Flat-rate pricing is rarely advantageous for the consumer. At core, it's little more than a way to make labor charges unclear. At its worst, it's an exploitive ploy.
Here's why what seems to be a clear price could be far from a clear deal.
No two repair jobs are exactly the same. Each house has a unique setup for its heating and air conditioning (AC) system. For this reason, setting flat-rate prices means that contractors must grossly overestimate repair times in order to ensure adequate profit from each job. Generally, the quoted cost is not renegotiated, so simple fixes will cost considerably more than hourly charges. Without an itemized bill, the lumped costs hide what contractors charge per hour as well as the cost of any parts. There are instances when a repair will take more time than was allotted in the flat-rate price, resulting in a bargain for the buyer, but these times are few and far between. If they weren't, nearly all contractors would still be charging by the hour.
Atop that, flat rates emphasize performing as much work as possible in as little time as possible to achieve greater profit. This often leads to poor quality of work, resulting in call backs, return visits and more spending.
In short, it's all about the presentation with flat-rate pricing, and unfortunately ad-speak has trained people to believe that they can honestly get something for FREE. It's far more attractive to hear “Our service call and diagnostic time are FREE” than to hear “We have a $70 trip charge/diagnostic fee, and our labor rate is $75 per hour plus the cost of the part.” The word “FREE” often wins the buyer since it seems like a no-haggle deal. When the numbers come in, a 1.5-hour repair job with a part that costs $75 is billed at $257.50 (including the trip charge). But under a flat rate pricing structure, the same job might be quoted and billed at $350. Flat rate pricing is always based on the worst case estimate of repair hours.
All this goes a long way to show why we offer what we offer. We charge an hourly rate. We will NOT sell you something that we don't believe you NEED. If your system is repairable, we will tell you that and give you an estimate for the repairs. If it is not repairable, we will suggest the most cost-effective solution for your home.
Why extended warranties aren't always worth the extra money
Extended warranties are akin to “Flat Rate Pricing.” Rarely are they beneficial for the customer. Equipment that is properly installed should last well beyond any extended warranty period. Any parts likely to fail during the warranty period are minor things that would never amount to the cost of the additional warranty.
Are there times that the extended warranty comes in handy? Yes. But, again, those times are rare. In most cases, extended warranties boil down to paying for repairs in advance, needed or unneeded.
When asked by our customers about extended warranties, we try to steer them away from spending the extra money. We like to think you should be able to expect better from brand new equipment and professional installers. However, we do have some customers who do not feel pinched by the cost and like the sense of security that they get from having an extended warranty. If you are included in that group, we will be happy to include an extended warranty in our price quotes.
