Ep 275 - Replay - How to Sell Flat Rate When Clients Want Hourly

This is Electropreneur Success Radio and we're on a mission to help you master sales, simplify pricing and deliver consistent premium level service. Hi, dustin and Trina, welcome to the show. If you guys hear us engaging with our live viewers, that's actually back at our Facebook page and all the links are on the podcast pages as well. So today, what are we going through, joseph?

We're going to go through. It was actually a very fun situation someone brought up on RSS. They were saying well, what do we do when our clients tell us that they don't want to go flat rate? You know, we used to work with hourly. What do we do now? How do we make that transition point? Or even, what do they say? Will they even want us to go from hourly to flat rate?

Yeah, and I love this topic, as you guys know, listening or viewing us live. Right now we're helping people simplify pricing and, in a large way, giving that context from hourly to a flat rate, you're able to come up with these six options that we recommend really in mere minutes. Once it's rehearsed a few times is a superpower. Correct, so powerful? Definitely. So the context of this one, of course. This is one of our clients shifting from that hourly rate to the flat rate and he's just at this point. He's gone through our exercise of figuring out that burden and sold rates, figuring out his markups and that sweet spot he wants to be in, and now he's about to present, getting ready to present and thinking, hey, I've still got this piece that I need to overcome. What if they tell me they want to know my hourly rate and that's where the call took off today.

So the thing that we wanted to dive into on that was we have to understand the why the question is being asked in order to properly come up with a reasonable answer. So the call comes down to where they I think the customer had actually called in and said, hey, what do you charge for an hourly? Like I want three recess lights put in my kitchen, what's your hourly rate? Why do you think, like coming from the mindset of the typical electrician, when you hear someone ask you that over the phone, Clay, what does that make you think?

Makes me think they want to know how cheap I can serve them.

As a premium server provider. Is it any of our interests at all of being cheap or serving people at a cheap? Well?

Not at all. It feels like something we need to pivot out of somehow.

Correct. We've got to be doing the exact opposite. So the only way that we can do that is first shifting the focus to three things. So they'll come and say so. I'm trying to get these lights installed in my kitchen. How much do you charge? What's your hourly rate? First would be well. I'd be happy to help you with that Before we get started. Who do I have the pleasure of talking to? Do you feel like getting the person's name and being on a first name basis may help overcome the objection or even be in a place of being able to talk about an objection?

Definitely.

Yeah, so we first is all right, let's get the name, let's make sure we're on a first name basis. Secondly is then turning down and saying all right, so where is the customer you've been looking at? Do you mind if I have your address? How do I know? You know I can serve your area. I know there were multiple times, whenever I would answer the phones, that someone would call and they're in a completely different state. And now I'm trying to give an hourly rate to a customer I can't even serve. Yeah, you feel like knowing where they might be, at is helpful.

Yeah, definitely.

And then, lastly, is asking them and saying all right, so, just so I'm on the same page to avoid anything happening, in case we ever get disconnected. Is this the best number to reach you in? Just to confirm, is it at 8675309? It's like, yes, it is Great. So we've got three pieces of information that gave us their name, their number and their address. At this point, if a customer is actually interested in working with you, they are drastically more likely to actually move forward with an appointment because they've already given you three bits of personal information, like if you've pretty much given away the keys to the castle at that point. They know where you live, they know how to reach you, they know your name.

Even though it's just little, minuscule steps, little inching forward, we're getting some momentum even at this point.

Yeah, so let's take this in a complete vacuum. So you've got one customer, one contractor. When they get asked that question, they say, yeah, we're about $105 an hour. Okay, thanks, thank you. Did that person serve that customer in any way?

No, no, no. It gave them an average in a marketplace which may or may not be even an average or a proper representation.

Correct and, in addition to it, if they were going to go buy an hourly rate, how does the customer know that you're going to work at the same speed or quality or process as another electrician?

That's the missing information. I would say the misjudgment really.

So, even if you were $300 an hour and your competitor is $100 an hour, are you able to do something that's at least three times the quality? Are you able to really feel like you're going to do something that's going to be better, more reliable, safer, better customer service, better warranty? I would hope so. To justify it right yeah, awesome. So that's the first step there. Now the next thing came down to. What did they end up going into? I believe they mentioned something like what do I do when the customer gives you some resistance to it, right? Was that a question that came up?

Yeah.

All right. So if they come by and they say, well, what if my existing customers don't want to go flat rate? The reason is we have to explain how it benefits them to do so. So if I was going to go hourly and the project took longer, do you think the customer would be comfortable with me charging them more for it? No, would they want some sort of assurance to know that if they were going to budget for something that they could accurately have a budget, they could stay behind?

I would assume. So yes, I would as a customer. That's what I would want.

So that's the position that we have to present it to the customer and say, believe it or not, hourly actually works in my best interest. If you want to stay hourly, I'd have no problem with that. But the reason why we're shifting to flat rate is because we believe in giving back to every one of our clients. We've done the market research and have realized that if we can offer you a flat rate, we can keep our costs in a measurable way so we can save you the most. That way, we're not consistently nickel and diamond you, if anything were ever to go up. In addition, it allows us to accurately predict projects so we can offer you better options in a way that once again saves you time, hassle and money. And then, lastly, one of the main benefits of doing this is, if you're going to go flat rate, I have the ability of really dialing into the quality and the reliability factors of this, meaning that I can really design a full range of options and I can stand behind the number for a longer period of time. So was I wrong to want to offer these benefits to you and your family? No, I didn't. Was I wrong to feel like this would be something you could find valuable?

Not at all.

Or was I wrong to think of ways to try to avoid you wasting money? No, sir, there you go Well, actually, if I ended it in a sir, that's usually a problem. It means that they're in bond with them. Enough, right.

Well, it's a no-sir from me, but it's a more accurate situation really. Overall, the whole thing is more defined, and earlier in the call we did tie this back into. Another thing that we help with really is your strategic positioning in your business. That's another chunk of leverage. See, if we charged hourly, we wouldn't be able to have this same level of guarantee on our service, because we're able to do this in a flat rate, very controlled environment, a controlled exchange. Then I can also guarantee that nothing will ever change without first communicating it with you and getting your approval. Wow, now that finish line is nice to know where it is, isn't it.

Especially, especially, when you have the customer coming to you and saying well, why do I even need to ask the flat rate, why do I even need to ask that hourly rate? The main thing is would you believe me if I said that some customers have just been mentally conditioned to purchase in this way, whether they realize it's right or not 100%.

The same way, people are conditioned to sales resistance.

Exactly so. We, as the electricians, have a definite advantage, but we don't ever seem to use it. Now, I'm not saying an advantage over a customer, something you can do to them and something we should do for them. If you, the electrician, go on, let's say, two service calls a day, you've seen five days a week, 10 different homes with electrical ranging situations Over the course of all the years. We've done it. How many homes, how many systems, how many faults, how many solutions, whereas the customer? How many panels have they changed at this house? Maybe one, if they've been there for a long term? Maybe how many times have they ever had to call an electrician? And if not, if they've only done it every now and then, how much trade experience do they have? How do they know what the right way of purchasing something is? They've only know what they've been taught and the trades we as an industry have taught them that they need to go hourly. So, if anything, what we need to do is we can't blame the customer from trying to solve a problem the way they've been educated to do so. What we are responsible to do is to say that this way is better, and the way it's better is by describing how it benefits the client. When you lead with those things, you'll often find you're more successful.

That's right. What's the value stack? I mean, the hourly is a problem. We kind of skipped over that today. But assuming you're watching this right now and you're not hourly already, well, let's say there are a couple of you that are. Maybe you're listening to this and you're still in the hourly challenge Replay or alive. There's no offense to be taken here, but doesn't the hourly present a problem when you yourself can't show up? Maybe the first question I should ask are you the most efficient, are you the quickest worker? Are you the best worker in your enterprise, in your organization? What about when Johnny shows up? What about when Johnny shows up late or hung over because it's Super Bowl Monday?

Is that?

same level of service coming across now? Is it the same price as what the neighbor paid for you to do the same job two weeks ago? There lies the problem. So, when you can't lock that price up front well, this is an estimate Well, why did Susie pay 1900 and I'm paying 27? And it seems like, honestly, the quality is crap here. It's different, it's not the same. I keep circling this thing back and sorry if I take us too far out. You know where I live. I'm a space cadet over here. Major Tom, to ground control.

No, I love it, though I was going to say, because no matter how far you go into it, the funnel just keeps spiraling and spiraling and spiraling. At the end of the day, the customer is not educated as to why going flat rate benefits them. We can always ask questions that ask the opposite, such as was I wrong to try and blank? So can I give you an example of what that might sound like?

Please go ahead.

So the customer comes to you and says why aren't you flat rate or why aren't you hourly? Why can't I get a material in labor breakdown? Tell me what it's going to be they're like. Well, I completely understand where you're coming from and I want to help. Now I could go hourly, all things considered. But do you mind if I ask you a question If I were to do hourly and the job took longer than expected, that's to say that you're comfortable paying me more than what I originally quoted. You Right?

Right, then, and there.

That's pretty broad right, yeah, would a customer immediately say, yes, I'm totally cool with paying an unspecified amount more than what you originally quoted.

For reasons outside of my control, essentially.

Pretty much.

Yeah, thank you.

You have no control of the situation. I get told that the material backed up by 900% and now I quote you $1,000 and actually it's 4,000.

Yeah, yeah, it's not going to go, not interesting.

It's not going to work right. In addition to it, what if I said that I could only warranty something so long? If I go hourly rate, how can I guarantee there's certain levels of reliability? That goes with it. Yeah, why should the customer work with us? The reason they're working with us is because we become a safe bet. Now I'd be willing to pay more to be guaranteed happiness and freedom from emotional pain, compared to someone who's saying, well, I might be less, or I could be as much, or I could be more, and the quality you're going to receive is going to be variable. Yeah, out of those two choices, would you rather pay a little more upfront for the safety of knowing that you're not going to have that kind of situation?

Or pay less than you should.

And that's the advantage of going flat rate.

Yeah, yeah, that's the challenge for sure. The other way I've looked at this many times is, honestly, we're trying to productize our service. Services won't really retire you that well. They're not conducive to that alone. Service work really does imply there's this time component that's fixed to it and I think that's where the hourly all comes from. It's the easiest, least risk situation for the contractor, but it's also the least reward right. That risk reward balances in every situation. So as we aim to productize this thing, I like to look at a company. The first thing we do is shed light on this vision Put your service on the conveyor belt, make this like manufacturing, and that means putting it in a little box with a bow and a price tag on it. And when you're able to do that, then you can do so consistently and you can continue to refine that process and refine the product and, as such, the value that customers are perceiving and receiving through your service. So it really becomes service to product mindset. And when we accomplish this, well, the only thing missing is the gap between really the articulation we're talking about today, understanding the benefits and how their benefits to the customer, not just us. This isn't a get rich quick scheme, but it is the casino principle, over and over and, over and, over and over, and the house has to win. And the best way to do that is to productize your service and make your delivery consistent, as we say, creating that premium, that consistent premium level service.

Now you actually can. I have one more thing to that, of course. You said something earlier and I really feel like it wasn't highlighted enough. It was how many of us have ever gone to jobs where we quoted for the neighbor or we quoted for the friend and then we go to quote for the other friend and it's a completely different number and they're like wait a second, that's not right. Like I got one situation where a client had reached out to us and said I quoted a Tesla system for 600 bucks installation and yet I needed to re quoted again. And for a friend, someone who referred someone out, and it was going to be like $2,800. And he's like I really didn't know how to argue it and I realized that you're right. If you can't give the neighbor a similar price, or at least somewhere in the ballpark, because you went hourly, that's going to be really hard to argue with them, right? Yeah, so being able to say, hey, we work flat rate, a panel should cost about this much. I know we're going to be looking at there's a range of options and you're going to leave be somewhere within the range that I quoted your neighbor. Now you can always point them. Be like well, I offered your neighbor these same options as well. Now, if your neighbor went on the premium route, now you have to keep up with the Joneses mentality.

Does anyone want to?

go cheaper than where their neighbor did.

No.

So being able to be at a flat rate and have pre packaged options are also helpful.

Definitely Consistent premium level service Can't say it enough. Hey guys, thanks for joining. If you caught this, if something was valuable and stuck out, please let us know. If you're listening to this for the first time on the podcast, please leave a comment below. Share it with someone who needs to know this stuff. And if you're not already a member of our electricpreneur secrets radio club, there on Facebook, you can actually just search electricpreneur just like electricpreneur but electricpreneur, and the group will come up. Electrical contractor success. Thank you for those watching it. Hey Greg, yes, thank you. Thank you for joining. And if you guys have faced this objection or others, if you've got a question that's burning and you want us to answer it, go ahead and leave it right there on the Facebook page and we'll talk about it tomorrow or Wednesday or Thursday or Friday or next Monday, five days a week. Guys, we're right here, live with you. All right, have a great week. Talk to you again soon. Take care guys.