Flat rate pricing is charging the customer a fixed price for a defined task, quoted before work starts, regardless of how long the task actually takes. The price usually comes from a price book listing each task.
It is the main alternative to time and materials, where the customer pays for hours worked plus parts.
How to calculate a flat rate price
A flat price is built from an expected task time, T, your billing labor rate, R, parts cost, P, and a parts markup, m:
Flat price ≈ T × R + P × (1 + m)
Say a task usually takes 1.5 hours, your labor rate is $150 an hour, parts cost $80 and you mark parts up 50%. The flat price is $225 + $120, or $345.
Then test it. For each flat-rate task, compare the price against actual time spent:
Effective hourly rate = (Flat price − Parts cost) ÷ Actual hours
If that $345 task averaged 2.25 hours in practice, the effective rate is ($345 − $80) ÷ 2.25, about $118 an hour, well below the $150 you planned for.
Why it matters
Flat rate moves the risk of a long job from the customer to you. That is why it is easier to sell: the customer knows the price before agreeing. It also rewards technicians who work efficiently, because finishing faster does not reduce the bill.
The risk is in T. If the expected time is wrong, every job of that type loses money quietly. Keep the task times in your price book updated from real job duration estimates and check them at least once a year.
Flat rate also does not cover the drive unless you build it in. Many companies add a trip charge or price by zone so that a job at the edge of the territory is not priced the same as one next door. The field service pricing guide compares the approaches.
A common mistake
Setting T from the best technician's times. The price has to work for your average technician on an average day, including diagnosis, setup and clean-up. Use the median of actual job times across the crew.
Related terms
- Time and materials bills actual hours and parts instead.
- Labor rate is the hourly figure a flat price is built from.
- Average ticket is often tracked alongside flat-rate pricing.
Common questions
Is flat rate pricing better than hourly?
Neither is better everywhere. Flat rate suits repeatable tasks with predictable times. Time and materials suits work where the scope is unclear until you start, such as some diagnostics and large repairs.
How do you handle a flat-rate job that runs long?
You absorb it. That is the deal. If a task regularly runs long, raise the price or split it into separate tasks in the price book.
Do customers prefer flat rate pricing?
Many do, because they know the cost before approving the work. It also reduces arguments about how long a job took.