Hourly versus fixed prices services

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For the most part, we have always provided services for a fixed price. As that is what the customer usually wants- how much is it going to cost me to get this work done? They don’t usually want to her per hour- if you give them that, then their next question is “how long will it take?”

This is fine in most situations- you want your lawn cut? Well, I can see your lawn and I can tell that if I cut it on a weekly basis, it will take me X amount of time. At the end of the day, the customer is paying for your time. Whether you give them a fixed price, which is just an estimate of the amount of time it will take you, or an hourly rate, at the end of the day you are pricing them based on how much time it takes you or how much time you think it will take you.

This fixed price model only works if there is a clear scope of work and you can accurately figure out how long it will take you and what materials will cost you.

In the past, we have given customers a quote on a price for weeding their garden beds. That would be fine if you were to weed them right that moment and you knew exactly how many weeds there were at the time of doing the weeding. However, in reality, you have no idea how long it will take you to weed the garden beds 3 weeks from now in the spring when the customer wants the work done. Last year, this hurt us quite a bit and we would bid a customer for one hour of weeding and spend 4 hours there with two guys which obviously is not a sustainable business model.

This year, we said, “well, we are going to charge the customers an hourly rate whether they like it or not”. With this mind set, we figured well if they don’t want to pay hourly, we just won’t do the work and that’s fine with us since it probably would have been done for a loss anyhow. If they did agree to the hourly work, we would be ensured that it would be profitable work for us.

What would you know, but everyone agreed to hourly weeding. And there were very few complaints- even when the guys spent an entire day weeding their property! We no longer could lose on the weeding jobs.

From here on out, we are going to bid other jobs that do not have a clear scope of work, such as pruning/gardening at an hourly rate. This way, we can’t lose.

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