In this episode of ‘The Tradie Show’, Andy and Angela explain the benefits and challenges of both Hourly Rate & Flat Rate pricing structures. Tune in NOW to find out which one is RIGHT for your trade business so you can get back to making AWESOME profit! Tune in NOW!
Andy
If you’d love listening to this podcast, why not come to our free live event? Lifestyle Tradie Live and meet Ange and I in person.
Ange
Lifestyle Tradie Live is jam-packed with everything you need to know to run a successful trade business, technology, profit, sales, and systems. We cover it all.
Andy
So head to our events page at www.lifestyletradie.com.au/events/ and register today for a city near you.
Ange
We can’t wait to meet you in person.
Andy
Hell yeah. Hello. Hello. Welcome back to The Tradie Show. I’m joined by my wife and business partner Ange.
Ange
Hey there! Tradies and partners. Thanks for tuning in today. So Andy, The Tradie Show toolbox is packed to the brim with trade topic suggestions, but there is one specifically that I’ve had my eye on for a few weeks now that I want us to dig into.
Andy
All right. Open her up.
Ange
All right. I found it! So often we are asked about pricing models in trade business, and which one will make your business more money and more specifically, more profit. So today I thought we might have a chat about hourly rate and flat rate pricing. Sounds good?
Andy
Sounds absolutely epic and you are right. We do get asked this all the time, but to break it down, there are two different pricing models used by trade business owners. The first one is hourly rate, and we’ve been doing it for donkey’s years, which is the exchange of time for money. And the second one, quoting is also known as flat rate or upfront pricing. This is a fixed price for the work.
Ange
If you’re out there and thinking to yourself, I’m not quite sure what flat rate is, or I’ve never heard of it before, let’s just talk about that first. So, as I mentioned, flat rate is quoting, but quoting in the true sense of the word is for bigger jobs, larger jobs, whereas flat rate or upfront pricing is for smaller style jobs.
Andy
Yeah, that’s a hundred percent right. And it came across to Australia around about 15 to 18 years ago, and it did come from America. It did start in America and came over here and a few of the bigger companies, including ourselves, we realized that we were at a point at $98 an hour with a lot of the industry was still at 70 and $80 an hour, and for us to break that a hundred dollars barrier, customers were like freaking out. And this is back to the old days when customers were just used to, what is your hourly rate? What is your hourly rate? What is your hourly rate? So we realized that we needed to grow our business and make the money that we needed to be a successful winner to go to $120 an hour, but we couldn’t tell our customers that. So this flat rate or upfront pricing came over from America and all it really was was quoting the smaller jobs. So you’d go into a house and you’d do a PowerPoint or you’d do a leaking toilet and taps. You’d just quote it and you’d quote it to make decent money. So when you’re working at an hourly rate, sometimes you get called up just for time and not making enough money for your company. So this is how it all came across here in Australia.
Ange
Yes. So a flat rate pricing model charges the customer a pre-calculated price. For a completed job, regardless of the time required to complete that job.
Andy
Yeah, that’s right. A basic way to determine your flat rate is to calculate the number of hours or minutes that the job will take to complete, then multiply it with an hourly rate that you know is right. You know, when we say an hourly rate that you know is right, is a rate that actually gives you an opportunity to make some serious profit. And really, it’s essentially just a quote.
Ange
Yes. It also includes materials with a margin.
Andy
A hundred percent.
Ange
So, as you mentioned, the alternative of course is hourly rate and the key difference is the end price is calculated after the job, which is still, of course made up of time, hourly rate, and materials.
Andy
Yeah, that’s exactly right. And you know, I’m gonna go into rant mode here. There’s too many trade businesses out there that just don’t know what they should be charging to make decent money. And let’s face it, one in three trade business owners go broke. And realistically, there’s probably only the top 20% of trade businesses out there that are making serious money. Everyone else is like winging and moaning and life’s too hard and everything gets in the way. And that all comes down to they’re playing this game of keeping up with the Jones. Keeping up with Billy Bum crack, they’re still charging 60, 70, $80 an hour and not charging what they’re really worth. And the thing is, us, tradies, we’ve been seen as the shit kickers. We leave school in year 10 and we get a trade because it’s too dumb to do anything else. What a load of bullshit. You know what? We went to TAFE, we’ve done four years, or we’ve done six years to be a qualified tradie. What stops us from charging the money that we want? You know, you’ve got these snooty nosed lawyers that can charge three to $500 an hour and we’ve been put in this bucket that we can’t charge enough to actually make serious money to survive. And that is the problem with the industry at the moment, is anyone out there that’s struggling and you’re not making the money, you’re either sitting at the beach doing nothing or you’re not very good at your trade, I’m sorry to say, or you’re not charging enough, and that’s where everyone needs to stand up and go, you know what? We need to actually make some serious money. And I will say that is starting to turn right now, I’m seeing it more and more people are realizing, you know, our bodies are gonna be broken, bruised, we’re gonna be in wheelchairs. We could, we work so bloody hard, , we need to charge that because when we’re 60 we may not wanna be on the tools anymore. Maybe when we’re 50, we don’t wanna be on the tools anymore. But we break our bodies and we are gonna look at what we charge now. We are gonna have to keep us in our job and have the money that we need when we retire. The old way was you bought your house and then you owned a house at the end, but it’s not enough if you’re living in it. You need serious money to retire these days.
Ange
Well, this is coming back to,
Andy
Sorry.
Ange
This is coming back to charging what you’re worth. But I think the connection here is actually about the fact that most trade business owners that we speak with don’t actually even understand what is the true hourly rate that they should be charging to ensure that they actually make decent money or decent profits specifically in their business.
Andy
That’s because most tradies do a week and nothing goes wrong and they bill out 40 hours and the sun shines and the unicorns are flying through the air and the rainbows are out, and you’re living in la la land. What you’re not doing is calculating what happens over our whole year, you know, there’s been covid, people are sick, people are injured. We’ve got workers’ comp. Four weeks of annual leave, two weeks of sick leave, two weeks of public holidays. Eight weeks already gone. Then you’ve got your ups and downs of business, so you’ve gotta look at the actual whole year. And when you get to the very end of the financial year and you sit down with your accountant, he looks at you and says, bloody good job mate. You’ve made some real good profit this year.
Ange
Yes. However, let’s just take that back to how this all started, it was simply because they were sheep and followed their previous boss, and that’s the reason why they chose the hourly rate.
Andy
This is the previous boss, listen, looking at Billy bum crack down the road that probably hasn’t got insurance and isn’t even a good tradie, and everyone goes, but he’s charging that. I better charge the same as him. I know that because they might be classified as a bit expensive. Charge what you are worth. I’m not telling you what to charge, but charge what you are worth to make the money you need to grow your business. And look after your staff. Your staff at the moment want megabucks. Megabucks. I say. So we’ve gotta start looking at all of that pricing and, and adjusting with the times. And why can’t we be like lawyers? Who’s to say they’re better than us?
Ange
Slight little rant there, but, uh, all good conversation and I know you and I could talk about that bit for hours. However,
Andy
Yes, you could.
Ange
I really wanna drag you back and have this conversation and break down challenges and benefits of each hourly rate and flat rate. Okay, so let’s kick off with the challenges of hourly rate.
Andy
So the first one that comes to mind is really price shoppers. You know, price is the first thing they ask. They give you a ring up on the phone. They say, I’ve got a job. And before you’ve even said, what’s your name? They’re like, how much are you an hour? And then they ring it on another 10 companies and go, how much are you an hour? And they’re actually price shopping off your hourly rate. They’re not actually looking at your company, your brand, or even who you are.
Ange
They’re not even giving you a chance, are they? To explain why you are better than anybody else. It’s literally a race to the bottom.
Andy
Definitely.
Ange
Right. So another challenge that we know is once you actually win that job and you’re actually on site because you’re charging an hourly rate, that customer is literally clock watching you every moment.
Andy
Yeah, they are. And I sort of get it. They’re paying for the hour, so they think, they look out and they go, well, hang on, he’s having someone to eat. Am I paying for that or is he paying that? Oh, hang on, he’s on his phone. What’s he doing on his phone? He’s on Instagram. He’s on Facebook. What’s actually going on with the tradies and they’re thinking, I’m paying for this. Now, all these little things are becoming a bigger and a bigger problem until it sort of explodes. When you give them the bill at the end and they go, well, why have I paid for all this stuff? And you go, hang on, hang on. I was on the job management system and I was taking photos of the jobs and this is all part of the job, but they don’t know that data. You know, and sometimes tradies do, they’re on Instagram or Facebook or they’re doing something else. So when you’re charging an hourly rate, sometimes it can really bite you in the butt with that.
Ange
Yeah. So just take care of that sometimes. We definitely recommend making sure your tradies in the field have a tablet versus a phone so that the customer doesn’t think they’re just playing on social media.
Andy
Yeah, that’s exactly right. We, um, made sure our tradies were like, listen, don’t sit on your phone if you’re doing stuff with work, even at the end of the job have the iPad. Yes. Because when you’ve got an iPad, the customer thinks you’re working. When you have a phone, you are looking at your phone. They think you’re scrolling through our Tinder, I don’t know.
Ange
Yes. They’re watching you like a hawk. And that’s what we’ve gotta be really careful of. So another challenge we find with hourly rate is that it completely eats your profits. So if you’ve agreed to actually go to a site for a hundred dollars an hour, for instance, and if you’ve completed that job within half an hour, that customer will go, oh, actually whilst you are here, can you just fix these taps? Because that will eat the rest of that other half an hour.
Andy
Yeah. Oh yeah. Oh, actually I’m paying for an hour. So I was just wondering, could you do the dishes for me and take my rubbish out? What else can I get you to do? You know, like, oh my God, come on.
Ange
Absolutely. So another challenge we find is getting to the end of a job. And because the customer has only heard say a hundred dollars an hour, and now they’ve got a bill for say, $500, they just look at you like, are you serious?
Andy
Yeah. You know, a lot of the time they look at a job and in their mind it’s a lot cheaper than what it actually costs to do the job, they may have heard from a handyman down the road that’ll only cost you a hundred bucks. So they don’t really know. They think it’s gonna take an hour and all of a sudden it takes four or five or six hours and you haven’t had any time to explain to them cause they didn’t know what the price was. And at the end, you give them a bill for six, seven, $800 and they’re like, I thought this wouldn’t be over $200. What have you done for me? And you go, but I’ve been here the whole time. But that bill shock is something that you don’t want to have happen and, and that’s a challenge with charging an hourly rate.
Ange
Well now think about how the customer thinks about you as a business and now they’re tarnished and they’re going to badmouth your business and they’ll probably never use you ever again simply because that’s the way you charged.
Andy
And I guarantee you this, when we were charging an hourly rate, we had more complaints than when we moved to the upfront pricing.
Ange
Interesting, isn’t it? So when I think about hourly rate, I just think about trade business owners trying to squeeze in and say yes to every single job they possibly can and do way too many jobs in a day. And because they’re really busy, they believe they’re really profitable and it’s a very dangerous place to play.
Andy
Yeah. For people that are doing more maintenance service sort of work. And you’re running in and you’re doing eight to 10 jobs a day and you’re like, we’re so busy. We’re the biggest company in the world. We’re amazing. Well, you know what? When you’re doing these eight jobs a day, you’re just charging an hourly rate, and a lot of the time it’s not a good model. The companies that I see that are making seriously good money are the ones that are doing quoting and making good money on quotes. When you’re running around with an average price for an hourly rate and you’re working your absolute ass off, I guarantee you, at the end of the year you look back and you go, I’m working a hundred hours a week. I cannot see the value in this business. Why am I doing this? And it all comes with understanding your worth and what you need to charge.
Ange
Yes. And where I see the biggest danger with regards to hourly rate, especially from a maintenance perspective, is this lost opportunity. Because every single job that you go to, that customer always seems to have additional work, and you’re in a position that you can’t say yes because you’re trying to race to the next job. You’re looking at your clock going, I gotta go. I can do that job, but I can’t do it today. Can we book it for next week? And actually, you’ve just pissed off your customer and that’s terrible. Lost money, lost opportunities on the job. And you could have actually slowed down, done that work, and the customer would’ve been super happy and you’re not driving around the world.
Andy
You said it.
Ange
Yeah, I did. Okay, so let’s switch this up and let’s talk about the benefits of hourly rate. And the first one that comes to mind is you can literally take as long as you like.
Andy
Yeah. A lot of people like hourly rates because they feel like it’s just comfortable. And it doesn’t matter how long they take, it doesn’t matter what they do. You know how many guys they put on the job. Everyone’s just getting the same amount, and at the end of the day, They’re comfortable.
Ange
Yeah. If you’re a perfectionist and you go slow and that’s just your style, it’s really accounted for, isn’t it?
Andy
Yeah, that’s right. Another benefit is you don’t need to have your vehicle stocked with, you know, $10,000 worth of stock because you know when you’re at an hourly rate, it’s okay. It seems okay. Oh, Mrs. Jones, I’ve just gotta head to the supplier and pick up that tap or that piece of wood and you just go there and the customer’s paying for you to do that and they cruise and you get bummed back after a bacon and egg roll and get stuck back into work.
Ange
Absolutely. My customer is paying for it. And another benefit of hourly rate is there really is less risk. So if you end up running into, I don’t know, rock under the ground and things take you a little bit longer, it’s really easy to be able to explain away why that invoice perhaps is more because you’ve ended up spending way more time on the job.
Andy
Yeah. It is less risk and sometimes you don’t make that profit at the end, but it’s less risk. And I’m seeing a few builders at the moment just because of staff shortages and also materials taking so long to be delivered on site. They’re sort of going, I don’t wanna quote this job because if materials go up another 30%, we’re gonna be in serious trouble here. I’m just gonna do and charge an hourly rate and materials and then I’ll be comfortable that I’m not gonna do my ass at the end of the job.
Ange
Okay, Andy, that’s all been great, but let’s start talking about flat rate and let’s switch to challenges with flat rate. Okay. So the main thing with flat rate is if you don’t understand it properly, and if you haven’t built it right, it’s gonna cause some real serious issues for your business. Because like any quote, they are still built with time, with materials, with a margin, times your people to ensure that you have a profitable job and you’re charging for a profitable work.
Andy
Yeah, that’s exactly right. It is a challenge sometimes cuz if you haven’t put the right time in and a job actually blows out and takes you longer, like a quote, it starts to burn a hole in your pocket.
Ange
Yes. And even with our flat rate, every single one of our team members needs to understand that one job is a particular time. So for instance, I don’t know, changing some taps, if it says that it’s built with 30 minutes of time, there’s actually a code in that so that the boys actually know I have to finish this job within 30 minutes, otherwise we’re not profitable.
Andy
That’s right. And when they’re looking at that code, if all of a sudden it’s a problem job, it’s up to them to understand how to extend that.
Ange
Yes, absolutely.
Andy
The other challenge is really around fully stocked vehicles. You know, when you are charging upfront pricing, you really wanna make sure your truck has all the stock. You don’t want your tradies leaving the site ever because that costs you a lot of money. And if you wanna make that high profit margin, you need to make sure that your vehicle is stocked.
Ange
Yes, time is money. It’s gonna eat profits if you leave. So, absolutely. Another challenge with regards to flat rate is that you need to ensure that you’re keeping up to date and across any pricing changes, especially now when materials are changing all the time. Because if you are what we call a pre-build inside your job management system, if you don’t review them and if you don’t change them regularly, again, this could be eating your profits.
Andy
Yeah. In these times, materials are moving at such a rapid rate. If you don’t get that right and you’re on the ball, it can seriously eat into your profit.
Ange
Yes, that’s exactly right. So let’s change this up and talk about the benefits of flat rate. So, as I mentioned, this is quoting for a smaller style of jobs. So imagine you’ve gone toward a customer’s house and you’re doing a job that you know you have quoted for $300. And when that customer has asked you to stay and do additional work, instead of you trying to squeeze that into your $120 an hour, and now you’re doing multiple jobs and only still charging $120 an hour this way with flat rate, it’s $300 for the first job, it may be $400 for the second job, and so on and so forth. So you may be there for more time, but you know, every single piece of work you do ensures that you make profit.
Andy
Yeah. When you’re doing this, um, there’s a lot of opportunities to look at up-sells and cross-sells when you’re at customers’ houses. But when you’re at an hourly rate, you don’t really wanna do it. It’s gonna suck in your time. You wanna go onto the next job. Where the benefit of the flat rate is you can upsell these jobs with good profit margins, so all of a sudden, instead of, you know, you’re a hundred dollars an hour, you could be charging $200 an hour. So when you knock these jobs over, all of a sudden you look at the end of the job and go, woo, we made some good money today.
Ange
Yes. I will just add a caveat here that if you were to implement flat rate or upfront pricing, the language is exactly the same inside your business as a maintenance style business. There is a sales process that is required at every step of the way from the way you answer the phones, to how you convert that to an actual appointment, to how you upsell every single job so that you slow down and do less jobs in a day so that you are more profitable.
Andy
Yeah, that’s right. Everything has a process. Obviously that’s what we do here at Lifestyle Tradie, but if you wanna get the best bang for your buck, you’ve gotta go about it the right way. Every step of the way is structured and systemized.
Ange
Absolutely. So let’s have a look at another benefit of flat rate, which when compared to hourly rate, there is no clock watching because you have literally said to a customer, I’m going to, I don’t know, fix your taps and toilets. It’s gonna cost you $300 regardless of how long I stay here. And the customer just takes a sigh of relief and goes, fabulous. Let’s get started.
Andy
Yeah, I mentioned earlier our complaints went down when we went to a flat rate pricing module. The thing is the customer understands the price at the very start. If they’ve got a problem, then you can discuss it and understand why they have a problem with the price and explain, well, this is how long it takes Mrs. Jones, so you’ve got a chance to explain it. Then they say, go ahead, and then it’s free and easy for them. They can have their cup of tea and not be worried about boys on iPhones or go to the suppliers or whatever. So it’s a good way to do it.
Ange
Absolutely. They’re not watching you like a hawk. They actually don’t care that you’ve left sight, you know, gone and come back because they just know that you’re getting that job done for a set price.
Andy
Exactly. And another benefit too is that if you are one of those tradies out there and you’re a gun tradie, then you are actually getting the job done faster than anyone else. So when you do an hourly rate, you’re actually ripping yourself off. So when you do a flat rate because you are so fast and you are so amazing at what you do, then you actually make more money and you are rewarded for that.
Ange
Yeah, there’s absolutely a benefit to you having quality work at a much faster pace.
Andy
Yeah, that’s it. And I think when you’ve gone down this model with the flat rate pricing, it’s a pricing that’s gonna suit your whole team. So every time, uh, one of your tradies goes to a job, it’s just like McDonald’s. The burgers are the same price, the fries are the same price, and the drinks are the same price. So a customer can’t say, you’re here last time and did this job and, and it was actually more than the time before because everything he’s set at the same price.
Ange
Yes. And much easier to train the entire team because the process is the same every single time they follow steps. 1, 2, 3, 4, 5, the customer is really happy and your tradies who work for you have an understanding of what is expected of them from their boss. So that’s a really huge winning point.
Andy
Yeah. It’s the only way to fly, especially on these smaller jobs these days. You know, most businesses that we are working with these days are going down that path, and it is just that chance because with traffic and everything that’s going on these days, there’s a lot of driving that’s gotta go into the bill, right?
Ange
Yes. And implementing flat rate inside your business ensures that you can slow down, be far more calm, and it takes away the stress of this rush and busy pace racing to try and win more work. Because you’ve gotta fit in like eight jobs in a day. Slow down and take a chill pill.
Andy
Yeah. And you know, when you’re working, especially in residential style of work, the customer actually wants to build a connection with you, so they trust you. And when you’re just running in, hi, Mr. Jones, gotta ya, okay, I can’t talk now, I’m super busy, ba da, da da, da da. And then you’re out the door. They don’t like that. So you’ve gotta slow down and give them the time that they deserve because they’re paying you.
Ange
Yeah, look, that’s a really good point. You’ve just talked about residential clients, which I call the market segment. So your market segment could be residential, strata, commercial, real estate, that kind of thing. Yeah. So I do wanna layer, I suppose that flat rate or upfront pricing can actually be implemented across a couple of these different market segments. So residential, absolutely, which is what we do. But you can actually be doing this for say, strata and real estates as well, can’t you?
Andy
Yeah, you definitely can, but people have got a habit of looking at your pricing, comparing quotes, right? Mm-hmm. . So the best time to do a flat rate is when you’re at a customer’s house, you give them a price, you ask for the sale, then and there on the spot, and you do the job. Like a lot of us and, and within our business that we’ve had for over 20 years, the thing to remember was if we were gonna be compared against a one man show down the road, we were never gonna win that job. So it’s all about making sure you make the customer feel comfortable at that time, and then you go ahead on the spot and get the job done.
Ange
Yes. This comes back to who actually are you working with and are they your A-grade client? Yep. So that you are seen as the authority in your space and they just love working with you because you are so reputable and you know that the job is gonna get done right every single time.
Andy
It’s time for the Tradie News Bulletin.
Ange
Okay, so what’s in the news today Andy?
Andy
Well, unless you’ve been living under a rock, you would’ve seen the recent nurse strike, paramedic strike, teacher strike, everyone’s bloody strike. And you know what, it got me thinking, what about if all of us trade business owners went on strike? The country would be shut down. Now I’m just joking. So calm down. This isn’t a quarter arms, just yet.
Ange
Oh my God, Andy. The litter of the tradies.
Andy
I dunno about that.
Ange
But you know what, it’s true. All these industries have been striking and not because they’re selfish, it’s so that they can create industry wide change, not just at an individual level.
Andy
Exactly. And look, guys, we’re speaking at Lents on this podcast about our need for industry-wide change across all types of trades. The fundamentals of what makes being a trade business owner great is what we need to address here. What we charge for our work. The way people see tradies as bottom feeders, even school kids view taking on a trade as their career. It all needs to be revised soon.
Ange
Absolutely right. Being a trade business owner is seen as second rate to say other professions like lawyers. They go to uni for say, four plus years, and then they get to charge huge eye watering amounts because the average person doesn’t have the same specialized knowledge that they do.
Andy
Okay. So with that in mind, us tradies, depending on your trade, have also completed between four and six years of TAFE, which is realistically no less time than a university degree, right? And yet we’re expected to charge nothing for our services. Why? Because what we do looks easy, but it’s actually really difficult, right? We don’t get to use all that fancy lawyer jumbo mumbo to make ourselves sound so amazing. We just get on with the job and be a true blue Aussie.
Ange
Yeah, exactly. You make it look easy because you are really good at what you do.
Andy
Because you know what? Sometimes it is easy because we’ve spent years perfecting our trade. But realistically, guys, how many jobs have you been to that the DIYs have gone completely high way higher?
Ange
Yeah. We’re in an age where everyone wants more for less, no matter what job or industry you’re in. Everyone wants more, more, more, but they don’t wanna pay more, more, more.
Andy
Now, I’m not saying as trade business owners, we should band together and head straight down the Canberra, but the more we talk about it, the closer we’re getting to convincing the public that really we are superstars, not just dumb ass tradies.
Ange
Yeah. It’s all about perception.
Andy
Well, it’s about the truth.
Ange
Yes. And in the case of this news story, nurses have been seen to be able to do more with less for decades, especially now during this pandemic. They’ve had to cope with less staff, horrible long hours, and because people see them being able to do it and cope, then they’re like, well, why do you deserve more money?
Andy
I’m not saying that we’re in the same boat by any means, but the essence is the same. We’ve had generations of undercharging our value and being told we’re not as smart as others, and we’ve just copped it on the chin. But enough is enough.
Ange
Yeah, the tough part is as an industry and as business owners, we’ve just started to find our voice. We’ve been educating and encouraging change at a business level, but that really high level industry wide change is still really slow, and that’s why there are industry strikes cuz it’s the only way to prove their value to the public at large and push for rapid change.
Andy
So let’s be real. We’re not all gonna wake up tomorrow and suddenly be able to charge massive dollars. Change doesn’t come overnight. It’s a battle guys, and as trade business owners, we’re on the front lines and we’ve gotta stand strong. So charge what you’re bloody worth. Don’t let people tell you you’re not smart or you are just a tradie. Stand up for yourself and be proud of what we do. We hold this country together.
Ange
Wow. I couldn’t have said it any better myself Andy. That’s it for the news today, crew.
Andy
Hell yeah.
Ange
Okay. That’s been a pretty exhaustive list of benefits and challenges for both hourly rate and flat rate. And with all that in mind, you’re probably asking, so, which one is right for me?
Andy
Yeah, it’s a really good question, and it does depend on where you live. You know, are you working in major cities? Are you working in a small little town? What pricing structure have you used in the past? What sort of profitability are you trying to get? And you’ve gotta incorporate this and go, well, is this actually gonna work for me in my area? And really in your trade business? There’s a lot of trade businesses maybe listening now going, I’m, uh, chippy. It’s not gonna work for me on a bigger job. And you’re right, this is really designed for jobs up to say $5,000, but it’s a good way to be able to make profit. And once you sort of go over that, it’s really just going back into the quoting system. So fixed rate pricing is really the low average dollar sale way of making bang for your buck instead of, you know, a lot of people will say, I’m not doing that little job because it’s just not worth my time. Well, you do do that little. And you make it worth your time.
Ange
Yes. And when we talk about geographic areas, if you are actually based in a rural area, you might claim that flat rate or upfront pricing is something that is actually not even adopted by the town, when you’re talking to residential clients. And we tend to agree with you, and that’s a reason why it’s important that we educate you on different ways to price and how to manage your work so that we can actually have a hybrid version of using hourly rate and flat rate.
Andy
Yeah, I agree with what you said, but I just wanna say that flat rate, you could flat rate at $10 an hour and go broke.
Ange
Correct.
Andy
So it’s not about being expensive, you’ve just gotta find your level or your line in the sand that you can make the right amount of money for your business. Yes. Um, and what happens with some of the smaller towns, some people go, I can’t charge that, you know, When we first started doing it in Sydney, even I said, I dunno if I could do this. And then we did it and it worked. You know, when we were helping people all around Australia with it, we were saying that people in Melbourne and go, this will not work in Melbourne. We’re different to Sydney and WA is different. And everyone around the country said it was different. This isn’t gonna work for my business. Everyone had an excuse why it isn’t gonna work. But it does work and it’s proved time and time again. It’s the only way that I believe everyone should be starting to look at running their business to be able to make the money that we deserve, not rip people off, but make the money you need to make it worthwhile to be in business.
Ange
Yes, Andy, all great points. If you wanna gain a better understanding of which pricing structure is right for your trade business, then can I suggest you have a chat with us? I recommend that you book a one-on-one strategy session with Andy, and together you two can figure out what’s gonna work best for your trade business. The links in the show notes or checkout www.lifestyletradie.com.au.
Andy
It’s been a cracking episode today. I absolutely loved it, but guess what? It’s that time to hang up the tool belt and we will see you next week.
Ange
Absolutely. Thanks for listening. Chat to you next week.
CASH FLOW GUIDE FOR TRADIES
Cash flow is the lifeblood of a trade business, without it, your business will flatline! Cash flow forecasting is one of the most critical elements to ensuring your business has sustainable cash flow at all times. Do you have enough cash coming in to keep you afloat?
JOIN OUR FREE
FACEBOOK GROUP
Jump into a group full of likeminded trade business owners. Ask questions, get expert tips or just share a win! Join ‘The Tradie Show Discussion Group’ now’.