This specifically pertains to my other recent thread, about my boiler needing repair (the boiler has combined duties, partly for on-demand hot water, partly for the under-floor hydronic heating system in the house).
I got someone to come by finally and check out the noise, things are diagnosed including other work that needs to be done. A couple of days later I got estimates in my email for the work. The estimates are separated out by job, that is, one major-ish part that needs to be replaced is on one estimate, another part that needs to be replaced is on another estimate, some other work is on another estimate, they even included 2nd day air rush shipping for the parts as a separate estimate if I wanted them to get started even sooner (parts have to come from the east coast).
Each of the estimates for replacing parts are just one number, that includes both cost of the part and labor, and this is what is bothering me. Is this normal for this kind of work? I’ve never seen it before. When I had remodeling done, parts were always itemized, as was labor by the hour. Same for previous plumbing work. It’s as if this company doesn’t want me to know how much the parts cost and how much they charge for labor.
I asked about getting these itemized and the technician replied, saying “Everything I quoted is flat rate. This means the parts and labor are included into one price.”
I’m not about to go trying to find another company, after the difficulty I had getting anyone to come, but I’m having serious thoughts about whether I should continue with them for any future work.
If you have experience in this area (they describe their business as “plumbing, heating, cooling”) please tell me what you think about this business practice.
This seems kind of normal to me. When we got a new skylight installed by a small (and excellent) company they just quoted us a flat rate. It included the cost of the custom built (by a big vendor) skylight, the supplies and labor required for the carpentry to hold it, and the installation itself. It never occurred to me to demand breaking it out into parts and labor. I’m not sure what I would have done with that information, and I typically haven’t demanded it for restaurant meals, cars, etc. and I’m not clear on what is different here.
I don’t think the roof or chimney company broke it up either. I can’t recall exactly what the electrician we used did. I think that was just broken up into the individual jobs (parts and labor combined).
I think it’s fine. You are either willing to pay the price they quoted or you’re not. Separating parts and labor would invite haggling I imagine. I’d rather have a flat fee that’s enforceable than “time and materials” which always ends up exceeding my expectations.
I don’t see this as comparable to buying a restaurant meal, or to buying a car. What breaking this down does do for me is to allow me to compare labor costs between similar service providers, assuming I were looking to do so. I don’t care so much about the cost of the parts or whether they marked them up from wholesale to retail, for example. But the primary cost for almost any home service like plumbing and electrical is the labor. Parts are often only incidental. It will I hope be rare that I have to have the same job done again, so there is no way I can take this work as a point of comparison with other work that may have to be done in the future.
Does this not make sense?
As for the flat fee being enforceable, that would be good, but it is on a form that says “estimate” not “guaranteed charge.” So I guess we’ll see what happens. They have already said they don’t know for sure how many hours the total job will take. Fortunately, they are coming on Thursday so I don’t have long to wait to make the noise stop.
I’m pretty sure that was about auto repair, not purchasing.
Regardless, it’s the job total that matters. There’s no guarantee that comparing labor rates gives an accurate indication of overall pricing.
On a side note that’s both analogous and tangential, my auto repair pricing is different from how most shops do it. My labor rate is higher than average, but my cost markup is significantly less than average. Of course some of my prices will be higher than some competitors’, and some will be lower. But the folks who call and ask my labor rate in the belief that it’s all they need to know to see how my prices compare to my competitors’ are quite mistaken.
When I’ve had work done on my house, the “estimates” are flat rates, not broken down into parts and labor. And I put “estimate” in quotes because it’s never quite been an estimate- that is, the price for doing X is the price for doing X and the only way the price would go up is if it turned out I also needed/wanted to have Y done, but there was no way to know that until the X work started. I’ve never had the contractor say “The price included 20 hours of work, but it actually took 30” and raise the bill accordingly. It’s kind of like when I go to the auto mechanic- they tell me a flat price , the actual written bill is broken down into parts and labor, but I’ve never been charged more because the job took longer than the hours that were used to generate the price. When the price has gone up, it’s always been because of something that wasn’t known when I was given the price- maybe I was given a price to flush my radiator, and in the process they find out a hose needs replacement.
Flat rate work is a growing tend in the plumbing trade. Companies that are or are looking to be larger outfits favor this model because it requires next to no paperwork on the part of thier technicians and doesn’t require the people handling billing to have any technical knowledge. It’s much easier to say replaced faucet, $300 on every faucet job, it’s a flat rate at a greater than average amount of time covers all parts and labor. It also allows the company to pay in piece work rather than hourly rate, encouraging their workers to work as quickly as possible.
The going rate for flat rate books and the data going into them is substantial. Companies are paying thousands of dollars for books and estimates. Data firms will buy years of invoices from time and materials companies to analyze and establish averages used for flat rate.
Most car dealerships and chain repair shops have been using flats rate for decades. Just on thier side of things it’s always been the labor billed flat without customers seeing it. The flat rate labor for changing a radiator in a 2000 homer mobile is 5 hours, that’s what they bill regardless of whether it takes 2 hours or 10.
I’m personally not a fan of flat rate, it also means on average the home owner will pay more than the job than if it were billed time and materials. But newer home owners actually favor it as there are far less surprises when it comes to billing. They may pay more for less but if it was an awful faucet to remove they aren’t going to get hit for an extra two hours either.
It’s pretty much as boyty describes. A lot of electrical outfits who’s primary business is residential service are going flat rate as well.
I might add that if it’s flat rate than its designed to work on averages and the pricing to complete the listed work should be a firm price, not an estimate. I’d confirm just in case yours is one of the hard ones.
At the very least make sure they are using quality parts. The cheap stuff may have you paying more for service later than the difference in upfront cost.
I was a manager for several years with a company that did electrical work in homes and businesses. It was VERY typical for us to have customers who wanted/expected me to alter my proposals/quotes to show MY lower parts costs with my competitor’s lower labor rates. (It’s absolutely true that some companies expect to make more on their mark-up for parts and some expect to make more on their labor charges.)
My company tended to charge more for labor, but the technicians had excellent equipment and well-equipped trucks. We got them certified by the manufacturers and had great on-going training. Our personnel had years and years of experience. OTOH, we had our inventory and JIT programs tuned to the point where we could keep our mark-up on parts quite reasonable.
Strangely (to me), most customers would make a decision based primarily on who had the lower labor rates. They seemed quite happy to say, “Your competitor has higher prices for parts, so they must be good quality parts. Their labor is lower, so I know you’re trying to screw me. I’m going with them.”
In some states Sales Tax is charged/paid on parts, but not labor if itemized separately. Sales tax on an inclusive total of say $1000 could be $80, while if the parts were $200 and the labor were $800 the sales tax would be $16.
It’s kinda hard to explain to people that a skilled and well equipt serviceman at a higher hourly has a better chance of being cheaper overall than the less skilled lesser equipt at a lower per hour rate.
Even harder for me to explain discrepancies in parts cost vs quality. Especially with the “I’d like to buy my own materials and you put them in” crowd.