Jim Correll, director Fab Lab ICC at Independence Community College, Independence Kansas 

For the most part, people don’t like paying for services by the hour. You don’t know how long something is going to take i.e. how long the provider will drag out the job. Some in the auto and auto body repair business use industry estimates for specific repairs so they can quote a fixed dollar amount. For me that works as I know what the price will be and don’t have to worry about some open-ended arrangement without having any idea of what the final bill will be. 

Fence Builders are Hard to Find 

On the home front, a few years ago we decided to replace a 400ft section of fence that separates our pasture from what we consider our yard. We decided to replace the aging barbed wire fence with a fence of woven livestock wire so we could expand the yard in which our dogs can run. We learned that fence builders are hard to find, but on a recommendation from a farm and ranch friend we called a builder that was “really good.” 

He came out to give an estimate, walking the path of the fence and sizing up the job in his head. He told me the job would cost $75 per hour for him, the laborers and equipment required to do the job. For that rate to include him, a helper or two and equipment didn’t seem too bad, but how long would it take? I asked him. “I have no idea. I don’t know how much rock or sandstone I’m going to encounter,” he said. “Can you give me a ballpark?” I asked, to which he replied “No, not really.” I then asked, “How do I even know if we have enough money to pay for this project?” He stuck to his quote of $75 per hour reiterating that he couldn’t tell how long it was going to take. 

It is impossible for me to believe that after building fences for many years, he wouldn’t have an idea of how many hours or days it would take to complete the project. We sent him on his way never to call him again. No matter how good he is at his craft we were not going to enter an open-ended arrangement like that with no idea the final cost. 

Finding Another Fence Builder 

Upon hearing our story, my neighbor suggested we talk to a friend of his, a welding instructor who does side projects during the summer when school is not in session. He came over and surveyed the project in a way similar to the other guy, but he came up with a price and said “If I run into any unusual circumstances that I don’t know about, I’ll talk to you so we can decide what to do.” Fair enough. He did the job. Nothing serious came up, however, a question of whether or not to paint the steel pipe posts and corners arose that we had not considered during the time of quote. He quoted an add-on amount for the painting and finished the project. He did good work and we knew the cost from the beginning. We’re very happy with the fence as are the dogs who have gone from a huge yard to a doubly huge yard in which to roam. 

Advising People Doing Service Work 

When I advise new entrepreneurs in the pricing of their service work, I recommend they quote their prices by the job but internally keep track of how long each job takes. Unless the customer makes changes to the job mid-stream they stick to the price even if it takes longer than planned. People can actually get better and better at judging how long jobs will take when they do a time analysis of each when finished. The customers are happier because they know up front what the job will cost. 

People don’t like paying by the hour. There are some exceptions, legal and accounting work come to mind, but for the most part service businesses do better when they quote each job rather than an hourly rate. There are no elements more important to a successful business than finishing the job on the promised schedule and at the promised price. Well, maybe a sense of gratitude for being the awarded the job in the first place is also very important.  

Jim Correll is the director of Fab Lab ICC at the Center for Innovation and Entrepreneurship on the campus of Independence Community College. He can be reached at (620) 252-5349, by email at jcorrell@indycc.edu or Twitter @jimcorrellks. Archive columns and podcast at jimcorrell.com.