Considering Changing Pricing Structure (High first hour, lower thereafter)

[ClickRight]

Currently I'm charging $64 /hr for everything residential. Since most problems are solved within an hour to an hour an a half, the average bills are $64 - $96. However, with computers getting faster, I've been completing more and more jobs within an hour.

By the time you pay for all your overhead, stock, and vehicle maintenance, etc. $64 doesn't get you very far.

I'm thinking of having a high rate for the first hour, then lower after that. For example, $75 for the first hour, then $55 /hr thereafter.

It would make short service calls slightly more expensive, but long calls slightly cheaper (before a 3 hour call would be $192, now $185) I believe it will be more beneficial to both me and my customers.

Is anybody else doing something similar, and how's it working out?

PS. This is for residential and small/home business customers only. Medium to large business is $75/ hr.

 

[NickCat11]

I was charging the same prices you mentioned in your post, $75 down to $55 after the first hour. I recently just changed it to $75/hour with no rate change after the first hour. Plumbers, electricians, etc all charge extremely high rates with no deductions after the first hour. So my feelings are why should I be any different? I haven't had anyone complain about the change so far.

*These are my business rates as I don't usually do residential onsite repair...

 

[ClickRight]

I was charging the same prices you mentioned in your post, $75 down to $55 after the first hour. I recently just changed it to $75/hour with no rate change after the first hour. Plumbers, electricians, etc all charge extremely high rates with no deductions after the first hour. So my feelings are why should I be any different? I haven't had anyone complain about the change so far.

*These are my business rates as I don't usually do residential onsite repair...

Thanks for your input. I should have mentioned in my original post (now edited) that this is for residential services. I bill business clients at $75 /hr as well.

 

[Doctor Micro]

My recommendation:

Residential - $75/hr, 1hr minimum, charge in quarter-hour increments after the first hour, or tenths if you want to keep the math a bit easier.

Commercial - $85/hr, 1hr minimum, increments as above.

 

[vr6rafal]

We use that price structure, $85 1st hour and $60 additional hours, because 90% of the time repairs take 1 hour or less.

 

[tartis]

I charge the following for on-site service: $75 per hour residential, $90 per hour commercial.

 

[lawson_jl]

I charge $80 flat fee for standard in home on site residently work. So far so good I've only been burned once. I was repairing a computer that had a dead hard drive after a power surge. It took about 1 hour to replace the drive and reinstall Windows. I then spent 45 mins trying to install the Microsoft High Def Audio drivers till I finally gave up and just installed a PCI audio and it worked. So I wasted 45 mins of mine and my customers time which they shouldn't be charged for anyway.

 

[ClickRight]

Any other thoughts on this? I'm afraid that customers will be put off by the high first hour fee, which I obviously don't want.

The other alternative would be to just raise my rates entirely as Doctor Micro suggests. I don't want to be charging quite that much per hour, however, as most people in my area aren't made of money. Maybe I could just go with $69 /hr. Decisions, decisions

 

[jscomputingpro]

Do you know how your prices compare to your competition? I would suggest you discover the average price of your competitors and use that as a baseline to determine yours. If you decide to set yours higher, make sure you have a reason you can give to potential clients if they ask why. (e.g. Education, years of experience, etc)

 

[ITG Tech]

I charge $85 per hours 1 hour minimum and billed @ ¼ hour increments after that for business clients.
I charge $20 trip charge local, $30 Area (1 hour or less drive time), and $45 Regional (drive time over 1 hour)
I don’t do on-site residential customers, but residential shop work is billed at $65 per hour unless it is a flat fee for a particular service.
My rates apply for computer work, business telephone systems, video surveillance systems, cable installation, commercial audio systems, Point of Sale maintenance, and systems integration. Since I don’t just work on computers and have to maintain certifications on all the business telephone equipment and network equipment, and am required to have insurance for contract work, I ask for and get the rate that I charge without any complaints from the business clients.
Some clients have a service agreement with me and they receive priority service and discount rates.
So far this has worked for me.