Pitfalls and Concerns for Implementing Flat Rate PricingCal Berry
The most common reason dealers give for not implementing Flat Rate is “Flat Rate won’t work in my town (market, area, etc.).” Frankly, this is simply not EVER the case. Flat Rate will work in any market, any town (even very small towns) and any area. Just try it; you’ll like it, and your customers will like it even more. And your bottom line will like it best of all. If it doesn’t work you can always go back to the pricing you used before. However, 98% of companies that convert to Flat Rate never go back.
Flat Rate implementation is a huge change for any company and it is very scary. The owner is usually worried that he will lose all his loyal customers because his price will be too high. Again, this is simply not the case. As said before, customers love Flat Rate. With any change, it will take a few months for everyone to get used to the new system. Techs will make mistakes in the beginning and that’s OK. Flat Rate pricing may need to be adjusted for some repairs. Invoices may need to be changed. However, the techs and the management team will grow to love the new system and embrace it very quickly.
Flat Rate implementation requires training and diligence. It requires convincing the techs that it is good for the customers first and foremost, as well as being good for the techs and the company. There will be complaints from some employees, just like there is push back for any “new change” that an owner implements. Keep working with your staff in explaining the benefits for everyone involved.
Owners and techs sometimes think they are “gouging” their customers which will affect their reputation. This is just not the case either. Owners and techs are worth the higher prices found in Flat Rate because they offer amazing services and value to the homeowner. They want the company to be there in the long run and in order to do that, the company must make money. Besides, a dealer does not have to charge unreasonable amounts, but, instead, a fair amount to cover the companies costs and profits. Furthermore, Flat Rate pricing is flexible enough that a dealer can change prices on some price sensitive repairs to ease the gouging fears of his techs.
Techs often don’t want to change to Flat Rate: it’s new and foreign to them. They feel they are forced to “communicate” more with the customer. Sometimes they view themselves as “salesmen” when asked to discuss Maintenance Agreements with customers. They don’t really want to collect money at the end of every repair. The dealer’s biggest challenge is working with the techs to accept and offer Flat Rate. However, patience and training will pay off in the end because techs will gradually accept the new system and grow to love it, especially when they see that customers love it.
Flat Rate implementation usually requires computer literacy. If a dealer is not very good with a computer, or staff members struggle with computer software implementation, then it is probably best if that dealer uses preprinted Flat Rate books.
One final word of caution, do not implement Flat Rate pricing in the slow times of the year. Implementation is better in the busy months because customers need the dealer’s services quickly and are more open to new ways of pricing. Techs are busier and they won’t have time to complain about the new pricing. By the time the busy season is over, everyone in the company will be used to the new system and will see its benefits.
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Latest posts by Cal Berry (see all)
- Include Profit, You’re Worth It! | HVAC Pricing Series Part 6 - July 21, 2016
- Can You Change Your Costs | HVAC Pricing Series Part 5 - July 14, 2016
- Overhead Costs | HVAC Pricing Series Part 4 - June 9, 2016