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How To Boost Your Income with Flat Rate Pricing
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How To Boost Your Income with Flat Rate Pricing
Deciding on pricing is one of the questions that technicians ask about a lot. In this episode of the Technibble Computer Business Podcast (with transcript below), we are going to talk about flat rate pricing verses per hour, when flat rate is the right choice to take your business to the next level and how to do it properly.
Podcast: Play in new window | Download (Duration: 8:20 — 7.8MB)
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Discussion:
00:27 – When to start reconsidering flat fees to your business
02:00 – Per Hour pricing versus Flat rate pricing
02:58 – What services you should make flat price
03:21 – Programs you can use to automate tech tasks
05:04 – Clients like to know what they’re paying upfront
05:40 – Opportunity to up sell with flat rate pricing
06:22 – Limitations on fixed price services
Tweetables:
“Take your Computer business to the next level with Flat Rate Pricing” [Click To Tweet]
“When Flat Rate Pricing Is the Right Choice For Your Computer Business” [Click To Tweet]
Transcript:
Deciding on pricing is one of the questions that technicians ask about a lot. In this podcast, we are going to talk about flat rate pricing versus per hour, when flat rate is the right choice to take your business to the next level and how to do it properly.
For most new businesses, per hour pricing is generally the best way to go. You simply don’t know how long things are going to take so making it per hour is the safe way to do it. However, once you are a bit further down the track and start getting busy, you should look at flat fee pricing again because it allows you to take your businesses income to the next level.
The problem with keeping your prices on a per hour basis is once you do start getting good at your craft and take less time, you start to earn LESS money. To put it bluntly, hourly rate pricing strategies don’t give you any incentive to work any faster or any better than you have always performed your services. If you work harder, faster, smarter and streamline your processes more and more, you make less, not more! This also begins to affect your workflow and your working attitude. Why find tools that can help you work better and faster if you’ll only lose money by using them?
Naturally, the first answer people will look to in order to fix this is to raise their rates. But a higher hourly rate begins to scare people because they don’t know how much time something will take. For example, lets choose a topic that I know little about nor care about – like car air conditioning systems. They have blower motors, compressors, condensers & evaporators. Lets say my car has a blower motor problem, how much time does it take to replace an air-conditioner blower motor? 15 minutes? an hour? 5 hours? I don’t know and most people who aren’t into cars probably don’t know either.
Should I put aside $100 for this repair, $300 or even $2000? This is how your client looks at us and computers and because of this, fixed rate becomes far more attractive to your clients.
For you as a business, fixed prices has greater potential for higher income. To illustrate, if you charge $75 per hour for your services, as long as that is your rate, you will never make more than $75 per hour. Maybe you can bump it up to $100 per hour but there is still a roof on your earnings. You can only earn so much per hour. On the other hand, if you charge a flat rate per service call, you always have the potential of making more per hour due to your flat rate strategy. If you had 5 systems on your workbench each doing an automated system tuneup at $49 each, that’s $245 in less than an hour.
With flat rate pricing strategies, you always have that subtle incentive to work better, faster, and to find the utilities and tools that will help you do that. It motivates you to keep on top of everything new that could help you work faster and streamline your processes more.
So you may ask “what services should I make flat priced?” and the answer to that is “only the ones that are highly automate-able”. Virus scans, format and reloads, software installations and tune ups are fairly common. Some un-automatable tasks can also be safe like hardware installation. The key is to not choose tasks with no known end like software troubleshooting.
To automate your processes, look into the following:
- For automated application installs, check out Ninite Pro. It allows you to install common applications automatically without installing all the toolbars and other crap that often comes with software. Just start the executable that has the instructions of what applications you want to install and let it run.
- For automated virus cleanup, check out Tron script which is a free and open-source tool that automates the process of disinfecting and cleaning up Windows systems. It is built with heavy reliance on the Reddit community and is updated regularly.
- For format and reloads, look into Fabs Autobackup, we actually have a review about Fabs Autobackup on our Recommend Page.
- To automate tune ups and other tasks, check out TechWARU by RepairTech. It allows you to create a list of tools from over 350 repair utilities, save that list as a preset for the future and click “Run” to have TechWARU do the work for you.
- Consider setting up a PXE server – Which stands for “Preboot eXecution Environment”. It allows you to automatically install custom made operating system installs on a computer without having to mess with CDs or USB drives. If you don’t want to mess around with servers, look at the Windows Automated Installation Kit or third party software like nLite.
- If what you do is fairly custom, you can write your own automation tools with software like AutoIT which has a fairly easy-to-learn scripting language. Just be aware that this can sometimes be a time sink trying to perfect your automation script as it encounters things it hasn’t seen before.
Now I know some technicians may be concerned about some sort of client backlash, but you’ll probably find that many of them prefer it. The thing is that people like to shop, people like knowing what they are paying up front without worrying that someone is milking the clock to run up the bill. People would rather pay $99 knowing that this is the price from the start, than pay someone else $99 per hour even if it should only take 45 minutes to do. Some demographics like students and pensioners need to know what the price is going to be before work starts. Knowing the price from the start will help you win you more jobs.
Flat rate pricing also gives you a wonderful opportunity to up-sell, you could setup something like having any fixed price service being half-off after the main service. For example, If someone calls you to remove a virus, you could sell them on a tuneup for an extra $25. Or, if they just want a tuneup and you happen find a virus during your scans, it’s only X amount more to have you remove it. In either case, you make more money, they perceive it as a value and it doesn’t take any more of your time because its automated.
If you find that fixed pricing doesn’t work out for you, you can easily just switch back to hourly when the next phone call comes in so its little risk.
That said, there are some limitations on fixed price services. You almost never want to have fixed prices for onsite work because a job could take only a couple minutes, or it can take a couple of hours. There are jobs that are fairly famous for taking a long time like virus scans, and these aren’t a problem with fixed pricing in the workshop because its automated. You can get it started and go away and work on something else. You can’t do this while onsite and it becomes very unleveraged. Always charge hourly onsite.
To put this into action,
- Think of your tasks that are the most autoamatable. Again, virus scans, format and reloads, software installations and tune ups are great ones to start with.
- Get the tools I mentioned before and practice on some of your own systems.
- Track how much time it takes you to do each task right now, what level of expertise is required and what is the potential is for it to go bad, then price accordingly. For example, a virus removal requires more expertise and has greater potential to go bad than a tune up so obviously you would make a virus removal cost more.
- Once you have your internal setup in place, push out your fixed price advertising to your marketing channels like mailing lists, social media pages and community boards. Fixed pricing works really well at reactivating old customers and gaining new leads.
That’s it for this podcast, if you want to learn more about automation and scripting we have an entire section dedicated to this on the Technibble forums. In order to see it though it does require you to have 5 posts and have been a member for 5 days. We do this so that end users don’t get hold of computer technician only scripts.
Head on over to the Technibble forums at Technibble.com/forums , see you there!