ECN Forum Forums General Topics of the Trade Business Related Discussion Contract, Flat Rate, T&M.

OK guys I poke around this forum even though I am not a business owner.

I have noticed that the terms Contract, Flat Rate, T&M get used a lot and I don't think we all use them to mean the same thing.

Maybe it is I that use them wrong, I would like to provide my definitions of these words.

Say a customer calls and asks us to install 15 hi hats and 20 receptacles.

We could handle this a number of ways.

T&M, Time and Material. This is work that we charge out each and every hour used, including travel time. We also charge for each and every item of stock.

Many times we do this after giving the customer a "Price not to exceed" for a given scope of work.

Another way to handle it is by contract price.

Contract Work This way of working we carefully consider all the costs involved, make a site visit, check the specifications etc and provide a total price for the job.


Finally there is "Flat Rate"

Flat Rate To me this means we have a set price per item, we don't go to the site, we don't carefully price shop. We simply say each hi hat fully installed is $125, each switch, is $75, each outlet $100 etc.

With flat rate we can provide an instant number but it is a gamble that sometimes we may lose but most time the customer will pay more than if the same work was done contract or T&M.

Anyway do my own definitions fit in here?

It strikes me what LK calls "Flat Rate" is better described as "Contract Work"

Now the problem LK might have with this is that he is required to always have a contract, I suggest that (at least in my area) "Contract work" work is not the same at all as "Flat Rate"

This in spite of the fact that both contract work and flat rate let the customers know in advance the total cost of the project.