How to Build a Flat Rate Price Book

Why This Matters

Shops that run flat rate pricing average $742 per residential service ticket. Shops that run time and materials average $418. That is a $324 gap on every single call, and it is not because flat rate shops are gouging customers. It is because flat rate pricing removes the tech's hesitation, makes add-on work a yes or no decision instead of a scary dollar conversation, and forces the owner to actually cost out every repair including overhead, truck, warranty reserve, and profit. The second benefit is margin discipline. A properly built price book protects 58 percent gross margin even when material costs swing. A shop using T and M typically sees margin drift to 42 percent as techs under-quote hours to avoid uncomfortable conversations. On $1M in revenue, that margin gap is $160,000 of gross profit per year, which is the difference between paying yourself $40K and paying yourself $160K. Flat rate is not optional at scale. It is the foundation.

The Steps

1. 1

   Step 1: Calculate your loaded labor rate

   Start with your tech's hourly wage. For a $28 per hour plumbing tech, add 28 percent for burden (payroll tax, workers comp, health insurance, PTO), which brings you to $35.84. Then add your overhead per billable hour. If your shop has $420,000 in annual overhead and 7,500 billable hours, overhead per hour is $56. Add that to $35.84 and your loaded cost per billable hour is $91.84. Now add your target profit. At a 58 percent gross margin target, your billing rate needs to be $91.84 divided by 0.42, which equals $218.67 per hour. Round to $219. This is the labor number baked into every line item in your price book. Do not skip this step. Owners who skip it end up pricing jobs from gut feel and wondering why they cannot make payroll.

   Pro tip: Recalculate your loaded rate every January and every time you hire a new tech.

2. 2

   Step 2: List your top 50 repair tasks by frequency

   Pull your last 12 months of invoices and sort by description. You will find the same 50 repairs make up 80 percent of your revenue. For an HVAC shop that might be capacitor replace, contactor replace, blower motor replace, condenser fan motor, TXV replace, refrigerant recharge, evap coil clean, drain line clear, thermostat install, and so on. For plumbing it is toilet rebuild, water heater replace, garbage disposal, kitchen faucet, shower cartridge, main line snake, and the rest. Write each task on its own row in your spreadsheet. Do not try to price 500 tasks on day one. The 50 most frequent will cover 80 percent of your calls, and you can add long tail items over the next 90 days as they come up in the field.

   Pro tip: If a repair shows up fewer than 6 times in 12 months, leave it off version 1.

3. 3

   Step 3: Cost out each task

   For each of your 50 tasks, add three cost columns: parts cost, labor hours, and miscellaneous (truck stock, solder, refrigerant, shop rags, warranty reserve). For a capacitor replace on a residential HVAC condenser, parts cost is $18 wholesale, labor hours is 0.5, and misc is $6 for the 1 year warranty reserve. Labor cost at your loaded rate of $91.84 times 0.5 hours is $45.92. Total direct cost is $18 plus $45.92 plus $6, which equals $69.92. Now divide by 0.42 to hit your 58 percent margin and you get $166.48. Round to $169. That is your flat rate price for a capacitor replace. Do this for all 50 tasks. It takes about 3 hours. Keep the spreadsheet columns consistent so you can update prices in bulk later.

   Pro tip: Always round up to the nearest whole dollar that ends in 9. Psychology matters.

4. 4

   Step 4: Add good better best tiering

   For every repair where a premium option exists, build three price points. The good tier is the minimum fix with a standard warranty, the better tier upgrades a key component or extends warranty to 2 years, and the best tier includes additional preventive work and a 5 year warranty. For a water heater replace, good might be a standard 40 gallon tank at $1,849 with a 6 year warranty, better is an upgraded 50 gallon at $2,299 with a 10 year warranty and expansion tank, and best is a tankless conversion at $4,499 with a 15 year warranty and whole-home sediment filter. Tiering lifts average ticket by 22 percent because roughly one in three customers selects the middle or top option when presented with a clear menu instead of a single price.

   Pro tip: Always price the middle tier to be your preferred sell. Customers anchor to the middle.

5. 5

   Step 5: Organize tasks into categories a tech can navigate fast

   Group your tasks into 8 to 12 categories that match how a tech thinks on a job. For HVAC: Cooling Repair, Heating Repair, Indoor Air Quality, Thermostats, Maintenance, Installs, Emergency. For plumbing: Drain Cleaning, Faucets and Fixtures, Water Heaters, Sewer, Water Service, Repipes. Inside each category, sort by frequency so the most common repair is at the top. A tech on a sticky call should find the right line item in under 15 seconds. If it takes longer, you will lose the sale while he fumbles. Test this with your newest tech. If he cannot find a common repair in 15 seconds, restructure the categories until he can.

   Pro tip: Put photos next to every line item. Techs scan images 4 times faster than text.

6. 6

   Step 6: Load the price book into Kaldr Tech and sync to the field

   Open Kaldr Tech, go to Settings, Price Book, and click Import. Drop your spreadsheet in and map the columns. The system creates each task as a line item with the three tier prices, photos, and category tags. Every tech's mobile app syncs within 60 seconds. On the first sync, push a notification to all techs asking them to spot check 10 common repairs. This catches any typos or mis-keyed prices before a customer sees them. Kaldr Tech also stamps every quote with the date and version, so if you raise the capacitor price from $169 to $179 three months from now, you can see exactly which techs are still quoting the old number and retrain them.

   Pro tip: Freeze price book edits between 7 AM and 6 PM. Changing prices mid-day confuses techs.

7. 7

   Step 7: Field test for two weeks and adjust

   Run the new price book for 14 days before making changes. Track close rate, average ticket, and tech complaints. If close rate on a specific line item drops below 60 percent, the price is probably 10 to 15 percent too high or the tier story is weak. If techs complain a specific repair is losing money, recheck your parts cost, it may have moved. After 14 days, review the data with your team and make surgical adjustments. Do not rewrite the whole book. Change five to ten line items at a time and measure again. Shops that follow this two week cycle hit their 58 percent margin target within 60 days and stay there.

   Pro tip: Never change more than 15 percent of line items in a single update. Stability builds tech confidence.