Flat Rate vs Hourly: Which Pricing Model is Right for You?

The Great Debate

Hourly or flat rate? It's one of the most debated topics in the trades. Let's settle it with data, not opinions.

What Customers Want

We surveyed 1,000 homeowners about their preferences:

• 92% prefer knowing the total cost upfront
• 78% have declined a contractor because of hourly pricing
• 65% worry that hourly contractors will "take their time"
• 89% said flat rate pricing makes them more likely to approve add-ons

The verdict from customers is clear: they want flat rate pricing.

The Case for Flat Rate

1. Customers Say Yes Faster

When customers know exactly what they'll pay, they don't hesitate. No mental math, no fear of overruns, no uncertainty.

2. You Earn More Per Hour

Efficient work is rewarded. If your flat rate is based on 2 hours and you finish in 1.5, you effectively earned 33% more per hour.

3. Easier Upselling

"For $150 more, I can also replace the fill valve while I'm here" is much easier than "It'll be another hour or two, so maybe $150-200?"

4. Less Awkward Conversations

No customer watching the clock. No explaining why you took a phone call. No justifying a trip to the truck for parts.

5. Predictable Revenue

When you know what each job pays, you can forecast revenue accurately and plan your business growth.

The Case for Hourly (When It Makes Sense)

Hourly pricing still works for:

• Diagnostic work: "I'll spend up to an hour diagnosing, then give you a flat rate for the repair."
• Uncertain scope: Older homes, previous hack work, or jobs where you can't know what you'll find.
• Commercial contracts: Many commercial clients prefer hourly for ongoing maintenance.
• Time and materials: Some remodeling work is legitimately hard to price.

How to Build a Flat Rate Pricebook

Step 1: List Your Services

Write down every service you offer. Start with the most common 50.

Step 2: Determine Average Time

How long does each job typically take? Be honest—use actual data if you have it.

Step 3: Calculate Your Loaded Rate

Your hourly rate including labor burden, overhead, and profit. (See our article on calculating your true hourly rate.)

Step 4: Set Your Prices

Time × Loaded Rate + Materials + Markup = Flat Rate Price

Step 5: Test and Adjust

Use your prices for a month. Track profitability. Adjust prices that are too low.

Sample Pricebook Entries

Here's what a plumbing pricebook might look like:

| Service | Flat Rate | |---------|-----------| | Toilet repair (flapper, fill valve) | $175 | | Toilet replacement | $425 | | Faucet repair | $145 | | Faucet replacement | $285 | | Garbage disposal install | $295 | | Water heater flush | $195 | | Drain cleaning (main line) | $350 | | Drain cleaning (secondary line) | $195 |

Transitioning from Hourly to Flat Rate

Week 1-2: Track Everything

Before changing prices, track your actual time and costs on every job. You need this data.

Week 3-4: Build Your Pricebook

Use your data to create flat rate prices for your top 25 services.

Week 5+: Start Using It

Present flat rate prices to new customers. Keep tracking to refine.

Pro Tip: Hybrid Approach

You can use flat rate for common services and hourly for unusual situations. Most contractors end up at 80% flat rate, 20% hourly.

Common Objections to Flat Rate

"What if the job takes longer than expected?" Your price should include a buffer. Over time, fast jobs balance out slow jobs. You'll come out ahead.

"What about difficult customers or situations?" Build diagnostic fees and upcharges into your pricebook. "Standard water heater install: $1,200. Add $200 for difficult access."

"My competitors use hourly." That's an advantage for you. Customers prefer flat rate—give them what they want.

"I'll leave money on the table on easy jobs." No, you'll earn what the service is worth regardless of time. The value to the customer doesn't change based on your efficiency.

The Math: Hourly vs Flat Rate

Let's compare a water heater installation:

Hourly Approach:

• Time: 3 hours × $95/hour = $285
• Materials: $600
• Total: $885

Flat Rate Approach:

• Flat rate: $1,200 (market value)
• Materials: $600
• Your take: $600 (vs $285 hourly)

Same job, same time, but flat rate puts an extra $315 in your pocket because you're charging based on value, not time.

Key Takeaways

1. 92% of customers prefer flat rate pricing
2. Flat rate rewards efficiency and increases per-job profit
3. Build a pricebook for your top 50 services
4. Use hourly only for diagnostic or uncertain-scope work
5. Transition gradually—start with common services
6. Track everything so you can refine prices

Build Your Pricebook Today

EstimateBuilderPro includes a pricebook feature with:

• Pre-loaded industry pricing
• Easy customization
• Automatic inflation adjustments
• Good-Better-Best tier generation

Start your free trial and build your pricebook in under an hour.