The Advertising
You've all told chance seen them: six-wheel field vans with billboard-size adverts on the edges, generally displaying a blown-up image of a white-toothed smiley-faced center class lady on the telephone, suggesting the hatful in life is best for her, now that she's discovered a disposable-booties-wearing plumbing & HVAC firm. Or perchance you have familiar as a type of colourful full-page adverts inside the Yellow Pages. You know the sort, they make you are feeling heat and fuzzy, and outline the hatful you thought you required to listen to. And what about their package of each bank card brand underneath the solar? Did that assure you that in case your unplanned plumbing emergency caught you quick on money, then it's best to, with out extra thought, simply use your plastic? Did the 800-number, blazing pink as hearth, subliminally recommend: "hotline straight though to the Maytag Man, who sits patiently awaiting to solace your discomposed mind"? Welcome to the world of Flat Rate plumbing and HVAC promoting!
I wager there's one matter you do not know, until, in fact, you probably did rent one all told these firms - they cost between $125 and $400 an hour. If you did not know they charged that charge, you aren't to be ridiculed on your ignorance, as that charge is covert inside the promote value of each half that they are locution (wink) you want.
Well, I'm going to shed some mild on the dark magic behind the M.O. of the Flat Rate mannequin, then possibly you will not enter internal organ arrest from sticker shock ought to you finish up paying one all told these firms after your resultant plumbing or HVAC emergency.
The Background
Among the self-employed inside the HVAC and plumbing trades are those that have drawn-out struggled to eek out an honest residing, myself amongst them. Traditionally, we have charged an hourly charge, plus a modest mark-au courant supplies. As a service technician for 2 2nd era gasolene firms - Tenney Fuels, and Ferns Energy Centers - inside the early '80s, I used to be paid $3.75 per hour to begin, ten cents above nominal wage. Those firms charged $25 per hour and made a revenue on elements, furnaces, burners and boilers, and the sale of gasolene oil, the last mentioned delivery inside the lion's share. Then, in 1983, Tenney bought resolute a sizzling shot "petroleum marketer" and my pay was raised to $6.90 an hour. In parallel, the brand new gasolene oil conglomerate raised Tenney's charges, and began charging the client for the hatful from pipe thread compound, thenme sprays of elements cleaner in a can, to speedy dry (kitty litter) to soak up oil we spilled on the ground. It did not matter that I spit-cleaned the burner electrode porcelains, the client still was charged for degrading spray cleaner. The identify of the sport modified from, service and set up work of the utmost superiority (at a good value), to slap-it-in-as-fast-as-you-can, and maximize revenue in each conceivable means, irrespective superiority. The new firm even introduced in technicians already educated on their new methodological analysis at different branches, to point out our service division how it could now be executed. It was a shock to me, a infully fledged horn, as each conventional observe bestowed upon me over the earlier 2 years was clearly and painfully on its means out. The shock on the faces of the shoppers, some who had been with the corporate since its inception, was a poignant expertise for them and me. Steadily via the 1980s and '90s, the vulnerable Old School slid closer to final extinction, together with the family-run really feel that we had been all used to. The Big Boys made their entrance with slick, grand, unimaginative signage, sporting company Word that left us - the staff and the shoppers - feeling like an intrusion was underway.
In 1988, I'd much had it with the brand new mannequin that I felt confined by, and resorted to recanting constructive affirmations I positioned on my service van console - somematter to have an effect on peace of thoughts so I may make it via one other soul-wrenching day working for The Man. By this time I used to be employed by a plumbing contractor who appeared to embody the New School doctrine of taking the client for all they had been value. Though I had been inside the commerce for eight years, a co-worker and junior technician - experience-wise - got down to "show me the ropes" my first day on the job. By noontid he'd managed to account for eight hours, per man, charging every buyer for the time it could hypothetically fancy journey to their residence and again to the store. It did not matter if Three of the shoppers lived on the identical road, they still obtained charged the total hour spherical journey, as in the event that they had been the one service name out their means that day. During the course of our rounds, the profit-motivated technician charged one buyer - my dentist - for a lightweight bulb inside the furnace room that he bumped his head on and broke. While there, he exclusively wiped the mud from the furnace. The account got here to over $300. Next, he charged a buyer for an ignition transformer that was not faulty. Then, he charged a 93 year-old lady in a cellular residence $285 {dollars} for wiping the mud from her furnace, and a brand new oil burner nozzle, regardless of the lady's plea that she may barely handle on her deceased husband's Social Security verify. (A calendar month later, when the lady familiar as with a no-heat emergency, she obtained me, the on-call technician. I went to her home, after regular enterprise hours, and settled that the burner grasp direction had failed, so I changed it...freed from cost, as recompense for the bamatter tub the technician gave her calendar months earlier. I'd lied on my report, stating that decision was a non-chargeable recall as a consequence of improperly adjusted electrodes.)
I used to be paid piecework for the precise time I beaked a buyer. Otherwise, if I did not cost them for, say, a visit to the provision home for elements, or journey to their residence and again, or for finishing the day's paperwork, I did not receives a commission for that point. I assumed the corporate owner was a prison for making his residing the way in which he did, and nostalgically pined for the youth at Tenney and Ferns - sincere and moral firms. I felt the current firm not exclusively ripped off (in some ways, not dead explainable inside the context of this writing) the client, but in addition ripped off me, the worker, by illegally dockage my invite out not filling out the every day paperwork appropriately.
The final straw for me was when the corporate charged Kay O'Brien, an aged lady of 84, for a number of service calls by a pipe fitter-employee who had no data of oil burners. When I used to be in conclusion despatched to straighten out the unique downside, and the extra ones he managed to create with a bountiful serving to of sheer ignorance, I advised that she name the primary work and clarify (complain). The owner's girl (the corporate bookkeeper) instructed her to "pay the f-ing bill, or we will take you to court!" This incredibly distressing and aggressive lack of gratitude upset me as a deal because it did Kay, and deeply affected my angle, not like somematter I'd felt working for any anterior firm. I withdrew from participation in firm conferences and occasions and, finally, I used to be fired. The boss man mentioned I "wasn't a team player", and I united, at the very to the last-place degree not on his workforce, which lead me down the solitary street of self-employment...and exhausting knocks.
5 painful years had bimanual and I detected I may have been making more cash working for a New School employer throughout that hopeless interval of pure angst. My earnings peeked over the poorness degree barely comfortable to see the opposite aspect, gazing at what the Joneses had that I could not muster from irrespective of how exhausting I'd labored. Soon, my mate left me for a lawyer. (Whatever occurred to for richer or for poorer? I believe she opted for richer.) Instead of giving in to working for The Man", I chose to risk everymatter on my luck as an artificer (see my essay, "Lessons In Invention Development"), which, by the way, is like jump out of an plane without first checking to see that the chute on your back is not really a backpack full of bricks.
Just anterior to falling like The Old Man of The Mountains, I was approached by a company wanting to sell me a Flat Rate franchise and poured on the gross sales dig in equal parts to the, same, over-the-top, advertising on the sides of certain trucks. I rejected their solicitation because their business model and methods seemed like voodoo. Bankruptcy seemed a more attractive option. A local plumbing company owner did buy into the franchise, thenon he was focusing all his efforts on service, all the patc his excessive drinking showed his behind-the-scenes stresses that apparently forced him into his decision to change his business model to the Holy Grail the Franchiser sold him on. He had a great many service vans with artificery levels I had not seen since the old days. He had a huge color ad in the telephone book that must have cost upwards of a $1,000 a calendar month. (I paid $250 for my black & white quarter-page ad.) He had an 800-number, in bold red ink, and slogans that I knew he wasn't clever enough to concoct by himself. The ad, with charge plate Word beat a row at the bottom, convinced me he had gone Flat Rate. I unreal him with voodoo dolls that resembled his clients, squeeze them until their wallets spilled out of the pockets, cash flowing from them for him to seize - the how-to instruction manual written on some secret page in his Flat Rate pricing book. I was skeptical of his ethics, as it seemed he had bought into somematter that recommended profit trumped quality, fairness, and full disclosure. I thought, "If it quacks like a duck..."
I pondered the methodological analysis behind the new buzzword, Flat Rate. Being a creative thinker, and problem-solver, I thought the method was ingenious, close to it of the Old School way of generating revenue. I examined the core problems in the trade, but also the lack of fulfillment associated with being self-employed, from my crushed and familiar down point of view. Competition was fierce, and there seemed no way to go au courant rates without losing bids, clients, and gross sales. I felt I was on the precipice of defeat, the consecrated martyr for the cause of doing honest work on a fair price, which seemed passé. Also, there seemed no way to afford employees, and the requisite benefits package they habitually demanded. I held back my despiteful tone with maintained thought so as no interviewee would notice when he expressed demands like "trip"; "insurance coverage"; "holidays", like much lava from a volcano, hot my patience to cinders. He didn't know, nor would I reveal, out of certain embarrassment, that I had none of these bennies. Once upon a time, I enjoyed all that he asked for at the family-owned fuel companies. Nonetheless, it seemed ironic to provide others with the very matters I was missing by not working for The Man.
An established company with 15 technicians in the field can generate comfortable revenue by the Time & Materials model, but I was beginning to see the employee prospects that I interviewed demanded a full compensation package, and that I would ne'er become the company that could afford to pay them. And with clients questioning, "What, you cost $35 an hour? I can get so then for $25 and hour!" the pressure to suppress the urge to charge more was what I feared and loathed the most, but was ever present. The over arched problem in the trade, that desperately required fixing, was the perception in the head of the consumer that irrespective the hourly rate, there was always individual out there who should be wanted for a "aggressive" bid. That sounds like Free Market Competition at work. By not charging by the hour, rather charging for 'materials only', albeit, with a hefty price tag that obscures truth cost of the parts, the Flat Rate model appeared to have offered up a solution to the problems I fully fledged. I'll explain.
The Way it Works
When you call a Flat Rate Company, typically it's because you are desperate to have your no-heat, no-hot-water, or worse, "no water" problem remedied, quickly. The typical Flat Rate client gravitates to the "Yellow Pages" like steel to a magnet, and dials the number in the most eye and emotion-catching ad. The company behind the ad anticipates them coming, and, in a sense, is like the Maytag Man who sits waiting for the unsuspecting and desperate voice on the other end of the phone line. The troubled voice is a common one, and the packaged mantras of the Flat Rate Company - "Honey, simply name ________." (Fill in the blank with a name of Flat Rate Company.); "Repairs and upkeep on all techniques"; "You get agency, up-front estimates and truthful, aggressive costs"; "Better superiority assure"; "90 days no funds, no curiosity financing"; "At final, a military personnel who's in the to the last-place degree multiplication on time, or you do not pay a dime"; "Never an time beyond regulation cost"; "You know the value, earlier than we begin"; "Clean, adept technicians"; "Immediate response"; "Our costs are based mostly on established requirements"; "_______ solves over 1000's of act issues a 12 calendar months and we are able to remedy yours now" - are like diazepam to ease the caller's anxiety. Those lines hook you fast in your superlative time of need. Hey, if you can get an fully fledged, neat, clean, and professional pipe fitter who allows you to okay the price before he does the work, and he smells nice (yes, there is an ad for nice smelling pipe fitters), and you can slap the repair on plastic, then who wouldn't call? It's true, the Fat Raters are unremarkably there shortly time, have the parts in their warehouses-on-wheels necessary to solve your problem, and you do okay the price before they begin work. However, there's more to their formulae, and intent by some, than catches the eye.
The Catch
Many Flat Rate companies tell you over the phone when you call, not in the ad, that there will be a trip charge (leverage) if you don't "okay the value" for remedying the diagnosed problem when they arrive. By then you've already done all the hunting for a technician in the hobo camp of ads that you can stand. When they assure you they can rapidly solve your problem, you agree to pay the trip fee should you disagree with their price. Shortly, the technician arrives, and in time he tells you that your problem is such and such, and the cost to fix it is...well, on page 7 of his Flat Rate pricing book. The price seems like a deal, but you have no way of knowing if it is overmuch - it's not like comparison brand name calling to generics side by side on the ledge of the supermarket. Besides, you are in a hurry to get your kids off to school, and get to work, and everyone necessarily to brush their dentition first. YOU WANT WATER, NOW! So you whip out your Visa card and he swipes it before you, so busies himself in the cellar for a patc. Once the repair is made, your nice smelling pipe fitter comes upstairs, utters niceties, and when he is positively out your door, removes his disposable booties, hoping you'll notice he didn't dirty your floor, which might be the most profound matter you remember about his visit.
On his way to his next service call, the technician whistles with glee, knowing he just made a 7% commission (an incentive to sell as many parts as possible) on the gross sale, on top of his $75,000 salary. Some of these guys make over a hundred grand a year!
[As a gross salesman for the last company I worked for, in 2002, I made 2% commission on net profit, which was determined by the owner of the company, though I wasn't privy to his calculations. I quit a year later and they refused to pay my commission check.]
The Math
So how do they hit their high prices? Hypothetically, the well pump pressure switch at the root of your no-water problem cost the Flat Rater $12, but you paid $379.25 (the charge that you 'okayd before they did the work'). $379.25 - $12 (their cost of the switch) = $367.25, the Company's mark-up. If you hired a time and materials guy, say, at $85 for the hour in your home and one on the road, plus $24 - an average sell price for the switch, you'd pay $194. Now, deduct $24 from the Flat Rate price of $379.25 and $355.25 is the labor amount you've been charged. But wait, there's more. Divide their labor amount by two (hours) and their equivalent hourly rate is $178 per hour - more than double that of the time and materials guy! You think, "How can this be? He was exclusively right here for 45 minutes?" Then you suck it up and remember his booties and your clean floor, rationalizing away your concerns, especially about the new balance on your charge plate, which you can make minimum payments on anyway. But don't forget to factor in the interest, delivery the total cost of the Flat Rate Company's repair to new high ne'er before seen in the Old School model. What is the Flat Rate technician's cut? 7% X $379.25 = $26.55, but that's in addition to his salary, or high hourly pay.
These are average numbers, of course, but you get the idea.
Some Flat Raters take price-setting to an extreme, raking in up to $400 and hour, then laugh through their admission of guilt to fellow market keeper at the supply house. I've actually detected them there, at the counter.
It's all about their marketing, paired with the desperate consumer's emergency, otherwise, the entire business model wouldn't hold up. The consumer pays a premium for the company's means of rental you know he can have a technician there with the requisite parts, inside an hour. But that doesn't mean that a totally qualified technician will show up at your door. Anyone can change parts. Besides, the more parts they sell you, the more often you pay that premium...until finally he fixes your problem. It's all but always a net gacertain the company, but a loss for the consumer. If the unqualified technician sells you 3 parts, or more, dependent on truth problem you bet long it takes to replace parts until the right one is found, the equivalent hourly rate quickly skyrockets to the same $400 an hour range. It's math 101.
There is an army of these companies now bell ringing the inhabited neighborhoods all supported by their big ads, hoping to add new clients, as many are one-timers, given the unwanted economic bath they took the last time. Speaking of being taken to the cleaners, how does $950 for a plastic Zoeller sump pump suit you? Maybe $1,900 for a 40-gallon electric hot-water tank sounds attractive? I think not! Check Home Depot's prices for those items the next time you are there. Flat Rate pricing seems to save the consumer from information they shouldn't see. What they don't know won't hurt them?
More often these companies are franchises and they are pop up around the country, from California to New Hampshire. But a local company (though I suspect it is only a matter of time before they sell franchises) boasts of having 35 fully furnished trucks on the road, in New Hampshire! Surely there must be as many dead European elk on the road.
Two Schools Collide
With pricing like that the Flat Rate Company can afford to pay their employees better than the non-Flat Rate competitors, thereby attracting the labor force away from the Old School guys like me. However, guys with talent, skill, and ethical fortitude tend to work for themselves. The quandary is omnipresent. I ask, why would anyone work for me if all I paid them was $40K a year, and exiguous benefits? The Flat Rate method answers this question, as it addresses the quandary of how to make self-employed tradesmen profitable, so they, too, can have the same benefits that their employees demand.
The New School, and Flat Rate have convinced me of the direction the trade has been headed certain some time, and that it will ne'er return to the days when I began as an oil burner technician for fuel companies that had been around since the beginning of oil burners themselves, and coal-fired systems before them. Still, I choose to work by the traditional ethics that I was fortunate enough to be taught, at once when the winds of change were shifting. I've release of the idea that I would employ many and reap the profits they generated for me. Now I work alone and hire other self-employed guy when I need a second pair of hands to complete a job that requires more than one, rather than go Flat Rate and take advantage of the client. I do believe in business ethics (surely some of you are happy at my naiveté). Maybe I'll ne'er sway from the Old School approach, as I still have zero patience for the sub quality work done by the bottom of the labor force barrel, and by some of these Flat Rate companies. Call it ego, or call it nostalgia, I call it exemption, exemption to choose to feel great about the work I did today, without having to scam anyone.
Presently, where once I charged only for the time on the job, I charge for the total time that I commit to my client, including travel time both ways. Also, I charge for diesel fuel to get there. After all, the time and expense of traveling to my client's site is not for my benefit; it's to solve their HVAC problems - my primary business.
I know every task required to complete any HVAC job, and the order in which they should be performed. With 28 years experience, I feel unlike many of the Flat Raters who often only have few. Really, many are simple parts changers in a neatly ironed uniform, behind the wheel of a moving billboard / warehouse, cartage around 25 grand of artificery...and a Flat Rate pricing book.
Despite my many complaints about them, I feel the Flat Rate innovators were very creative and perceptive when they developed their solution to the ills in the trade. However, I feel their method is fraught with deception, and chance for fraud. Not all are bad, but take the following as example:
The Fraud
A precedent is my client Cheri Whittaker's experience with a Flat Rate company. Cheri called me for a "free estimate" to change the boiler in her home, in Exeter, after seeing my ¼-page black and white ad (that cost $450 per calendar month), in the Portsmouth teletelephone book. Being a savvy and knowledgeable gross salesman, I knew enough to get a deal of information up front, before I united to give a free estimate - somematter everyone vocation ads in the telephone book expects. Estimates take a deal of time, if done cautiously and accurately. The answers Cheri gave to my queries - viz. who the (Flat Rate) company was that condemned her old boiler fortnight earlier - caused me to suspect she just required an honest and fully fledged technician to diagnose the problem right. I felt I was her man, and united to give the estimate.
Upon arrival in her cellar, I detected that the air gate on the oil burner had been by choice shut, causation the fire to burn improbably dirty. Black smoke spewed from the chimney, and the boiler was blocked with soot. Before long, damage to the oil burner would result. Cheri showed me the account and recommendations the technician had left with her. There were many reasons listed on the account for condemnation of the boiler - every one false and designed to pressure Cheri into buying a new boiler from a "Comfort Advisor" they planned to send resolute give an estimate. Had she gone on with their diagnosing and prescription, the technician would have received a $700 commission in his paycheck that week. Imagine him doing this more than once a week, and you can see how he would easily approach a $100,000 annual salary.
The last time the boiler and burner had been serviced, anterior to the Flat Rate Company's visit, was over a year, so I knew the Company technician had sabotaged the boiler by choice. Otherwise, an oil burner starved of air would have caused it to fail in a matter of weeks, and it was nearing that point. In a way, the technician's statement on the account was correct: "the boiler is because of imminently fail".
Cheri and her husband asked me to confront the Flat Rate Company, in their presence, so no surprise, I united. Soon, the technician and his service manager arrived at their home and we converged in the cellar. Within 15 minutes, I evidenced false the Company's claims in their account and of no wrongdoing. The Whitakers were not affected with the hollow answers and guilty looks from the two, and evicted them from their home, telling them they would ne'er return. I proceeded to clean the very dirty boiler and bring it back to good, safe in operation condition for few hundred bucks - a far cry from the $10,000 it would have cost to replace the boiler.
The Summation
Cliché's abound for situations like the same such as, caveat buyer - "buyer beware". And, "if it appears too good to be true, then it all told chance is." Think of all the claims, promises, and guarantees in the telephone book ads, then recall what they charged you. Was it a steep price? Had you ever been charged that rather money for a service cbeat your past? What about the so-called Trip Fee, did you opt for that and disokay of their Flat Rate? Did the technician fix the problem right the first time, or did you have to call him back? Gimmicks like disposable booties, and surreptitious slogans - "you okay the value" - are devised to dupe the layman from excited about the value for a restore. These firms are intelligent, and acquiring loaded with out doing a deal superiority work for the cash, even so they do promote a hatful of elements, which I suppose bolsters the commercial enterprise system.
My Mom and her husband in California had been simply hosed by a Flat Rate Company, paying double the value for passe air con tools that's being phased out as a result of its refrigerant destroys the Ozone layer. I wanted I may have saved them from the wolf-in-sheep's-clomatter Comfort Adviser that bought them on the conception of dynamic their functioning furnace and condensation unit, earlier than that firm loosed their disposable booties of their residence. I do not blame the one's who've been bitten; I maintain the snake charmer liable for permitting the snake to chunk.
But, hey, at the very to the last-place degree the owner of that one-hour flat charge firm is content material with not having to work for The Man - one matter we do have in widespread
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