Flat-Rate Debate ContinuesThis flat-rate debate is finally getting under my skin enough that I feel prompted to write. I think this is even my first letter to an editor. This letter is for the six or seven readers who still have an open mind in the upfront pricing vs. T&M debate.
I’d like to address just one point in the flat rate vs. T&M debate: It is flawed logic to claim that flat-rate pricing is unethical because it hides the rate (price per hour). Is it an ethics issue or is it just because we’ve been taught that the value of the job is measured by how long it takes rather than what we do and how well we do it?
How much do we pay per hour to watch a boxing match? Tickets cost the same, whether the decision is in the tenth round or it’s a knock out in the first. We might grumble a bit if we only get to see three punches, but the fact is, we paid to see one high-functioning thug drum another high-functioning thug until one thug can no longer continue.
How much do we pay per hour to watch a ballet? Tickets are priced about the same as the boxing tickets, but we get much more time for our dollar. Vastly more time. In fact, we get an eternity for the same price as the boxing match. An abbreviated ballet might actually be worth more, but don’t count on it. Even though most folks wouldn’t miss a dance or two there are too many dancers you’d have to pay off.
Why is it that when we replace a water heater in 53 minutes we get bragging rights at the shop because we’re so good yet we feel like we need to s-t-r-e-t-c-h that job to make our customer feel like they received their money’s worth? After Holyfield thumps Tyson in the second round will he have Tyson propped up for a few more punches just to make sure everybody gets their money’s worth? I don’t think so. (Of course, he might get a few takers if he offers it as an add-on.)
Plumbing service can be viewed as a challenge match between man and matter or as a performance of grace and finesse. Who hasn’t felt a sense of victory after battling a sediment-laden water heater up the basement stairs? Who hasn’t stepped back to admire a gleaming battery of new copper supply and return piping, all square with only the slightest glimmer of solder showing in each fitting? Sometimes the performance is a fight, sometimes it’s pure artistry. Customers don’t buy performances by the hour so why should they buy plumbing by the hour?
Why not just be great at what we do? I say forget about hourly rates and concentrate on delivering a great performance for the price of admission. Let’s get paid for what we do and how well we do it rather than how long the performance lasts.
Fort Worth, Texas
I follow the debate on the pros and cons of flat rate vs. T&M, and I am amazed that contributors believe everyone has to get in line and follow only “their” path. I enjoy the articles on flat rate and I believe in it, but I also use time and material.
I believe that the customer is No. 1 and absolutely no short cut should be made in servicing the customer. Where is it written that all plumbing should be done as “cheaply as possible.” I do not sell cheap, I only sell quality. I inform all new customers that I am not cheap just the best that they can get (my regular customers already know this). If they’re only shopping price, I am not their man.
I have a tremendous following and referral rate. I refuse to install any water heater that does not offer at least a 10-year warranty. I also charge for a first-class installation and do all the safety checks that should be done when installing a water heater. I also take the owner through all the valve locations, safety checks and setting of the water heater. The standard Big Box $150 installation is never as thorough as mine.
I charge between $850 and $1,100 for a water heater installation and have never had a complaint, and I always get referrals. You cannot stay in business and provide for your family by selling “cheap,” but if you are going to charge a respectable fee, you must provide the service that is due.
When you only do T&M, you have to take every short cut that you can to literally keep the customer off your back as he is usually standing beside you or peeking in the door. This is not always conducive to giving the customer the best possible job.
Whichever method you choose, you have to know your true costs and how to successfully run a business.
In my area, every once in a while a plumber who thinks his boss is getting rich off his hard work thinks he will get rich by starting up his own “shop” out of the back of his pickup. He sets his rate by figuring that if he was getting paid $20 per hour, he’ll get rich by charging $30 an hour. He has no idea what taxes, insurance (if he has any) and overhead are.
After about six months, he drops out of the system and goes back to work for a real shop again, and wonders why he did not make it. In the meantime, this individual has done all his customers a disservice by having to take every short cut he could. His old customers are now without any warranty of any kind on the service or work that the plumber performed.
In this wonderful country, you can choose your own path, and you do not have to have everyone get in line behind you. I am totally happy with my path.
I am an employee of a flat-rate company, and in the last two years I have finally started to make closer to the amount of money I should be making. I have a problem with some of the companies that are charging the “going rate.” I also at one time charged the “going rate.” I make more money now than I did when I was in business for myself — with a lot less headaches and worries, I might add.
I remember when we first started looking at the flat-rate system, we also had all the negative ideas that Ken Secor has. But without the flat-rate system, how would anyone be able to charge a reasonable amount of money for any particular job and expect to pay a reasonable rate for a good service technician? I have heard a lot of contractors complain about the problem of not being able to obtain and keep good service people; in fact, when I was in business I also had the same complaint.
In order to retain good employees, you have to pay them well (very well) and have good benefits. And who should pay for all of this? The customer has to pay for it all! How else can a small business acquire a digital phone system, good box trucks, video inspection equipment, computer systems, proper tools and equipment for each truck, good pay, benefits and professional training for their employees?
This is in regards to Ken Secor’s recent lashing against the “unethical” and “illegal” flat-rate pricing system. I am 25 years old, and own a plumbing corporation. I am starting my professional business based on my costs of running a professional business from the get-go, and not having to go back 10 years later to revamp the whole thing like T&M shops that switch to flat rate.
I am bound and determined to make this system work for my business, my future employees, and all of my clients that see the value which we provide with a full 24-hour service shop, fully equipped trucks and state of-the-art equipment. I trust in my clientele, and I trust in the system that has worked for thousands of PHC contractors throughout the country.
John L. Wood Jr.
Hub Plumbing and Mechanical Co. Inc.
Super FanMy name is Greg Pineau, and I am the third generation of our family business. My son, Jared, is generation number four. I don’t know if there will be a generation number five, still too early to tell.
I want to say how much I enjoy reading Frank Blau’s column each month. It is a jolt of energy to read about good, sound thinking pertaining to the plumbing business.
Several years ago I attended one of Frank’s seminars. I remember driving into the parking lot, and seeing Frank strolling along outside. I thought he was just out for some fresh air. Well, I laughed when he began the program, and one of his first comments was about the trucks some guys drive, and how they should be ashamed to park them in a customer’s driveway.
I’ll never forget that comment or how much I was able to learn that day. I have always been very attentive to the “business” of plumbing; however, you can never learn too much.
A. Pineau & Sons Plumbing & Heating Corp.
New Bedford, Mass.
Clogged In ColoradoIn response to Robert Brooks’ Letter To The Editor (I Gotta Go To the ‘Jim’?) in the May 2002 issue of PM, I’d like to submit a response on behalf of Sloan FLUSHMATE.
First, let me say that there is plenty of documentation that proves low-consumption toilets save water. So to suggest we throw out the Federal Energy Act because of some poor-performing fixtures is not going to resolve the need to conserve this precious resource.
The real solution here is education.
Many consumers today are not aware that there are other flushing technologies other than the conventional gravity fed. And, when it’s time to purchase a new toilet, they rely on old purchasing habits to select a fixture. Like every other appliance on the market today, you need to evaluate your needs and wants and select a toilet that best suites your situation.
Based on the way you have described your experience with your existing fixture, a pressure-assist model would have better suited your needs.
I am willing to bet that you are not alone with the dilemma you are in, but if we as an industry would educate our customers on the different technologies available, a couple of things would happen. First, the customer would be making an informed decision; secondly, the customer in general would be happier with his decision because he has reasonable expectations about the product he selected.
After all, informed customers make the best decisions.
Franklin Park, Ill.