I've talked to contractors running both models and contractors who somehow try to run both at once. The ones trying to run both are always the most confused and usually the least profitable. Pick a lane.
Time and Materials: What You're Actually Doing
With T&M, you charge the customer for the hours you work plus the cost of parts with a markup. Simple in theory. In practice, every job becomes a negotiation the customer doesn't know they're in.
When you show up and take an hour to diagnose and two hours to fix, the customer is doing math in their head the whole time. Was that really three hours? Did he need to drive to the shop? Why did the part cost that much? T&M invites scrutiny that flat rate doesn't.
T&M also means your revenue depends on how fast your tech works. A fast, experienced tech makes you less money on T&M. That's backwards. You should be rewarding efficiency, not billing for inefficiency.
Flat Rate: What It Takes to Do Right
Flat rate means you publish a price for each service. Replace a capacitor: $185. Full tune-up: $149. Install a standard thermostat: $225. The customer knows the price before you start. There's no meter running.
The upside is trust and simplicity. The customer approved the price and doesn't watch the clock. Your tech can take the time to do the job right without costing you margin. If your prices are built correctly, you make a similar margin on every job regardless of how long it takes.
The work to set it up is front-loaded. You need to know your costs. What does it actually cost you to run a service call? Labor, overhead, fuel, insurance, the time your dispatcher spent scheduling it. All of that goes into your flat rate. If you price without knowing your numbers, flat rate will crush you.
Which One Should You Pick?
For residential service and repair, flat rate almost always wins. Customers expect it, competitors use it, and it eliminates the most common source of customer conflict.
For large commercial projects where scope is genuinely uncertain, T&M with a clear estimate and change order process makes more sense. Some complex installs are hard to flat-rate without building in so much cushion you price yourself out.
The worst position is quoting some jobs flat and some T&M depending on how you feel that morning. Customers compare notes. When they figure out you're inconsistent, they stop trusting you.
Pick your model. Build your prices correctly. Stick to them. WerkOps can help you track job costs so your flat rates are actually based on what things cost to deliver, not on what sounds reasonable.
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Written by
Dina Good
Founder, WerkOps
Dina grew up in the trades. Her father was a contractor, then a building inspector, and the job site was her classroom long before any formal one was. She went on to own her own contracting company, which is where she first felt the pain of running a skilled trade business on bad software and worse spreadsheets. A love of data pulled her into programming, and the two worlds eventually collided into WerkOps - software built by someone who has actually been on the truck.