- Flat rate puts the risk of the unknown on you and rewards working fast. Customers like knowing the price.
- Time and materials puts the risk on the customer. It fits jobs nobody can see the end of: old houses, troubleshooting, work behind walls.
- Many shops troubleshoot on time and materials, then quote the repair as a flat rate once they can see it.
Side by side
| Flat rate | Time and materials | |
|---|---|---|
| Price | Set before the work | Hours at a rate, plus materials at cost plus markup |
| Who carries surprises | You | The customer |
| Rewards | Working efficiently | Careful records |
| Customer sees | One number | An estimate, then the actual bill |
| Best for | Repeatable work you know well | Unknown scope, investigation, changing jobs |
| Paperwork | A clear scope and change orders | Daily logs, receipts and a not-to-exceed |
When flat rate wins
If you have done a job a hundred times, you know how long it takes. A flat price lets the customer say yes without worrying about the clock, and every hour you save is yours. That is why service trades use flat-rate price books for common tasks: replace a faucet, swap a breaker, clean a dryer vent.
Protect a flat rate with a tight scope. Say what is included and what is not, and price anything else as a change order before you do it. Our flat-rate price book builder turns your labor rate and markup into a priced list of common tasks for your trade.
When time and materials wins
When nobody can see the whole job until it is opened up, a flat price is a guess, and you lose the bad guesses. Time and materials fits investigation, older homes, repairs behind finished walls, and jobs where the customer keeps changing what they want.
Protect yourself and the customer with a written time and materials contract: the hourly rate, the markup on materials, how often you bill, and a not-to-exceed amount you will not pass without written approval. Keep a daily log of hours and receipts and share it with each bill.
Mixing the two
- Diagnose, then quote. Charge a set diagnostic fee or a short time and materials visit, then give a flat price for the repair.
- Flat with allowances. Quote a flat price with an allowance for an unknown, like rotten sheathing, priced per unit if found.
- Flat per phase. Break a long job into phases and price each once the one before it is done.
Whichever you use, set your hourly rate from your real costs. Our labor rate calculator works it out from wages, burden, overhead and billable hours.
Published October 7, 2024. This page is general information, not legal or tax advice. Rules change and differ by state and city, so confirm with the agency named before you act.