Time and Materials
Definition
Time and materials is a pricing model where the customer pays for actual labor hours worked plus the cost of parts used, usually with a markup.
What Time and Materials Means for Your Business
What it means
Time and materials, often shortened to T&M, bills based on the clock and the parts receipt. It is the traditional pricing model for commercial, industrial, and complex repair work where the scope is hard to predict.
Why it matters
T&M is honest when scope is unknowable, but it can be a disaster for residential customers who want certainty. It also punishes fast techs by billing less for the same outcome.
How contractors use it
Commercial service shops still run T&M for emergency and complex work, with published labor rates and a standard parts markup. Residential shops generally move away from T&M as soon as they can build a price book.
Real-World Example
A commercial refrigeration company bills $165 per hour T&M on emergency calls with a 35% parts markup. A typical night call runs 2.5 hours at $410 labor plus $280 in marked-up parts for a $690 invoice.
Related Terms
Flat Rate Pricing
Flat rate pricing charges a fixed amount for a specific task, regardless of how long the technician actually takes to complete it.
Cost Plus
Cost plus is a pricing model where the customer pays the contractor's actual costs plus a fixed percentage or fee as profit.
Parts Markup
Parts markup is the percentage added to the wholesale cost of a part to set the retail price the customer pays.
Billable Hours
Billable hours are the portion of a technician's paid time that is actually invoiced to customers as productive service work.
Diagnostic Fee
A diagnostic fee is a flat charge a service company bills to come onsite, inspect the problem, and provide a repair quote.
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