By David Crary
Deciding between a flat-rate and a time and material approach can affect your irrigation business in surprising ways. So it's no wonder it’s one of the irrigation business essentials. There are risks and rewards to be considered. Taking a few moments to weigh each option may wind up affecting the overall direction you take in piloting your irrigation business!
Time and Material – The ‘measured’ approach
On the business side, there’s a comfort in knowing what you’re paying for. Divvying out material rates and hourly rates to customers provides an assurance that both parties are being fairly represented. There is little possibility of over-assessing in this situation, since everything will be quantified and covered in the end process.
This may wind up being the better strategy if you’re worried that the outlays of a given job might exceed expectations. Perhaps you’re working in a tricky atmosphere where mistakes and slip-ups would be more costly than usual. Time and material pricing can be a good way of covering your bases to protect from unanticipated circumstances.
Flat Rate – The challenge to perform, and profit!
There’s an art to assessing a job before it’s done. There are some people in this world who have that knack for knowing what each endeavor will entail and how long. This is where the risk/reward of a flat rate stratagem comes into play. By assessing a flat-rate, you are assuming that that price will cover all the time and material needed, regardless of potential lapses. One thing becomes extremely important to any field service business that uses this strategy: efficiency.
Being able to optimize your time and resources with a flat rate can be HUGELY profitable. The trick is to focus on streamlining every process, and I mean every single moment spent on anything. (Tip: Irrigation business software can help you do that.) Make the goal of every project to utilize new ideas, which can be sourced from your employees or elsewhere, and using efficiencies geared towards enhancing daily operations.
Time and Material – The customer can rest assured.
Approaching a customer for irrigation services can be daunting, especially if we’re dealing with someone who has acres of real estate. Knowing outright the hourly cost can give the customer a feeling of security in knowing exactly what’s being paid for. You may find it easier to reconcile with customers in determining the pricing because you’ll be able to show them through invoices what got spent where, how, and why!
Flat Rate – No guesses, just straight talk.
Flat rates can also be marketable to customers because it cuts out a lot of the decision making. Having to waffle over possible unforeseen expenses can seem arduous to a client who would much prefer a take-it-or-leave it offer. It’s quick, uncomplicated, and they know exactly how much is coming out-of-pocket from the start. This type of customer would rather know that what needs to be done is getting done, and then leave it at that without any unnecessary stress.
In either case, whether you decide to stick to the safety net of time and material or go with the convenience of flat rate, your best bet to capitalize on their strengths is to make sure your customer is fully aware of your reasoning! If you choose a flat rate, focus on highlighting how your business is centering itself towards providing simplicity and convenience. If you choose time and material, talk about how you want the customer to feel confident that they will never get a raw deal with your brand. The choice can really affect your company’s identity!
Both have their upsides. Your job now is to choose which one best fits your business’s practices. From there, as with any part of your business, you’ve got to OWN it!
Whatever pricing model you choose, you can vastly improve your business by installing irrigation business software. Download our Irrigation Software Buyer's Guide to learn what to look for!