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Aug 16

Hourly Rates vs. Upfront Pricing

This subject in the past has been a struggle for me as arguments could be offered for both methods and since I’m in the service industry, my job is to figure out which method best serves our customers… The fact is that most customers want the best service for the cheapest price or as people love to say “a fair price”… The problem is that we really never know how long any task will take, and even if your charging by the hour the customer still wants an estimated time (how long do you think this will take?) as they quickly try an calculate the cost… Then comes the rub, even though your agreement was to work by the hour, the customer is only happy if your hours fall @ or below your guess on how many hours you thought the task would take… So, really either way you end up providing “upfront” pricing, but with an hourly rate that price is subject to change… To again borrow the popular term “a fair price”, it seems clear to me that the best policy is to reveal the cost of the service before you make the sale…

Here is a perfect example of why upfront pricing is right for Half Moon and its customers… Just this week my technician quoted a job to replace a kitchen sink drain in which he thought would take about 5 hours… 3 hours into the job he called me an requested my assistance because the project was not going according to plan… As we wallowed in the mud like pigs under that home hour after hour, I knew my profit would have to come another day… So my motivation became 2- fold : getting done, and the fact that our customer was getting a great deal and would soon be washing dishes for the same price as earlier quoted… A great sense of satisfaction/gratification even if absent of a profit, was still to be enjoyed by a job well done and a happy customer… A job that was quoted to take about 5 hours ended up taking a combined 13 hours to complete, we certainly couldn’t afford to repeat this error often, but the fact is, we like to know how much something cost before we buy and we never want to pay more…

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