Flat rate prices the task; time and materials prices the hours. Put work you've done enough times to know the hours on flat rate (fan motors, thermostats, tune-ups, installs with allowances), and keep work nobody can scope before the panel comes off on time and materials, behind a diagnostic fee. Most shops run both. The skill is knowing which jobs go where, and pricing the flat-rate side from your own job history instead of a vendor's book.
What each model actually charges for
A flat-rate price is one number for a named task, set before the tech arrives: the hours the task usually takes at your loaded hourly rate, plus the part at your markup. The customer knows the price before the work starts, the shop carries the risk that the job runs long, and when the tech is fast, the shop keeps the difference.
Time and materials (T&M) bills the hours the job actually took at your hourly rate, plus parts, usually behind a service call fee for the trip and the first stretch of diagnosis. The customer carries the hours risk and sees exactly what they paid for. The shop is paid for whatever the job took, and gets no bonus for being good at it.
The loaded rate already covers wages, the truck, overhead, and profit. Average task hours come from your own invoices, not a published book; they're the input that decides whether the price is right.
The decision matrix: which jobs go flat, which stay T&M
Three questions sort almost every job: how well you know the hours before you arrive, what it costs you when you're wrong, and whether the customer is a homeowner who wants one number or a property manager who audits invoices. The table uses jobs from the sample quote builder and dispatch board as stand-ins; swap in your own.
| Job (from the sample data) | Scope certainty | Customer | Model |
|---|---|---|---|
| Condenser fan motor, thermostat install, capacitor swap | High: done weekly, hours known | Homeowner | Flat rate from the book |
| AC tune-up, furnace inspection, annual maintenance | High: a fixed checklist | Homeowner | Flat rate, sold as its own task |
| 3-ton system installed, mini-split install | High, with unknowns at the edges (electrical, line set, permit) | Homeowner or builder | Flat rate with named allowances |
| No cool, tenant call, intermittent fault | Unknown until the panel is off | Anyone | Diagnostic fee, then a book task once you know; T&M if the cause stays open |
| Rooftop unit service under a maintenance agreement | Varies visit to visit | Commercial contract | T&M at contract rates |
| Venting or duct rework in an old house, remodel tie-ins | Low: conditions drive the hours | Homeowner or contractor | T&M with a not-to-exceed |
- If you've done a task 20 times, you know the hours well enough to sell it flat. If you've done it twice, you don't.
- A book task that turns into a surprise (a seized bearing, burnt wiring behind the motor) stops being a book task. Say so before you continue, and bill the extra work at your hourly rate.
The same repair priced both ways
Take the Bell Tower Apts quote in the sample data: a condenser fan motor at $385 and 2.5 hours of labor at $95. That's a T&M quote. Now suppose the shop's book says a fan motor swap averages 2.0 hours, and the $385 is a $275 part at a 40% markup. Every number here is the sample's; replace it with yours.
- Part
- $275 cost × 1.40 = $385
- Book hours
- 2.0 hours
- Labor
- 2.0 × $95 = $190
- Flat price
- $385 + $190 = $575
- What the customer pays
- $575, whether it takes 1.5 hours or 2.5
| Tech speed | T&M total ($385 + hours × $95) | Flat-rate total | Flat-rate labor collected ÷ hours |
|---|---|---|---|
| Fast, 1.5 hours | $527.50 | $575 | $190 ÷ 1.5 = $126.67 an hour |
| Average, 2.0 hours | $575.00 | $575 | $190 ÷ 2.0 = $95 an hour |
| Slow, 2.5 hours (as quoted) | $622.50 | $575 | $190 ÷ 2.5 = $76 an hour |
That table is the whole argument. Under T&M the $95 spread between the fast job and the slow one lands on the customer. Under flat rate, speed becomes margin and slowness becomes a loss, and the customer pays $575 either way. Over a year the two collect about the same total if your book hours are honest. The trap is the word honest: if the book says 2.0 hours and your techs average 2.5, you're giving away $47.50 on every fan motor, and the fix is the average, not the model.
The service call fee
The service call fee (trip charge, diagnostic fee, dispatch fee; same thing) pays for the truck roll and the first stretch of the tech's time. For the range customers already expect, HomeAdvisor's AC repair cost guide (updated June 2026) puts the HVAC service call fee at $75 to $200, a flat charge to send someone out and diagnose that's typically applied toward the repair, and its plumber cost guide (updated June 2026) reports plumber service call fees of $100 to $250 that usually include the first hour of work. Those are consumer-facing national ranges, not a price list; set yours from what a visit costs you.
At the sample's $95 rate, 30 minutes of drive plus 45 minutes on site is 1.25 hours, or $118.75, which you'd round to a book number. The sample board prices a furnace inspection at $129: the same idea sold as a task.
- Under flat rate, the fee pays for the diagnosis. When the customer approves a book task, either credit the fee against it or keep it and price the book a little lower. Pick one and print it on every quote.
- Under T&M, the fee usually covers the first hour, or the first 30 to 60 minutes, and the clock runs from there at your hourly rate. Write down where the clock starts.
- On a declined repair, the fee is what you get paid under either model. Waiving it to be nice is paying for your own truck roll.
Good, better, best, and what the customer sees
Flat rate has one advantage T&M can't match: three complete prices side by side, each final before the work starts. The Gunning Homes quote in the sample data (a 3-ton 16 SEER system installed at $6,850, a smart thermostat at $240, haul away at $125) is a better column waiting for its neighbors: good steps down in efficiency and to a standard thermostat, best steps up to a variable-speed system and adds a year of maintenance. Keep the same line items and the same named allowances in all three, and write the differences in plain words (quieter, cheaper to run, longer warranty). The other two prices are your equipment costs, not ours. A T&M quote shows the rate, the fee, the markup policy, and an hour estimate instead, and its price is final when the work ends.
How to start a price book from your top 20 tasks
Don't buy a book; published ones carry another market's hours and markups, and the reason to go flat rate is to be paid for how your shop runs. Twenty tasks cover most of a residential service company's tickets.
- Pull the last twelve months of invoices and list every task you've billed at least five times. Sort by count; the top 20 are your first book, and everything else stays T&M for now.
- For each task, average the labor hours from those invoices and note the typical part and what you paid for it. Drop the single fastest and slowest job first so one bad day doesn't set the price.
- Set your loaded hourly rate, the one that covers wages, truck, overhead, and profit (the sample uses $95), and a parts markup that slides with part cost: higher on a $20 capacitor, lower on a $4,000 condenser.
- Compute each flat price with the formula, round it to a number that reads like a price, and check it against what those invoices actually billed. If the book comes out lower than your history, your average hours are wrong, not your rate.
- Put the tasks into the CSV template below, or start in the quote builder: enter each task as a line item with quantity 1 and the flat price as the unit price, save that quote as your book, and duplicate it for each customer. Anything not in the book gets the service call fee plus hours at your rate.
Questions people ask
Which is better, fixed price or time and materials?
Neither on its own. Fixed price (flat rate) is better for tasks you've done enough to know the hours, because the customer gets one number and you're paid for being fast. Time and materials is better for work nobody can scope in advance, because you're paid for what it actually takes. Most service companies run flat rate for the book and T&M behind a diagnostic fee for everything else.
What is flat rate pricing in HVAC?
One set price per named task (a capacitor swap, a fan motor, a tune-up, a system install with allowances), built from the hours the task usually takes at the shop's loaded hourly rate plus the part at markup. The customer sees the price before the work starts; the shop keeps the difference when the tech is fast and absorbs it when the job runs long.
When should a time and materials contract be used?
When the scope can't be known before the work starts: an intermittent fault, venting or duct rework in an old house, or a commercial maintenance agreement where every visit is different. Pair it with a service call fee, a written hourly rate, and a not-to-exceed the customer signs, so open-ended doesn't mean unlimited.
What is a service call fee?
A flat charge for sending a tech out and diagnosing the problem; it also goes by trip charge, diagnostic fee, and dispatch fee. It should cover the drive and the first stretch of time on site at your loaded rate. Under flat rate it's often credited when the customer approves a book task; under T&M it usually covers the first hour, and the clock runs from there.