Flat-rate pricing was supposed to make your life easier. No more haggling over hours. The tech shows a price, the customer says yes, the job gets done.
And it works — until you realize some of those flat-rate jobs are quietly losing money, and you have no idea which ones.
The mistake: one price for every version of the job
A capacitor replacement isn't one job. It's a capacitor on a two-year-old condenser with clean access panels — 30 minutes. And it's a capacitor on a 15-year-old unit buried behind a fence, rusted shut, in a crawlspace — two hours and a busted knuckle.
If both pay the tech the same flat rate, the easy ones subsidize the hard ones, and you never see it in the books. Multiply that across every job type, all summer, and you're donating thousands in labor you never billed.
Fix it with tiers, not vibes
Break your top 10 job types into tiers: standard, difficult, and nightmare. Define what puts a job in each tier — equipment age, access, location — and price each tier from real average hours, not the best-case time. The price book gets a little thicker. The margins get a lot healthier.
Track estimated vs. actual hours
Every flat-rate job has an estimated labor time baked in. Start recording actual time per job type, per tech. Within a month you'll see the pattern: which job types run long, which techs beat the book, and where your flat rates are fiction. Reprice the fiction quarterly.
Run the math on maintenance plans
Maintenance plans are priced to retain customers, not to make money — and most shops never check which one they're doing. Add up the true cost: two visits a year, tech labor at burdened cost, drive time, filters and parts, dispatch and scheduling overhead. If the plan costs you $210 to deliver and you sell it for $189, every plan you sell loses $21 a year — and your best, most loyal customers are the ones buying them.
Price the plan to break even at minimum. The profit comes from the repairs and replacements the plan generates, not the plan itself.
The "dog job" list
Keep a running list of job types you lose money on. Not guesses — jobs where actual hours beat estimated hours three times in a row. Those get repriced, re-tiered, or dropped. No sentimentality. A job type that loses money is a hobby, not a business.
A simple example
Your flat rate for a contactor replacement is $450, built on 1.5 estimated hours. Tracking shows it actually averages 2.3 hours because half your calls are on old units. At $120/hr burdened labor, that's $96 in unbilled labor per job. Do 200 a year and that's $19,200 walking out the door on one job type.
Flat-rate pricing isn't the problem. Unchecked flat-rate pricing is. Check it, tier it, track it — and keep the thousands you're currently giving away.
Want someone to run the real math on your price book with you? Talk with Us — free 15-minute call, no pitch.