Fixed Prices vs Hourly Rate, What's Better Pricing For You

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Fixed Prices vs Hourly Rate

Finding the right option when getting your property serviced isn’t easy and there are a lot of factors to take into consideration. 1 of those factors is how they prices their services. Often, they will charge you by the hour, but you may come across some who charge you with a fixed price. Which one is better?

Hourly Rate

When you are being charged by an hourly rate you are expecting the service to be done within a certain period to ensure they do not over charge you. Many companies choose this because it’s easier to upsell, but this method assumes everyone works at the same pace. These services are often over quoted to compensate for the different speeds, to ensure the company still profits and to try and satisfy most clients.

What are the pros?

  1. Service Providers are given a time limit for each service. Making planning the Service Providers schedule easier.
  2. Service Hours are normally given by the client to fit their budget.
  3. Works for most Service Providers.

What are the cons?

  1. Generally, under quoted services but overpriced. Service prices normally increase after the service has been completed or the service is left incomplete or to a lower standard.
  2. Service providers aren’t pushed to work harder because at the end of the day their ratio for effort to profit is very small, unfortunately this means slower workers who struggle to provide a high-quality service.
  3. Priority of tasks is given to the Service Provider and they have control over what they can fit within the time limit.
  4. Common lines from these Service Providers are “if we have time” and “sorry we didn’t have time”.
  5. Inconsistent service standards, what 1 service provider can accomplish another might struggle with.
  6. Service providers often work slow, they will be paid the same regardless.

Fixed Pricing

Fixed Pricing is normally offered by companies who are confident in the services they provide. They know how long each task takes, what’s needed to complete the service to a high standard and the client’s expectations. Being transparent in business is important, both parties then know their obligations. Services have set tasks that are completed every service and time is not a barrier with the focus being on quality and completing the tasks instead of time.

What are the pros?

  1. Service Provider completes the service at their own pace. The more comfortable the Service Provider works the better-quality service they provide.
  2. Service transparency, you know exactly what is being completed and to what standard, this also applies to the Service Provider.
  3. Billing transparency makes budgeting easier, no under quoting and overpriced jobs. Allowing you to know the exact cost for what you want.
  4. Consistent quality of services, the ratio of effort to profit for the Service Providers is higher, they are in control of how much they earn per hour depending on the quality and speed in which they provide the service.
  5. Service providers don’t waste time because there is no benefit to doing this.
  6. Easier for Service Providers to get into a routine.

What are the cons?

  1. Service Provider is finished once all the tasks are completed. Sometimes faster than you expected.
  2. Service Providers can complete the service in different times.
When comparing hourly rate to fixed prices, it’s easy to see who the winner is. Fixed pricing offers many benefits to you, your service and the Service Provider. Hourly rate is used by most because it’s easier for them to increase their profits by either getting more services or just under quote and overprice their services without the needs of providing a high-quality service. The Service Providers are also paid the exact same regardless of how well they perform leaving them with no incentive to provide anything more than they need to. Paying by the hour seems like the right way because you think you will be getting X amount of hours work, but it’s not productive work.

Our Experience

After being in the cleaning industry for over 10 years we noticed many cleaning providers would slow their work down so regardless of what the client wanted in their service, they only ever did “what they could fit in” leaving us with unhappy clients. While we were constantly training and finding new recruits as we grew bigger they had no incentive to work harder once their probation period had ended. We tried increasing our price per hour and paid the Service Providers more, we also increased how much they were paid to travel to each service, but cleaning is a hard job and they wanted more for working harder and providing a high-quality service. Instead of increasing our price per hour again, in 2015 we decided to switch over to fixed pricing. This helped solve our problem by giving the Service provider more control but offering a more stable structure in services and prices. Having fixed prices means having set tasks which needs to be completed, this allows a uniform cleaning service setting where setting standards becomes easy. Instead of getting a simple description such as:
  • Clean Bathroom
They are given specific tasks that are required to clean a bathroom to a high standard.
  • Scrub Shower, Removing Soap Scum and Dirt.
  • Clean Mirrors and Taps
  • Scrub Basin and Vanity Top
  • Sanitise Cupboards Fronts
  • Scrub and Sanitise Toilet
  • Polish Taps and Mirrors
We do this for all tasks, giving the Service Provider clear instructions on what needs to be completed for every task. When the client is booking their service, these descriptions are shown to the client as well, making booking simple and more transparent. Clients know exactly what they are paying for but also, they can plan maintenance a lot easier on their property. We see fixed prices to be the future of service providing as more and more businesses and clients move away from hourly rates.
Posted: 17/05/2018 00:27:27