Flat Rate vs Hourly: What Should You Charge?
Hourly protects you when a job is unpredictable. Flat rate rewards you for being fast. Here's when each one makes you more money, and why most established trade businesses end up running both.
Charge by the hour and you get paid for exactly the time you spend — including the time you spend getting slower. Charge a flat rate and every efficiency you find goes straight into your pocket, until the day the job turns and you're wearing it. Neither is right for everything, and the tradies who do best aren't loyal to one. This guide covers what each does to your margin, which jobs suit which, and how to run both without confusing yourself or your customers.
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The two models side by side
| Hourly | Flat rate | |
|---|---|---|
| You get paid for | Time spent | The outcome delivered |
| Risk of overrun | Sits with the client | Sits with you |
| Reward for being efficient | None — you earn less | Direct — you keep the difference |
| Client's view | Open-ended, harder to approve | Certain, easier to say yes to |
| Admin | You must track hours accurately | Priced once, no time tracking needed |
| Best for | Unknowns, diagnosis, repairs | Repeatable, well-defined work |
The uncomfortable truth about hourly is that it penalises experience. The sparky who's done a job two hundred times finishes in half the time and earns half as much as the one still learning. Flat rate is how you get paid for knowing what you're doing.
When hourly is right
Hourly exists to handle uncertainty. Use it when you genuinely can't scope the work in advance:
- Fault-finding and diagnosis — you're being paid to work out what's wrong, and nobody knows how long that takes.
- Repairs on old installations where what you find decides the work.
- Strip-outs and demolition with unknowns behind the surface.
- Client-directed work where the scope keeps moving because they keep changing their mind.
- Anything you've genuinely never done before — don't put a fixed price on your own learning curve.
The requirement that comes with hourly is honest time tracking. If you're charging by the hour and reconstructing the hours from memory a fortnight later, you're not really charging hourly — you're guessing, and usually low.
When flat rate wins
Flat rate suits work you've done enough times to price with confidence. That's most of what most trades do:
- Repeat installs — downlights, GPOs, taps, mixers, hot water swaps, door hangs.
- Measured work priced per square or lineal metre — painting, tiling, decking, paving, turf.
- Service calls with a known scope, priced as a call-out plus a standard item.
- Anything you're competing for on a quote, because a firm number beats a range.
The advantage compounds. Once you're on flat rate, every improvement you make — a better tool, a smarter sequence, a second pair of hands — increases your effective hourly without you having to raise a price or have a conversation about it.
Flat rate only works if you know your real times. Price from what jobs actually take, checked against finished work, not from your best run at it. A flat rate built on optimism is a discount you're giving away on every job.
Running both without confusing anyone
Most established trade businesses end up with a hybrid, and the trick is being clear about which applies where.
- Flat rate your price list. Everything repeatable gets a fixed price. That's the bulk of your work and the bulk of your quoting speed.
- Hourly for the unknown. Diagnosis, fault-finding and open-ended work stay on the clock, with your rate stated up front.
- Diagnose first, then quote. Charge an hourly call-out to find the problem, then give a flat price to fix it. The client gets certainty on the expensive part, you carry no risk on the unpredictable part.
- Say which is which on the quote. Label every line. A quote that mixes fixed prices and hourly work without saying so is a dispute waiting to happen.
- Cap the hourly where you can. "Up to 3 hours, we'll stop and talk before going further" makes open-ended work far easier for a client to approve.
Moving from hourly to flat rate
If you're currently all-hourly, don't switch everything at once. Take your five most common jobs, work out what they genuinely take, price them properly, and run them flat for a couple of months.
Then check the finished jobs. If your effective hourly on those five went up, expand the list. If a line consistently overran, the rate was wrong — fix it rather than abandoning the model.
ServiceYak holds both — fixed-price items in a reusable kit and hourly rates for the open-ended work — so a single quote can carry both and the client can see exactly which is which.
Frequently asked questions
Is flat rate or hourly better for a tradie?
Flat rate for anything repeatable, hourly for anything genuinely unknown. Flat rate pays you for being good at your job rather than slow at it, but only if your prices are built on real times. Most established businesses run both and label clearly which applies to what.
Do customers prefer a flat rate?
Generally yes. A fixed number is easy to approve and easy to compare; an open-ended hourly rate makes people nervous about a bill they can't predict. That's a genuine competitive advantage on quoted work.
What if a flat-rate job takes much longer than expected?
You wear it, unless the extra work falls outside the scope you quoted — which is exactly why exclusions matter. If it's happening repeatedly on the same item, that's a pricing problem, not bad luck, and the rate needs to change.
How do I charge for diagnosis?
Charge an hourly call-out to identify the fault, then quote the fix as a flat price. The client gets certainty where the money is, and you're not carrying the risk on the part nobody can scope in advance.