Another sleepless night. Tom was struggling to earn a decent profit in his service business. Quoting customers $105 an hour had bombed. They pushed back hard.

Sadly, Tom conceded. Tomorrow he would tell his team to go back to charging $90 an hour, even though it means less take-home pay for him.

Dave was too excited to sleep. He ran the numbers over and over in his HVAC estimating software, factoring in overhead and unapplied time, and was certain charging $155 an hour, with a $69 diagnostic fee, would ramp up profit.

Tomorrow, Dave would train his team to use HVAC flat rate pricing to present their new fees to customers, who would love their upfront approach.

Back To Our Story…

Tom is swimming in paperwork when the phone rings. “Yes, our rate is $90 an hour,” he responds, “with a one-hour minimum. Not sure how long it will take.” The caller uneasily agrees to an afternoon appointment.

Dave’s in a good mood today when the phone rings. “Hello,” he answers cheerfully. “We charge a $69 diagnostic fee to figure out the problem. Then we’ll quote you an exact price before we start.”

“Sounds good,” the caller says and they set up a time.

Down in the basement, Tom’s tech diagnoses the problem. “It should take about an hour to get you up and running” he tells the customer. “You’re probably looking at $200-300.

Dave’s tech diagnoses the problem and looks it up in his HVAC flat rate pricing app. “It’ll be $247.” Dave knows the customer won’t be watching the clock and counting the minutes.

Tom’s tech lets out a stressful sigh as he checks the time. “Rats! It took me close to two hours. Now I have to tell the customer that my quote was off.”

“What? No way I’m paying that!” barks the customer. “You said it would take an hour.”

“It took a little longer than I thought it would”, Tom’s tech mutters sheepishly. “I’ll only charge you for an hour, ok?” The tech adjusts the invoice.

Tom’s tech puts his truck in reverse and quickly pulls away and thinks, “that wasn’t a great start to the day.”

Tom’s total for the call is a net profit of 4.3%. “Abysmal numbers,” Tom thinks as he shakes his head.

“Here you go”, Dave’s tech says confidently as he hands the $247 invoice to his customer. There’s no “sticker shock” because it’s the same price they already agreed on.

“Do you take credit cards?” the customer asks, ready to pay in full.

“Thanks for everything—I’ll be sure to recommend you to my friends,” the customer says to Dave’s tech as he leaves the house.

“Business as usual,” Dave’s tech thinks as he strolls to his truck and heads to his next call.

With his HVAC flat rate pricing software, Dave earned 12% net profit and will earn the same at his next call. “Life is good! May have to stop by the Marina and check out that boat I’ve been eyeing.”

Tom is still struggling to…

• Pay his vendors
• Pay his techs a competitive rate
• Provide benefits
• Keep his old service vans on the road
• Pay himself more
• Pay workers comp insurance

And the list goes on…

Meanwhile, Dave…

• Receives discounted vendor’s bills
• Hired a new tech
• Purchased a new van
• Introduced a 401k
• Paid for additional tech training
• Gave himself a raise

And bought a new boat!