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Home Service : Billing Methods

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There are several ways a service company may charge for their service. In this section we try to explain some of the most common forms of billing for home service and try to present each's advantages or drawbacks.

Flat Rate

Some larger companies and factory service providers charge a flat rate. Whatever time is involved in a job, the labour cost to the consumer is exactly the same. Change a transmission or repair a burnt wire, they're all billed the same amount (not including parts). The benefit of this type of billing is the consumer is never surprised with a higher labour charge. The down side is that even if it is just a breaker in your house breaker panel that needed to be reset, it would still be $169 (for example) for service. If the job is a particularly large one (eg. a washer transmission replacement or refrigerator compressor change, etc.) where any number of unexpectancies could crop up, this form of billing can be advantageous.

Service Charge + Time

Most companies still bill a 'service charge' and then additional labour on top of that. The additional labour will be billed out in set increments, not actually by the minute. Those time increments may be anywhere from 10 to 15 minutes to a half or whole hour, as set by the company. If the job goes into the next increment by more than a minute or two, you should expect to be billed for that full increment of time. For example, if the company bills time by the half-hour and the job takes 40 minutes, you will be billed for 1 hour's labour.

Be aware of the Free Service Call* (*with completed repair) marketing scheme.

Nothing these days is "free" and that goes for a service call too. Under this marketing ploy, all that occurs is that once the technician knows what the repair will consist of, they will provide the consumer with a single estimate for the total job. While no separate "service charge" may appear on the bill, be assured the charges required for day to day operations (which is what the 'service charge' is intended to make up for) is built into that 'job rate' quote so the consumer is really no further ahead. Should they decline the repair, they would then be billed a "service charge" for the inspection and estimate.

While service performed by companies employing the "Free Service Call" tactic may be adequate and even at the going rate, I believe this to be misleading marketing aimed at consumers and just meant to get that one company's 'foot in the door' first. It really has no added benefit to the end consumer and could possibly dissuade them from calling the best choice for service on their particular product.

Job Rate

Many companies are going to a 'job rate' system. These rates are calculated on averages of the time it *usually* takes to perform a particular task. For example, changing a pump on a particular design of washer will always be billed the same amount even if one rusted screw (for example) might cause the technician to have to work 20 minutes longer to complete the repair. With this type of billing, servicers can give consumers a definite price for a job whom will not get 'stuck' paying more for unforeseen incidents. Of course, some leeway is built into these job rates to make up for occasional inconveniences. On a job that goes perfectly smoothly, the servicer is making a small profit over what the actual service cost would otherwise be.

Mileage and/or Fuel Surcharge

If you are located out of a normal service area, you will often also be billed a mileage charged in addition to whatever rate structure the company uses. When gas prices are high, a servicer may bill an additional 'fuel surcharge' even within their normal service range to make up for wildly fluctuating gas prices. If these added cost become stable, the company will likely have to raise their rates permanently at which time they should do away with any fuel surcharge they had been charging.


AJ Madison, Your Appliance Authority - Online appliance parts, FREE repair advice

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