In this episode of Close It Now, Sam interviews Danielle Putnam, the president of The New Flat Rate, which is the first and only home service menu-selling system designed to put profit directly into the hands of plumbing, electrical, and HVAC contractors.
Listen in as they talk about why using a flat rate pricing model is important and how it can help futureproof your business.
Danielle Putnam with The New Flat Rate 55:43
Sam: Welcome to this weeks close it now Sam Wakefield here I am so excited with another special guest. I hope you're enjoying the new format, a weekly interview. We were bringing in industry experts who are here to drop some Nuggets on you guys and ladies and to you know help everyone up level their game. You know our industry has been such a if you ever watch the Anchorman, it's like old old wooden ship that is super slow. And that has been our industry forever. If you listened very much at all, you'll hear me say over and over that anything that's been done exactly the same way for over 50 years is ripe for revolution. So it is time to up level our game. Let's stop being weird and start selling. As we always say on this podcast, so I'd love to take a second and introduce someone who has been in the industry basically her whole life, and it's hardly say it's a her and but she's so she's third generation a track. Also she is. With the company now that is on the forefront of leading the way into change, helping us up level with just partnerships that they have with. So much about the way that we do things and helping everyone become so much smoother in their process and their systems. And yes, welcome to podcast today. This is Danielle Putnam. she is president of the new flat rate. I don't know if you've ever heard of the new flat rate, but I'll tell you what I've been from the get go in when I got it street. That was one of the very first things that the very first company the service that we use right off the at the start to go from. Time and materials like everybody kind of seems to start with into flat rate pricing and we never looked back from our very first month of using it. We became dramatically more profitable and the margins went up just an insane amount and would never turn back. We never went back to anything else except for. From that moment on we Flat rated everything and the whole world change for us, and so she's going to talk a little bit about that as in. She's also one of the big things that you hear me on this podcast here. Talk about a lot is the value of women in our industry. She's on the Advisory Board of women in HVAC. So yeah, love to welcome you to the podcast today. Danielle, thank you for being there.
Danielle: Awesome hey thanks Sam, I appreciate the introduction. It's great to be here.
S: Yeah, awesome. Well give us a quick highlight. I know I kind of just hit super high level bullet points, more in depth history of who you are Danielle and what makes you tick. You know what what's gotten, you where you are. President new flowery but you know, kind of the oranges of that. Why what got started there?
D: Well, when I was young I thought someday in life I'm going to be successful when I have a flip phone and you know, of course. Long time ago I didn't have a cell phone at all. But in the future I was going to have a flip phone. What I figured by then. I remember that there was a bag phone in my dad's car. He was a contractor, you know. So he had this bag phone. Anytime I got to borrow his car I got to use it. I felt so cool. 'cause you know everybody else was still using pagers but someday I was going to have a flip phone because I wanted to be an entrepreneur. Wanted to be a business person and that was a picture of success for me. It wasn't in dollars. It was when I can wear high heels in business suits and have a flip phone. I'm going to be successful so that, you know. But what I love about growing up in the trades. I feel I was born and bred. My dad's a contractor, his dad's a contract or my brothers or contractors and so I always grew up in the in the shop, in the warehouse, working the phones, going out, delivering parts. It's just kind of it was a way of life. But I love the lifestyle of business, family, business and we're always working and figuring things out and looking for better ways. And so maybe part of being the entrepreneur was a little bit in my DNA. 'cause you know, his dad and grandpa and brothers. It's like it just was like that for us. And then today you know here I am and I'm. Living my dream of being in business and you know, it's never perfect and we've had the new flat rate now for 10 years and they say that it takes 20 years to be an overnight success. And it's true. It's so true because it's a lot of work. Whether you have a contract ING business or anytime you know businesses work, it just is. And so you know, I love. That's what makes me tick. Is finding an area that wait we need to put a process in over here and to smooth things out. And hey, let's get this area dialed in better so that we can scale or hate. We missed some opportunity there and I know you talk about that a lot on your show. You know with sales we're closing the sales and there's all these opportunities left on the table every day. So whether it's. You know, out in the field or in any kind of business, that's the kind of stuff that makes me tick is how can we dial it in a little bit better?
S: yeah, absolutely. I love it. I love it. So let's take a quick dip Archer from a track talk real quick, because in fact I'm borrowing this and I'm not just borrowing and stealing this from guys number right now. They do this on their podcast the to the Point podcast, which you have if you haven't listened to it, make sure to go back and listen to the episode that I interviewed Tall Paul from. Podcast that was episode #50 for everybody that's counting in the in the world out there, but something they do on their podcast that absolutely love, Danielle If you were in the center ring and it's your title fight. And if it's boxing or maybe your MMA fighter and you walk out whatever your fight is when you walk out, what would your theme song be?
D: Crazy Train, it's what you know. Crazy Train right all above. You know, smile. So I think you know what I'm talking about.
S: So crazy train. That was perfect timing for that song introduction. I mean, we couldn't get more appropriately. I don't think, yeah, I feel ya going off the rails, right? Right? Well, cool I love it. And throughout the summer I will guess. Do interviews inside.
D: I can hear you better now, to actually your mikes, not cutting it out might be the way outside.
S: Yep, very very possible. So OK good alright. So back to the task at hand. Crazy Train is Danielle's theme song and why is that your theme song? I know we probably said it would cut out a little bit. Let's recap that.
D: I don't think well, I didn't hear you say why. You just said hey if I was going into a boxing ring and I was going to win the fight, what song is blaring when I walk into that ring train? Because I've north of Atlanta, GA. And if you live in America, especially near Atlanta, GA, you need to be a Braves fan because the Braves are America's team. Right, right, Chipper Jones used to walk up to bat and that whole song would light up the stadium and he'd always have a great hit. So I mean, if I was going to win, I'd channel my inner Chipper Jones and I always knock it out of the park.
S: I remember growing up. It was always always about the chop chop. Yep, those were the years. Good stuff, awesome move cool. Very very cool. So let's dive into some content today. I know there's a million things that we could talk about. One of the you know coaching so many people across the country for the last several years. A lot of the conversation that comes up with me is how do I price things? It's always how do I price this? How do I price that? And so yes, there's a way to, you know, do all of the work and build it backwards, and you have to know your overhead and your cost of Labor and all those things. What decide what margins you want to set and all that kind of stuff. But that is seems to be one of the biggest I guess blocks almost walls that people run into because they feel like they have to. Get all of that done before they can ever set foot in in in the field or in the house and sell anything because they're scared of losing money and all these things. Then what happens is they'll get frustrated with it. And then say, OK, well, let's just double the equipment cost and go out and start there and then they do actually lose money and they're going out of business. So help us out here. What can we do otherwise that would make a whole lot make the whole lot easier for everybody.
D: Yeah, well you can create your own system or you can start using one that already exists. That kind of makes it a little bit easier, right? For example, our company, the new flat rate. I can't not mention that we do pricing and we help contractors all over the US and Canada to do that. I mean, I appreciate that. I'll catch that one, you know and that's what we do. We love to help people set their price and make sure that it's right in their marketplace. And it's done for you so that you don't have to spend all the cumbersome hours doing it. But you know Sam. If if we could be real, honest here and candid, it seems that there's two types of people there are the CPA style contractor, and then there's the entrepreneur style contractor. The CPA knows their numbers, they understand it, and it doesn't mean that they have a CPA degree. But there are numbers guy right, more of an accounting background, so when they're thinking OK, I need to set my pricing they’re calculating all those things and they're going to come up with a really great price and it might take ‘em time, but they're going to do a great job at that and have a great price,it might take them time but whereas the majority of us are kind of fly by the seat of our pants. Hey, I sold a job. Who cares what I'm going to price it out or no, I have an opportunity I'm going to get out there and I'm going to sell it. And so you go out there and you do the diagnosis and the customer says how much and you're like. Oh shoot, I don't know you will quick calculation. Maybe make a fake phone call and then you know you say hey you know it's going to be $325 today for example or whatever it is. And then you're hoping that you priced right? So with those two, you know us entrepreneurs were testing it. We kind of find a prize for losing money. And then sometimes we call all around and kind of phone shop our competitors and see where the market is. But it is a lot of work. Fortunately, you know you guys you Craftsman. You already know what your equipment costs are. You already know what your material, you know what it's going to cost you to do the job and so. You also have an idea of what you want to mark it up, but it doesn't have to just be double whether you. You know, say hey, I'm going to work up my equipment 40% fifty percent, 60%, and then figure in your taxes. And you know, of course. What you're talking about, too is knowing your billable hour and so many people don't know how to do that right. You know all those things do have to be factored in. You know Sam, I want to give you like the perfect one sentence answer to your question.
S: But let's rephrase, let's have a better question. OK, if somebody says you know what I'm interested in, 'cause I'm I'm such a big fan of flat of new flat rate. I've used it in my companies before. It's something I've you know it completely turned around the way our pricing work with our margins. And if somebody was like you know what, I'm just tired of dealing with not knowing if I'm going to be priced. High in the market, low in the market, right in the middle. If I'm going to make money or not and they raised their hand and said, hey Danielle, how can you help us? What are the what's that look like? So you mentioned the thing that really caught my interest because I've talked to a lot of people who have mentioned that they've heard of new flat rate. But they also were apprehensive to check into it because they were scared that it was only priced 40. It's just in the big city market so the prices are going to be too high. Or oh, it's only in the small market so the prices are going to be too low. So you mentioned that you can set it and you guys have already done the market research for the different areas. Expand on that a little bit.
D: Yeah, you know, we're in big towns, small towns, and I hear that too. So it's interesting to hear you say that you know it's not going to work in my market 'cause I'm in a small town. Well, with the new flat rate when we start working with you again, it's done for you. We've already built all the database. We've already got all the pricing in there. So then we just get a couple of simple numbers from you. You know, if you don't know what your billable hour is, we can help you calculate that. We do have a billable hour calculator tool that's very easy to use, like a widget. If you've ever used TurboTax to do taxes, just step by step help you learn your billable hour. So if anybody does want that, reach out to me after the show and I'll give you our billable hour calculator.
S: Thanks for that, that's huge.
D: Yeah, absolutely, but if you do know your billable hour, then we ask you what it is and what are the taxes in your area. Do you offer a service agreement? Discount an what's your service and diagnostic rate or your trip charge? OK, once we have those four numbers then we can put him into our systems and the algorithms already built in the back end and then we take a look at where you're located. And surrounding areas. You're right, we have done all the research and we know based on you know what you tell us and what we know already of the US in Canada. What would work well in your area? Then we will send you a preview and say OK, this is what we've put together for prices and we can do that in less than 24 hours. Does that look good? Because what we're looking for Sam is. Is that what you would currently charge 'cause we don't want to raise or lower your prices. We want to be real comparable if you don't know what they will make a break recommendation. If you say hey that looks good and if for example you went on board with the new flat rate and we built out our app for you and get you up and going, we provide 5 price points for everything diagnosed in the home. And that's the beauty of the system is we're not pricing too low. We're not pricing to too high. We're giving the homeowner five prices on everything so they can make an educated decision based on their budget and what they want. So what we see Sam is 80% choose higher than the bottom and the bottom is a standard flat rate, so 80% or choosing higher than that. And it is so easy for technicians to prejudge it. It's not just techs it’s humans, right? We like to say, oh, they have a BMW. They have money. Or oh, they have a Dodge Caravan. You know they have money. Or oh, they live, you know, in that side of town across the tracks, they don't have money. And that's not true, right? So we go in and we discount all the time. Don't wait based on what we think and we perceive. So we call it leave your mother in the truck like you gotta check those emotions at the door an offer somebody options because they know their budget and their need and what's important to them. And then they're going to choose the level of service based on their budget. So when it comes to selling service, selling equipment, show multiple options and then shut up.
S: Nice, I love it that's you know, I've always said it's like don't make their don't spend their money for it's not your money to spend. Did from you know my personal experience as well as coaching so many people I've got into the biggest nicest houses in the biggest neighborhoods and they couldn't even get approved for not just the basic system for financing. It wouldn't even get approved for the second look. No, you know previous. Yeah, and then I'll go into a house to the other side of town. That's not even square or level. The house looks like it. Leaning over and they're like, Oh yeah, I'll take the just whatever the best you have and is there anything else we can add to the project and then they're going to get a copy can of cash out of the backroom and they pay you no problem and it's it's wild. The difference? So the pre judging has to stop it does.
D: It does as humans, you know, and we do it based on our budget, we know, hey, I'm bout to send somebody to College in my family and I don't have any money so surely they can't afford it either. But well, we don't know. We don't know their scenarios.
S: Nothing to do with our own lives. So let's I'm super interested in because I know how I've always explained why flat rate. Versus time and materials. I would love to hear from the expert. Your your take in how you express to people why it's beneficial to convert to a flat rate menu pricing type of system versus the time and material, how it's good for the contractor and how it’s good for the homeowner.
D: Every contractor I've ever talked to that switched from time of material to flat rate. Emphatically said, I started to make more money. Every one of them said pay that we started to be more profitable. We started to make more money but the switch to flat rate kinda was a long time ago. You know when people were like hey what was it in the 80s? The flat rate came about.
S: Yeah yeah it was a good while back yeah everything. Move into it, yeah?
D: So then everybody you know, not everybody. There's still a lot of contractors on time and material and but the switch over your prices you start to make more money and then that works for a long time. But then what we saw in the industry over time was OK. We started to make more money but now we want even more so we need to turn the technicians in to selling technicians and force them to look for more opportunity. But that wasn't necessarily a process that was a training. A person, not a process, and so that's why with the menus then flat rate evolved again into, you know what we call menu pricing when you just use the process of showing 5 price points. Then the customer chooses and you make even more money, so you had time material, flat rate, and then menu pricing. The revenue opportunity profit went up, but why flat rate? You know the consumers. The consumer has changed. Anywhere that we go, we see the price of what we're paying and the certainty of knowing the budget. It's what the consumer wants. The consumer has changed, but then also that changed again because now you go to Amazon or you go to Walmart, you go Home Depot, you go anywhere and you have multiple options for every product that you want, right? You have all the different price points you get to choose based on your budget. And so it's it's the changing of the times it's who we are as retail shoppers.
S: Frank, I totally agree. You know, especially right now in our industry it was starting to happen gradually, but especially as soon as covid hit, you know. Personally I did a couple of webinars for three or 400 people how to do virtual sales appointments. Nobody ever thought in. Anything trades especially HVAC. You could do a completely 100% virtual sales appointment. Well now we have people all across the country doing, you know, $1,000,000 a year in virtual cells which was unheard of. You know. I personally I've always done a few 100,000 a year, just not even intentionally...