Seamlessly Implement a Custom Plumbing Flat Rate Price Book For Your Business Today
Time and Materials vs. Flat Rate Pricing
Plumbing Time & Materials Pricing Model
Time and Materials Equation
((Total Job Hours x Hourly Rate) + Materials) x Markup = Time & Materials Price
Example: ((5 hours x $75) + $400) x 1.2 = $930
Pros
Cons
- Highly adaptive to changes in project scope or unforeseen complexities.
- Ex: pre-existing water damage or corroded pipes
- Disputes with customers over the perceived value of time spent versus output.
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Questions from customers about the efficiency of technicians or the accuracy of billing hours. -
Unexpected charges placed on customers due to project extensions.
Plumbing Flat Rate Pricing Model
Time and Materials Equation
Example: ((5 hours x $75) + $400) x 1.2 = $930
Pros
Cons
- Highly adaptive to changes in project scope or unforeseen complexities.
- Ex: pre-existing water damage or corroded pipes
- Disputes with customers over the perceived value of time spent versus output.
-
Questions from customers about the efficiency of technicians or the accuracy of billing hours. -
Unexpected charges placed on customers due to project extensions.
1. Include a buffer for unforeseen issues
- 10% of the total estimate can provide a financial safety net for the unexpected.
- How many hours is the job estimated to take?
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Will the job require more than one technician?
Are permits required for this type of job? - What are the required materials and equipment? What is the cost?
- What are the precise measurements for the required materials and equipment?
- Are there any concerns with the job site that would require extended labor hours or additional safety equipment?
3. Create a clear pricing structure for additional work
- Be transparent with the customer about how additional work will be communicated and charged. Will you charge a flat rate per hour or will you require a fully updated estimate?
4. Keep a reserve fund for unexpected expenses
- Create an emergency fund of at least 6 months of business expenses.
Comprehensive Cost Calculations for Plumbing Jobs
How To Calculate Plumbing Labor Costs
Plumbing Labor Cost Equation
Example: (1 x 5) x ($75 x 1.2) = $450
How To Calculate Plumbing Overhead Costs
Hourly Overhead Cost Equation
Example: $10,000 / 700 = $14.29
Overhead Cost Per Job Equation
Example: $14.29 x 5 = $71.45
Total Job Price Equation
Example: $450 + $420 + $71.45 = $941.45
How To Price Your Plumbing Services Competitively
- Economy pricing provides affordable rates due to your ability to complete jobs at a lower cost. This strategy would be best in markets where affordable service is the primary determining factor for customers.
- Premium pricing allows you to charge a higher rate than your competitors but also provides additional value, like premium services. This strategy is best used in markets that are quality service-focused and are willing to pay extra for convenience and quality.
- Competitive pricing means charging similar rates to your competitors and focusing on differentiators or incentives to attract customers. This is the most common pricing strategy and can be successful across most markets.
Premium Services for Setting Above-Average Prices
Examples of Premium Plumbing Services
Emergency Response Services
Membership Programs
Customer Financing
When Is It Time To Update Your Service Pricing?
How to Measure an Effective Plumbing Pricing Strategy
Net Income Equation
Example: $500,000 – $105,000 – $150,000 – $20,000 = $225,000
Profit Margin Equation
Example: ($225,000 / $500,000) x 100 = 45%
How To Automate Plumbing Profitability
Plumbing management software can help automate profitability in several ways.
- Automatic job profit reports reduce the need for manual entries and spreadsheets while allowing you to make informed decisions on your pricing strategy.
- Accounting software integration with your preferred accounting software, like QuickBooks, to eliminate double-entry bookkeeping and provide simplified financial tracking.
- Flat rate price books that streamline profitable pricing and ensure your costs are covered on every job.
- Maintenance agreements that create recurring revenue while keeping track of upcoming renewals, overdue or expired payments, and upcoming appointments with ease.
When evaluating which plumbing software to work with these questions will help you find software that simplifies operations, improves your collections, and helps you sell more.
- What kind of onboarding and support is offered?
- Does the software integrate with QuickBooks (or other accounting software)?
- Does the software have custom maintenance agreements and proposals?
- Will I be able to collect payments from customers?
- Is there in-platform financing available?
- Is there an app available for ease of use in the field?
Payzerware is a single solution that fulfills all of your back office, field operations, client experience, and insight management needs. Payzerware offers automatic reporting, QuickBooks integration, flat rate price books, maintenance agreements, 24/7 support, comprehensive onboarding, in-platform financing, an easy-to-use app, and much more! Schedule a demo to see why Payzerware is trusted by over 15,000 contractors as their go-to software partner.
Establishing and maintaining a profitable plumbing pricing strategy balances the cost of service delivery with market demands and customer expectations. Embracing regular price evaluation practices is key to keeping your business competitive and profitable. You are ready to create long-term growth for your company by using these pricing strategies and plumbing software.