Its Going to Cost How Much!!!

The age old debate:

Flat Rate vs. Hourly (or Time and Materials)

I have always worked for an hourly shop, but I have heavily researched the Flat Rate model, and know plumbers who work as Flat Rate plumbers.

Truth of the matter is, investors balk at both models and never seem happy when it comes to paying contractors, but I hope to dispel some of that with this info.

 So here are some facts when dealing with both models.

Flat Rate:

Plain fact of the matter is, whenever you take your car to the mechanic, your paying Flat Rate. The book may say 4 hrs, and you agree, up front, to pay 4 hours, but in truth it only took him 2. Rarely does anyone get upset when their car comes out fixed and operating like it should (although you may swallow your gum at the price tag to fix it). We pay the bill and move on our merry way.

When a plumber charges Flat Rate, you would think someone ripped off the customers arms and beat him/her with them. Why is that?

Well, you get to see the plumber work on your house, whereas, you don't see the mechanic. That can and does make a difference.

Flat rate cannot be judged by its initial sticker price. Like anything you have to look at the benefits.

In most cases you will get the same plumber every time.  Plumbers on Flat rate are trying to build their customer base, which is a bonus to you. They are more willing to be available to you, night or day, then an hourly guy.

Also Flat Rate shops have huge warranty's, What do I mean? I know a plumber just outside Denver that guarantees his water heaters for life. What does that mean? He will replace the water heater, and any parts, for the lifetime that you have it. Yes, you will have to pay the labor, but he is willing to take the cost of the replacement. Try to get an hourly shop to do that.

Flat rate shops offer a plethora of 'Programs" to ultimately save you money. What they are trying to do is win your loyalty by giving you breaks they wont give just everybody.

Flat rate shops are also huge on presentation, customer service, cleanliness and follow-up. Rarely can the hourly shops match the level of customer service a Flat Rate shop already practices.  

Hourly:

Hourly is exactly that, the time spent and the materials used only. Which means if your plumber has to make a run for parts, that's on your bill as well.

A lot of people who don't care as much about presentation and customer service will go the hourly route. Now I'm not saying its bad, remember I work for an hourly shop, im just saying its time and money driven.

Warranties from a Hourly shop are going to pertain to the part (if you got it from them) and the labor put into that part only.

These shops are no frills kind of shops, and if that's what your into then these are the way to go, if you want the cheaper price now. In 5 years they will not come replace it for free.

Some people feel Hourly shops are more fair. You would really need to compare the two models more closely over the long term.

I have often thought of making a model that brings the best of both worlds. Some shops are already using a hybrid like this. If the concept interests you then hunt your local area until you find one.

The one thing you should be asking for as investors no matter which shop your talking about is the "guaranteed estimate".

Have them look, ask for the guaranteed estimate, and then hold them to it.

Advantages abound in both Flat rate shops and Hourly. Just make sure you understand them both, before you poo-poo either.