Mxz--700 said:


> Lol, the average home price is about 800,000 to a mill. So I don't think so....


Not hardly...

http://www.city-data.com/county/Dutchess_County-NY.html

More like $250K to $300K. And on a steady decline since 2006.


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## Pro Plumber (Jun 16, 2010)

After looking at both pricing techniques I’ve come to the conclusion that both have they’re place in the plumbing industry. Both can be affected by poor trades man performances. With flat rate one can feel they are getting a sales person over a plumber. Sometime companies focus all of there training on sales rather than good plumbing technique. With time and material a homeowner relies on the technician to be experienced and aggressive, using his time to complete a task in a timely manner. A homeowner maybe unlucky by getting a technician who havent developed into a seasoned professional. These issues can come up in every trade. None of us started in the field being where we are now.


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## Mxz--700 (Jul 8, 2011)

plbgbiz said:


> Not hardly...
> 
> http://www.city-data.com/county/Dutchess_County-NY.html
> 
> More like $250K to $300K. And on a steady decline since 2006.


Good one cutie, but I live in Dutchess and work in Westchester . You would make a crappy investigator. Try looking at profile o smart one and u will see where I am licensed. Never worked here because u don't need to be licensed. ( um and just why am I explaining myself to you.)? Also all homes in my part of Dutchess are in the average of 600,000 if u want to get really accurate. Happy thanksgiving though lil one.....


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## Mxz--700 (Jul 8, 2011)

Associated Plum said:


> And you furnished the faucet and trap @ that price? We get more than that for a low end Delta faucet alone


Um no, if you had read post it says customer supplied faucet. How could anyone do the job for that and supply it. Are you all just digging for arguments on this site?


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## Mxz--700 (Jul 8, 2011)

plbgbiz said:


> Nope. :no:


C'mon pleeeease?


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## Redwood (Sep 8, 2008)

Mxz--700 said:


> Good one cutie, but I live in Dutchess and work in Westchester . You would make a crappy investigator. Try looking at profile o smart one and u will see where I am licensed. Never worked here because u don't need to be licensed. ( um and just why am I explaining myself to you.)? Also all homes in my part of Dutchess are in the average of 600,000 if u want to get really accurate. Happy thanksgiving though lil one.....


If you had posted an intro no one would care....

Actually we still don't but the mission has changed to breaking your stones...:yes:


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## Mxz--700 (Jul 8, 2011)

Redwood said:


> If you had posted an intro no one would care....
> 
> Actually we still don't but the mission has changed to breaking your stones...:yes:


I love getting them broken cause I can give it back like the best of em:laughing:. But.... I did do intro!!!:thumbsup:


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## plbgbiz (Aug 27, 2010)

Mxz--700 said:


> Good one cutie....Happy thanksgiving though lil one.....


:laughing:

Silly Mxz...Unfortunately I am no longer as cute nor "lil" as I used to be.


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## Associated Plum (Nov 4, 2008)

Mxz--700 said:


> Um no, if you had read post it says customer supplied faucet. How could anyone do the job for that and supply it. Are you all just digging for arguments on this site?


I'll man up about misreading the quote and we would still be a couple of dollars higher for both.

Arguement!! Where would that get us?


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## plbgbiz (Aug 27, 2010)

Mxz--700 said:


> ...Are you all just digging for arguments on this site?


We're just a group of plumbers hangin' at the sales counter Mxz. Don't try to make too much sense of it because often there isn't any.

Sometimes your the poo, sometimes your the paper. :w00t:


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