flat rate or t&m?

[FacilityPro]

I'm getting close to retirement and am starting a company on the side so I don't have to watch soaps all day. Thinking about the light commercial market - rtu's and such. Don't know much about the business end, but I've read alot about flat rate pricing and on the surface, it seems like the ticket for a guy like me. Can you guys give me some pros and cons?

Thanks

[jimbob73]

I think flat rate pricing is typically used in residential service because of the nature of the work and the benefit to the customer by knowing what the repair will cost upfront. A residential company with sharp techs can capitalize with flat rate pricing because the unit can be diagnosed within an hour on a majority of the calls.
On the commercial side I think it would be a bad thing because it is impossible to get 8 jobs done in one day and there are a lot of unknowns. I say this because with flat rate pricing, You have a diagnostic fee which is at a set amount.(Lets say $60 which would allow you 1 hour) This is for the time it takes to diagnose problem only. Doesn't matter if it takes you 10 minutes or 8 hrs to find problem, Customer pays $60. It can take a long time just to access the equipment when doing commercial work. $60 for several hours it can take to gain access and diagnose unit won't cut it. A common practice in commercial service is to charge by the hour to diagnose, Then give a quote to make the repairs which will include parts/labor to do job.

[alpha480v]

I agree with what jimbob73 said. Hourly rate is the way to go in commercial, IMHO.

[tim fox]

T&m is the only way to go in comm. Too many unknowns to flat rate. Do ladders need to be set up or is there ladders mounted to buildings? How far away from unit is 120v power outlet? How far away is water supply for coil cleaning etc.? I've had simple maintenances take a long time, do to no close water supply and had to rinse coil cleaner with a water fire extinguisher and make numerous trips to a sink to refill it.

[FacilityPro]

thanks for the input - I hear what you are saying about the possible complications, but the system I was looking at allows for a service charge that seems reasonable to me to cover diagnosis, and allows you to customize for problems such as accessabilty. The thing that I find attractive about the whole thing is that they claim to cover all of the incidentals that a guy like me is likely to miss. It's been a long time since I did side work, but I always felt like even though I enjoyed the extra cash in my pocket , I was losing money if I considered all of the expenses. I've got 23 techs working for me and about half of them do side work. After talking to them, I'm convinced only one of them is really making a decent profit. I would like to save myself the time he puts in bidding each job, which is what got me started on this flat rate thing in the first. I'd also like to feel certain I wasn't screwing myself or the customer.

Still thiking about.

[slimwoodie]

HALF ...??

HALF ... do SIDE WORK ....??

you feel this is acceptable ..??

[FacilityPro]

We work for a school district. They arn't competing with us, and they do their jobs while the're here. It doesnt bother me that they choose to make money on their own time, and even if it did, I doubt I could stop them, short of firing them.

[slimwoodie]

about half of them do side work. After talking to them, I'm convinced only one of them is really making a decent profit.

and ....

ALL of them ... are stealing work from Legitimate contractors

[FacilityPro]

most of them, myself included, are licensed and insured. We have the same overhead as any of the "legitimate " contractors you refer to,which is the basis of my original question concerning flat rate pricing. There are a few hacks in the crowd, but to assume we all are would be incorrect.

[air2spare]

...it is illegal in the state of Texas to use your license for a part-time business. The law states that a license can only be used to solicit work when a license holder is a FULL TIME employee of the company that he assigned his license to. Part timers may it hard on legitimate full time business owners

[FacilityPro]

I'm not sure I agree with that interpretation of the law, but I'll contact TDLR to get the skinny on that. I believe the intent of that is to prevent license holders from allowing thier liscense to be used by a company who pays them only for that purpose. If I own and operate a company, for which I handle all of the funtions performed by that company, and bear all of the liability that comes with it, and am involved with 100% of all business conducted by that company, this makes me a full time employee of that company. If I adhere to all of the laws and regulations which apply in the state of Texas for an HVAC contractor, which I do, what makes me any less legitimate than any other contractor? ( can't get to my books right now to look this up - the're at the office, but I'm pretty sure I'm correct) . I know this is a sore subject for any contractor who is paying all the costs associated with operating a legal business - because I pay all those same costs. I agree that the hacks who operate without these costs hurt the industry - I just don't happen to be one, simply because I have another job.

[air2spare]

I wasn't calling you a hacker. Here is what the law says;

Subchapter F. License Requirements
Section 1302.252(a)

An air conditioning and refrigeration contracting company must employ full-time in each permanent office a license holder who holds an appropriate license assigned to that company.

[FacilityPro]

Which I do. My license is assigned to my company, which is a full time HVAC contracting company, and which I devote 40 hrs. a week to, at the minimum. I don't use this license for any other enterprise, including the school district I work for. I did call TDLR for clarification on this when I decided to start this enterprise, but was unable to reach anyone who could answer my questions. I may try emal - I'm a law and order kind of guy. Wouldn't be doing this if I thought it was illegal, but I've been wrong before (imagine that).
Anyway, I appreciate the feedback. Any thoughts on the flat rate issue?

[air2spare]

is pretty much a residential thing, there are some companies who can set you up on flat rate pricing. We do T&M for commercial.

[wen-sar]

Subchapter F. License Requirements
Section 1302.252(a)

An air conditioning and refrigeration contracting company must employ full-time in each permanent office a license holder who holds an appropriate license assigned to that company.

.................................................. .........

i have visited here often but this was the first time i felt compelled to post..

the only thing required by the law as it is written is..

an air conditioning contractor is required to maintain a license to do business while handling EPA chemicals..

anyone who holds their EPA license can work under any circumstances.. full.. part-time.. or any manner they desire.. the law is designed to protect consumers from unlicensed contractors handling refrigeration chemicals.. it is not intended to restrict a license holder from working as they see fit..

please read the law carefully.. it holds NO restrictions on EPA licensed individuals from performing work as they see fit..

example.. XYZ company seeks to do business as an HVAC company.. at least one of their employees must hold an EPA license for the purposes of working with restricted chemicals (EPA 608)..

example.. Joe Blow the individual has an EPA 608 license.. he may perform any job for any person or business so long as he holds either a business license or meets state work requirements as to number of hours worked or and pays any taxes required.. yes, properly licensed Joe Blow may in fact work part-time or full-time for anyone he chooses any number of hours he chooses..

do NOT mis-interpret the law to mean he can only work for a contractor.. THAT IS NOT what the law says..

remember the law is intended to protect consumers and uphold EPA requirements for refrigeration chemicals.. and THATS ALL..

so have at it FacilityPro.. you may legally work using your EPA license as you see fit so long as you follow state laws for self-employed individuals..

:)

[slimwoodie]

where are you...???

[air2spare]

this isn't California and nobody said He had to work for a contractor, read the post again. In Texas if you hold an HVAC license you ARE a contractor but to use that license legally as a business you must be a fulltime employee of that business















Subchapter F. License Requirements
Section 1302.252(a)

An air conditioning and refrigeration contracting company must employ full-time in each permanent office a license holder who holds an appropriate license assigned to that company.

.................................................. .........

i have visited here often but this was the first time i felt compelled to post..

the only thing required by the law as it is written is..

an air conditioning contractor is required to maintain a license to do business while handling EPA chemicals..

anyone who holds their EPA license can work under any circumstances.. full.. part-time.. or any manner they desire.. the law is designed to protect consumers from unlicensed contractors handling refrigeration chemicals.. it is not intended to restrict a license holder from working as they see fit..

please read the law carefully.. it holds NO restrictions on EPA licensed individuals from performing work as they see fit..

example.. XYZ company seeks to do business as an HVAC company.. at least one of their employees must hold an EPA license for the purposes of working with restricted chemicals (EPA 608)..

example.. Joe Blow the individual has an EPA 608 license.. he may perform any job for any person or business so long as he holds either a business license or meets state work requirements as to number of hours worked or and pays any taxes required.. yes, properly licensed Joe Blow may in fact work part-time or full-time for anyone he chooses any number of hours he chooses..

do NOT mis-interpret the law to mean he can only work for a contractor.. THAT IS NOT what the law says..

remember the law is intended to protect consumers and uphold EPA requirements for refrigeration chemicals.. and THATS ALL..

so have at it FacilityPro.. you may legally work using your EPA license as you see fit so long as you follow state laws for self-employed individuals..

:)

[FacilityPro]

The state laws for self employment that you refer to are what we are discussing. The quote that you copied comes from the Texas Statutes, Occupation Code.

Back to the subject -

Chapter 75 Air Conditioning and Refrigeration Contractor License Law
75.10 Definitions
(18) Full time employee - an employee who is present on the job 40 hrs.a week, or at least 80% of the time the company is offering air conditioning and rerfrigeration contacting services to the public, which ever is less.

This is the basis of my assumption that I am following the letter of the law. I havn't found anything to contradict or superceed this definition.

[esornivram]

thanks for the input - I hear what you are saying about the possible complications, but the system I was looking at allows for a service charge that seems reasonable to me to cover diagnosis, and allows you to customize for problems such as accessabilty. The thing that I find attractive about the whole thing is that they claim to cover all of the incidentals that a guy like me is likely to miss. It's been a long time since I did side work, but I always felt like even though I enjoyed the extra cash in my pocket , I was losing money if I considered all of the expenses. I've got 23 techs working for me and about half of them do side work. After talking to them, I'm convinced only one of them is really making a decent profit. I would like to save myself the time he puts in bidding each job, which is what got me started on this flat rate thing in the first. I'd also like to feel certain I wasn't screwing myself or the customer.

Still thiking about.
I have been doing commercial for 25 years, NO TWO locations are the same
1. I had to share water hose bib with garden center, anytime they wanted water they unhooked me, usually not hooking it back up cause it was different person each time.
2. usually mangers dont care about you, I have been locked on roof before,
had pallets unloaded block ladder on wall
even had my ladder moved to unload something and then not replaced it.
3.same company has different locations dymanics, heck one didnt have 120v power on roof, try running an recovery machine on 250 ft of extension cord,
or vacumm pump
4. try haveing to walk 1200 ft(1/4 mile to other end ) on the roof to the other end to use the only roof access to the whole plant, I have on a beckhardt plant take thirty minutes just to reach the machine
5. if you only have one customer and you have all the unkonws fixed, over come, and wont have to do that again the flat rate MAT BE FAIR TO YOU
but in no way will you make anything if each call is a new beggining
I worked on an advance pro wearhouse, there was NO WATER on the roof, closes water was 500 ft away and it was 60 ft in the air
also power was 150 ft apart
we ran 1.5 inch water header w/pvc and filled it each spring, it took 4 to 5 hour for the header to fill up so we could get any water on roof, would you set up there for free waiting?
we also each spring hoisted up an generator for power
u going to buy that and leave it there all summer? for free?
I could go on for hours, untill you have checked the lay out and know the required tools for the location, what about an extended lift? for inside work? your going to supply that in an flat rate?
from your question i would say you have done little to NONE AT ALL commercial work
how are you going to flat rate crawling around in an attic bleding air out of an chiller system?
the flat rate would be larger that many sets of encylopedias
listen to the previous guys they KNOW
you answers says you DONT
or maybe you just want the flat rate to be cool, either way doing commercial work you will be spending more time adjusting your flat rate program and not much working, repairing problems