Pricing components and services for field service technicians have always been a bit of a difficult situation because they don’t know how much a job might cost until they’ve finished the work and compiled all the expenses that occurred during it.
This article will examine flat-rate pricing, a potential solution to this frequent problem, its concept, and the benefits and downfalls of using this strategy.
Flat rate pricing is the concept in which businesses charge a single price for a field service job regardless of other factors included in the process, such as delivery, material cost, extra dependencies, and so on.
The concept of flat-rate pricing began to grow after there was a good amount of noise on the fact that local service technicians did not have a set pricing model. For any job they did, the total cost for service was calculated afterward, and it always turned out to be an exorbitant price compared to what should’ve been paid.
A problem that began to arise here was that due to overpricing of technician jobs, people stopped doing their repairs, causing massive issues impacting large groups rather than just one system or house.
A solution for this problem was brought forward in the form of flat rate pricing that would charge a one-time fee for a whole service, and the price would be mentioned to customers before the job even began.
This solved the problem of customers’ budgeting problems and allowed technicians to correctly price their services for their hours and the average cost of services and materials.
Before flat-rate pricing, technicians would have a pretty hard time with pricing for their jobs overall,
The pricing book is a tool that technicians can use to estimate the general pricing for every job they can do. They can use it as a reference when doing jobs in the field and needing to create an estimate for a flat-rate price.
This tool of pricing knowledge is regularly updated and used to make estimating much easier and faster, not wasting extra time on job cost calculations.
It also assures consistency to the customer and a definite rating of how much a job would cost before the technician starts it.
To calculate the flat rate pricing for a service job, you need to decide upon a few components of pricing that can change according to the job. This is where a price book would come in handy, and help have specific prices for every job you can do for a customer. Here are the components you need for calculating a flat rate,
Here’s an example of how to calculate flat pricing for a technician job,
Flat Rate Price = (Hourly Rate * Expected Total Time) + Expected Material Cost + (Expected Material Cost * Markup Percentage)
Let’s say that these are the average values we have for an electrical technician job,
Hourly Rate – $150
Expected Total Time – 3 Hours
Expected Material Cost – $100
Markup Percentage – 20%
Therefore, the flat rate price for the job would be -> (150 * 3) + 100 + (100 * 0.20) = $570
Now that we’ve seen how flat rate pricing works let’s take a look at the advantages and disadvantages that it would pose for both workers and customers,
This article gave you a detailed look at flat-rate pricing for field service technicians, how it can be both beneficial and disadvantageous to them, what you need to calculate it, and how to calculate flat-rate pricing for your jobs.
For more information on how you can improve your business, check out this article I wrote about which KPIs are the most important to track for a service company and how focusing on the performance of these points can help you grow exponentially. For more marketing blogs, take a look at our complete collection here.
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