Flat-rate pricing
Flat-rate pricing charges a fixed price for a defined task, no matter how long it takes on the day. The price is built ahead of time from your average time for the task, your cost per billable hour, parts and profit, and kept in a price book.
Also called: Flat rate, Upfront pricing, Task pricing, Price book pricing
How it works
The customer approves a price for the task before you start, not a clock. Replacing a capacitor, a faucet cartridge, a GFCI receptacle or a disposal is one line in your price book with one price. If the job goes faster than average, you keep the difference; if it runs long, you absorb it.
That trade only works when your time on the task is predictable. Flat rates fit repeat service tasks with a visible scope. Work you can't size until you open something up fits time and materials better, often with the repair itself priced flat once you find the problem.
Building a price-book line
Each line is built from the same parts:
- Average time for the task, from your own job records, not your fastest tech's best day.
- Cost per billable hour, which covers wages, payroll costs, overhead and profit. How to set your labor rate shows how to work it out.
- Parts at their selling price, using your markup policy.
- Adders for conditions that change the work: attic or crawl space access, a second story, a seized shutoff, after-hours calls.
Example: An electrician's records show replacing a standard receptacle with a GFCI takes about 0.75 hours on average, including setup and cleanup. At $160 per billable hour, labor is $120. The device costs $20 and sells at $45. The book price is $165 for the first one. A second GFCI on the same visit takes less setup, so it's a separate, lower line. The numbers are made up for illustration.
Pros and cons
| For the customer | For you |
|---|---|
| Knows the price before work starts | Carries the risk of a slow job |
| No watching the clock | Keeps the gain from a fast one |
| Easy to compare options | Needs good time data to set prices |
| Prices go stale if not reviewed |
Flat rates also make options easier to present. Two or three priced choices for the same problem is the idea behind good-better-best pricing.
Common mistakes
- One price for every condition. The same task in an open basement and behind a finished ceiling are different jobs. Use adders instead of averaging them into one price that's wrong both ways.
- Never checking the book. Part costs move and times drift. Compare finished jobs with the book line using job costing, and review the whole book on a set schedule.
- Hiding the trip. If you charge a service-call fee or trip charge, say so upfront and state whether it's credited toward the repair.
- Flat-rating the unknown. Pricing a leak search or an intermittent fault as a flat task either overcharges the easy ones or loses money on the hard ones.
How it connects
The trade pricing guides for plumbing, HVAC and electrical show which tasks suit flat rates in each trade and how to build the lines.