Variable vs. Fixed Pricing

A question that many computer businesses are faced with. Should their pricing be variable on a per hour basis, or fixed on a per job basis? In this article we’ll talk about the advantages and disadvantages of both.

Variable Pricing:
Most computer technicians will start out with variable prices charging around $50 an hour or so. There is also another common way to variable price which is the way I personally charge my clients. Most of my work is done onsite so I charge X amount for the first hour, and half that for every following hour. This way I can expand my service area and it always covers my fuel costs. The further away my client is, the higher the first hour charge becomes.

Most virus removal jobs typically take an hour or under to fix. If you are charging only $50 per hour and you had to drive 45 minutes to get out there, you only got paid $50 for 2 and a half hours of your time.

If you offer both onsite and in-shop service, I recommend that you have two pricing scales for each.
For example:
In-shop: $50 per hour
Onsite: $90 for the first hour and $40 for every hour after that.

Fixed Pricing:
Many customers (especially residential customers) fear the cost of a computer repair running up to something they cant afford, so fixed pricing can be highly attractive a customer. Unfortunately fixed pricing allows for the computer technician to lose out should a job be larger than anticipated.

For example, lets say a client calls you saying they have a virus. You ask a few questions about what the virus is doing and you find that it is a commonly known virus that you have removed many times before. In the past it has only taken 20 minutes to remove the virus and you give them a fixed price to remove it. Once you arrive you find that their computer is a very old, underpowered machine that takes 15 minutes just to install and startup the virus removal program. This is a very good reason why your fixed prices should be considerably higher than your hourly costs. If you were charging $50 per hour you might consider having a fixed price, $99 virus removal and optimization plan for your clients.

Greggh, an experienced technician and business owner from our forums wrote an excellent way to prepare for going fixed price.

We track how much of the overall time of a job was applied to individual tasks. Such as 15 minutes to cleanup the viruses, 30 minutes to do X, 20 minutes to do Y, 2 hours to reinstall and reconfigure. We then collect all of this information from all of our guys. Some might think its a way to find out who doesnt know what they are doing (like taking 4 hours to reinstall windows.) But that is not the case, we can use it to find out better ways to charge customers for certain things (if we ever go flat rate.)

So which is the better of the two? Id say variable pricing for the first few years and experiment with fixed pricing once you know how long each job will take.

If you arent a member of our forums already, you should be because its a wealth of information from experienced computer technicians and business owners. Alot of the computer technicians there have posted their own experiences with variable and fixed pricing. Check it out:
https://www.technibble.com/forums/showthread.php?t=978