Toolboxplaybook-back-btn Playbookplaybook-back-btn Chapter 6

CHAPTER 6

Billing Structure: Determine Your Pricing

Flat rate or hourly pricing? Making that decision wisely helps to ensure you’re charging rates that match the value of the service, and making sure there’s a profit from every job.

SECTION 3 OF 6

What Does Flat Rate Mean?

Flat-rate pricing means your company charges the customer a set price for a specific job, regardless of how many hours it takes to complete the project. A single, fixed price includes the direct costs for parts and labor, and the indirect costs of overhead expenses.

When explaining this flat-rate meaning to customers, instruct your techs to describe it as the direct cost your company charges for providing a service, plus a small added markup based on a certain percentage or a set amount to cover company costs. 

For instance, a flat-rate plumbing fee of $250 to fix a leaky faucet might include the parts needed for repair, estimated time on the job, and a small percentage fee for overhead expenses, such as fuel, truck maintenance, insurance, etc.

In comparison, hourly pricing or a time and material contract means your company charges the customer for parts and materials, plus a set hourly rate for the amount of time spent on the job.

Go to Section 4: Pros and Cons of Flat Rate vs. Hourly Pricing