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Getting Over Your Fear of Change: How To Get Started With Flat Rate Pricing

By following a few simple guidelines, electrical contractors can implement flat rate pricing with flying colors. 

Transitioning to a flat rate pricing model doesn’t have to be some big to-do; in fact, the biggest hurdle is getting past your own fear. And once that’s done, there are only a few small steps you need to take in order to set yourself up for success with flat rate pricing. During the implementation process, you’ll benefit by taking the following actions:  

1. Calculate your labor rate – and be sure of it! 

Your labor rate will make or break how profitable your business is with flat rate, so it’s important you calculate it correctly! Here’s a few dos and don’ts to follow when establishing your labor rate: 


      • Consider every cost associated with an employee when calculating your labor rate (payroll taxes, benefits, vacation pay, etc.). 
      • Download our Pricing for Profit kit to learn the exact calculations to use to determine your labor rate.   


      • Base your labor rate off your competition’s, as their operational costs will likely differ from yours. 
      • Forget to consider your position in the market when establishing your labor rate. For example: a contractor in Los Angeles will have more competition local to them than a contractor in a less densely populated area, like Annapolis, so they should be approaching pricing differently.  

2. Practice, Practice, Practice 

When you’ve implemented a flat rate system, it’s crucial that you take the time to familiarize yourself with where tasks are in that system and practice some scenarios to understand the flat rate methodology. It can be helpful to pull 20 or 30 of your most recent service tickets done with time and material pricing and then try to price them from their flat rate program. You may even find that some service techs are coming up with different prices when presented with the same scenario – a problem that can be then nipped in the bud before you use flat rate on real jobs.  

Practicing with flat rate may also present unexpected challenges, but that only forces you to think about how you’d want those scenarios handled in the future. It’s also beneficial for a manager to have an open discussion with their service techs to ensure they’re all on the same page about how to handle certain issues, like what to charge for tracing shorts, how to handle getting parts not on your truck, or how to charge for supply house runs. And if there are issues you can’t figure out, lean on your flat rate system vendor for help! For example: Profit Rhino, a powerful flat rate pricing platform, has a team of experts behind the scenes with years of industry experience – and they’re always happy to help a customer in need! The bottom line: the old saying ‘practice makes perfect’ exists for a reason. By working through possible scenarios, you will absolutely get off to a better start using flat rate and see more success over time than if you had started with 0 experience.  

3. Review, Review, Review 

After you roll out flat rate at your business, the most important step is to review its use. Every day, you should obtain a sampling of tickets and review them to ensure they’re in line with what you would have charged. Should a ticket not match up, you can use that example/scenario at your next service meeting as a training tool. Also, keep in mind that if you don’t monitor the first few weeks, bad habits will set in or techs will become complacent in the use of the product (which reduces profit). That being said, watch out for missing items or labor times that exceed the time allocated by the flat rate system. 

4. Establish KPI’s 

Finally, you should recheck your profitability under flat rate and establish a few Key Performance Indicators (KPIs) that you can track, like the gross margin for every job. Being on top of any problems is always better than reacting after the fact, and KPIs help expose shortcomings that need addressed or whether or not more training – something your flat rate company can help with. 

By taking the above actions at your home services business, you can transition to a flat rate model with ease. It’s vital, however, that you work with a company that provides you with the tools, resources, and training that you need to be profitable with flat rate, like Profit Rhino. Profit Rhino’s platform comes jam-packed with powerful flat rate tools designed to help electrical pros implement accurate pricing, increase their average ticket, and grow their businesses.  

To learn more about getting started with flat rate pricing, visit Rhino University and check out our online educational classes!

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