What are the Best Practices For Flat Rate Pricing and Labor-Only Repair Billing?

A Contractor University Member recently utilized the Ask-The-Expert Q&A feature within the member dashboard by submitting the following question and received the response below.

Contractor Question:

“How do I approach pushback on flat-rate pricing? What are the best practices when billing for a labor-only repair with products under warranty?”

Contractor University Expert Response:

“Create a flat-rate labor-only warranty repair code with a reduced rate. Use this sparingly for a small percentage of your calls—ideally 1-2% maximum. Since we are exposing the repair labor rate, I recommend $175 per hour. This will be significantly lower than the usual $525 rate.

The $525 rate exists because it accounts for reduced efficiency, productivity, and other factors, but the lower $175 rate doesn’t significantly impact the overall picture. However, it does help address customer concerns of sticker shock with no line items.

For accessories, I treat them as a general pricing per-hour event. You may be pricing them using the book rate—why? Accessories are an add-on, and if you’re on a service call, you’ve already covered overhead. Treat them as part of a club agreement price and sell them accordingly. You win this way. While the book price might be $700, my price is closer to $400 since the service call has already covered overhead. For non-service call sales, stick to the book rate, though most sales are handled by the technician on-site rather than through direct sales.

Additionally, get an EVR (End-of-Vendor-Return) rebate on all purchases from suppliers—this is another win.”

Contractor University members can submit questions via the Ask-The-Expert page in the member dashboard once logged-in. If you are not a member, sign-up for a free trial to access this feature today.

Want to read more real contractor questions and the expert responses? Our faculty members have also answered questions on other related topics, including Training Service Techs in Customer Service and What Should Technicians Do Before Leaving A Service Call.

Hear more from our “Ask The Experts” faculty members on “Cracking The Code,” our weekly web series.

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