Flat Rate Billing (Part 1)…What is it?

“I recently hired someone from [name omitted] to replace an electrical outlet. When he arrived, he made a big deal out of the outlet and asked me if he could take a picture of it because he ‘had never seen anything so bad.’ When he went downstairs to check out the panel, he claimed that it was so old that it was out of code and needed to be replaced. He quoted me $5k to replace the panel. When he left, I called Lapp to get a second opinion. Lapp Electric came out to look at the panel. He unscrewed the front to check the inside and informed me that everything was fine. He said that the panel looked like new, and that everything looked like it had been done correctly. He said that, even if it would need to be installed, it would only cost $3k or maybe $3,500 if I wanted to upgrade. I will never go to [name omitted] again, but I will stick with Lapp Electric!”

August 2022 Lapp Electric Google Review

This Goggle review that we received in August 2020 is something that we hear from customers and the community, so we decided to take a moment to explain what flat rate billing is and why we do not use it at Lapp Electric.

What is Flat Rate Billing

According to Wikipedia, “a flat fee refers to a pricing structure that charges a single fixed fee for a service, regardless of usage.”

Recently, we have seen electrical contractors moving to a Flat Rate billing structure because of the ease with which it allows them to look at and do projects.

The downside of flat rate billing, for you as a customer, is that you are paying for a worst-case scenario, which may not be what you have.

Here is an example to consider

Say you want to add a dedicated receptacle in your first-floor bathroom. It is about 50 feet to your panel, which is located in the basement. You have easy access to install the additional wiring whereas the next customer’s situation may be less accessible and be more difficult to do the exact same job.

If you hire an electrician who uses a flat rate billing structure, you are going to pay the same amount as the customer’s whose situations may be less accessible and more difficult.

So, even through your job is going to take less time, you are going to be charged the same amount.

Contractors who use flat rate billing structures tend to have higher prices all the way around to cover themselves on the projects that are a more difficult and take more time.

Want to Learn More?

Be sure to check back next week to find out more about flat rate billing and how to know if you are hiring a contractor who uses flat rate billing.