Flat Rate Pricing can be an extraordinary boost to your company's profitability and success. For those not familiar with it, flat rate pricing is basically the practice of combining your estimated labor and material charges into a single, fixed price that is given to the customer before the work is performed. It allows you to effectively hide your labor rates, so that you can charge what you need to, all while making the customer happy because they know exactly how much the repair will be before you start working.
ESC allows you to import flat rate data from many different providers but not everyone knows that you can actually use ESC to build your own. So let's take a look at how that works to see if it might be the right option for you.
The first thing you will need to understand is that all flat rate prices created through ESC are calculated automatically according to the price of the parts, the average amount of time it will take you to perform the repair and a couple other vital pieces of information. This information is entered by going to Company → System Setup → Inventory and clicking the Flat Rate Setup tab. Here you will set your trip charge (or inspection fee), hourly labor rate and extra surcharge for miscellaneous materials that might be needed on all repairs. You can also determine if you want to give a discount for additional repairs and/or service agreement customers.
Note: If you are charging tax to your customers be sure to leave the Round to next dollar amount option unchecked or it will cause problems with your tax reporting.
After that has been saved you can turn any part into a flat rate repair by recalling the part on the Inventory Entry screen and going to the Flat Rate tab. Enter the average time it will take you to complete the task (hedge on the side of it taking longer than expected) and click Calculate Flat Rate Prices. This combines the data you entered in System Setup with the time required to perform the repair and the price of the materials needed from the Price A field on the general tab to arrive at the six different pricing levels.
To enter a flat rate price on an invoice, just add the part to the body of the invoice like normal and a new Flat Rate column will appear. Select the repair type you want or leave it set at None to charge for time and material separately.
Taxes & Flat Rate Pricing
When you first setup flat rate pricing, ESC asks you which tax code to use. This information is ONLY used when printing flat rate price books and is shown for reference when a part is made into a flat rate repair.The actual tax that will be charged to the customer will depend on the tax code used on the invoice. The tax will be shown separately on the screen, but you can go to File → Print Options and select Combine tax into flat rate parts on invoices to make sure that the customer does not see it broken down that way when it prints out.
Written by Eric Rausin
Featured in April 2013 Newsletter