Flat Rate Pricing Calculator
By BRIX Editorial Team · Updated
A flat-rate price is a fixed price per task, quoted before work starts. Calculate it as book hours × your hourly selling rate, plus parts cost × (1 + parts markup). A 1.5-hour fan motor swap at $170 an hour with $100 of parts marked up 80% prices at $435.
- Labor portion
- $255.00
- Parts portion
- $180.00
- Gross margin at book time
- 61.5%
- Gross profit per hour at book time
- $178.33
- Gross profit if it takes 2 hrs
- $245.00
- Gross profit per hour at that time
- $122.50
The customer pays $435.00 either way. Running 0.5 hours over book time costs you $22.50 of gross profit, and drops it to $122.50 per hour.
Key takeaways
- Flat-rate price = book hours × hourly selling rate + parts cost × (1 + parts markup).
- Book hours should come from your own job history, not a guess or a competitor's price book.
- The selling rate must cover burdened labor, overhead and profit per billable hour.
- Under flat rate, the shop keeps the gain when techs are fast and eats the loss when jobs run long.
What is flat-rate pricing?
Flat-rate pricing means the customer gets one price for a defined task, such as "replace condenser fan motor," before any work starts, no matter how long it takes. HVAC, plumbing, electrical and garage door shops use a flat-rate price book so every tech quotes the same price for the same task. See flat-rate pricing for the full definition and history.
Flat-rate price = H × R + C × (1 + K)
- H
- book hours: your standard time for the task
- R
- hourly selling rate (covers labor, overhead and profit)
- C
- parts and materials at your cost
- K
- parts markup as a decimal (80% = 0.80)
How to build a flat-rate price
- 1
Set your hourly selling rate.
This is not the tech's wage. It's what one billable hour must bring in to pay the burdened wage, overhead and profit. Work it out with the contractor hourly rate calculator.
- 2
Find book time for each task from your own jobs.
Pull the last 20 times your techs did the task and take a typical time, including setup, testing and cleanup. Drive time is usually covered by a trip or dispatch fee instead.
- 3
Price the parts.
Multiply each part's cost by your markup. Many shops use a sliding scale, with a higher markup on cheap parts and a lower one on expensive equipment. Check what each markup really earns with the markup and margin calculator.
- 4
Add them and round.
Labor portion plus parts portion is the task price. Round to a clean number and put it in the price book.
- 5
Review the price book against job costs.
Every few months compare actual times to book times. If a task keeps running long, raise the book time or fix the process.
Flat rate vs. time and materials
Under time and materials, the customer pays for the hours used. The same fan motor job billed at $170 an hour would be $520 if it took 2 hours and $350 if it took 1 hour. Flat rate keeps the price at $435 either way.
| Flat rate | Time and materials | |
|---|---|---|
| Customer knows the price | Before work starts | After work is done |
| Fast tech | Shop keeps the extra margin | Customer pays less, shop earns less |
| Job runs long | Shop absorbs the extra hours | Customer pays for every hour |
| Best for | Repeatable service and repair tasks | Unknown scope, remodels, troubleshooting with no end in sight |
| What it needs | Accurate book times from your job history | Accurate time tracking and customer trust |
Flat-rate task examples by trade
These examples show how the formula prices common service tasks. The book times, rates and parts costs are illustrative, not a price guide. Build your own from your job history and your rate.
| Trade | Task | Book hrs | Rate | Parts cost / markup | Price | Gross margin |
|---|---|---|---|---|---|---|
| HVAC | Replace condenser fan motor | 1.5 | $170 | $100 / 80% | $435.00 | 61% |
| HVAC | Replace run capacitor | 0.5 | $170 | $18 / 200% | $139.00 | 71% |
| Plumbing | Rebuild toilet tank (fill valve, flapper) | 1 | $160 | $30 / 150% | $235.00 | 68% |
| Plumbing | Clear main line from cleanout | 1.5 | $160 | None | $240.00 | 72% |
| Electrical | Replace GFCI receptacle | 0.75 | $165 | $22 / 150% | $178.75 | 68% |
| Garage door | Replace pair of torsion springs | 1.25 | $150 | $90 / 120% | $385.50 | 64% |
Common flat-rate pricing mistakes
- Buying a price book and never adjusting it. National book times don't know your drive times, your techs or your overhead. Use them as a starting point, then correct them with your own data.
- Setting the selling rate from the wage. A selling rate has to cover overhead and profit for every billable hour, and most paid hours aren't billable. Check your technician utilization before setting it.
- One markup for every part. A 100% markup on a $4,000 condenser prices you out; the same markup on an $18 capacitor leaves money behind.
- Leaving out the trip. If book time doesn't include drive time, charge a dispatch or trip fee, or build an average drive into each task.
- Never checking the result. Compare quoted to actual with the job costing calculator. Tasks that always run long are quietly losing you money.
Frequently asked questions
How do you calculate a flat-rate price?
Multiply the task's book hours by your hourly selling rate, then add parts cost multiplied by 1 plus your parts markup. For 1.5 hours at $170 with $100 of parts at an 80% markup, that's $255 + $180 = $435.
What hourly rate should I use for flat-rate pricing?
Use a selling rate that covers your burdened labor cost, overhead and target profit per billable hour, not the wage. Divide total annual labor and overhead cost by billable hours, then gross up for profit. The contractor hourly rate calculator does this.
Is flat-rate pricing better than time and materials?
For repeatable service and repair tasks, flat rate usually wins: customers see the price up front and the shop keeps the gain from efficient techs. For remodels or open-ended troubleshooting, time and materials protects you from scope you can't see yet.
How do I find book hours for a task?
Use your own job history. Pull the clock-in and clock-out times for the last 20 or so times your techs did the task and take a typical time. Add a little for older homes or hard access if those are common in your area.
Should flat-rate prices include drive time?
Either build an average drive into each task or charge a separate trip or dispatch fee. Shops covering a wide area often prefer the fee because drive times vary so much by zip code.
How often should I update my flat-rate price book?
Update parts prices whenever supplier costs change and review book times and your selling rate at least once a year. Raise prices when your wages, insurance or fuel costs go up, not after the margin has already gone.
Related
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- What Is Gross Profit per Hour?Gross profit per hour shows what each labor hour earns after direct costs. See the formula, compare it to overhead per hour, and spot jobs that lose money.
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