The 2025 Plumbing Pricing Playbook: Flat Rate vs. Time & Materials (with real math)
Meta title: Plumbing Pricing in 2025: Flat Rate vs. Time & Materials
Meta description: Learn how to set profitable plumbing prices in 2025. Real numbers, simple formulas, and a step-by-step playbook for flat rate, T&M, and hybrid models.
Slug: /plumbing-pricing-2025-flat-rate-vs-time-and-materials
Why this matters
If you can’t quote fast, collect confidently, and hit target profit on every call, you’re leaving money on the floorboards. This guide gives you the math, models, and scripts you need to price jobs that customers say “yes” to—while you hit 20%+ net.
Step 1: Know your true hourly cost (per sold hour)
Formula (per sold hour):True Cost = (Burdened Labor) + (Overhead ÷ Sold Hours) + (Truck/Tools per hour)
- Burdened Labor: wage × (1 + taxes/benefits %).
- Overhead per hour: all overhead for the month ÷ (techs × sold hours/tech/month).
- Truck/Tools per hour: (truck + tools per month) ÷ sold hours/tech/month.
Example A — Lean shop
- Wage $32/hr, burden 28% → $40.96
- Overhead $14,000/mo, 3 techs, 32 sold hrs/wk → $33.68/hr
- Truck $1,200/mo + tools $200/mo → $10.10/hr
- True Cost ≈ $84.74/hr
Example B — Typical service shop
- Same wage/burden as A → $40.96
- Overhead $14,000/mo, 3 techs, 24 sold hrs/wk → $44.91/hr
- Truck/tools → $13.47/hr
- True Cost ≈ $99.34/hr
Example C — Growth mode (heavier overhead)
- Wage $36/hr, burden 32% → $47.52
- Overhead $28,000/mo, 3 techs, 24 sold hrs/wk → $89.81/hr
- Truck $1,500/mo + tools $250/mo → $16.84/hr
- True Cost ≈ $154.17/hr
Pro tip: Always calculate per sold hour, not payroll hour. If your sold hours drop, your cost per hour spikes—so does your required selling price.
Step 2: Convert cost into a profitable selling rate
Account for variable fees (cards, warranty/callback reserve, financing) and your net profit target.
Pricing formula:Target Rate = True Cost ÷ (1 − Variable % − Net Profit %)
- Variable fees (typical): 8–12%
- Net target (healthy): 20%
Using the examples above with 8–10% variable and 20% net:
| Scenario | True Cost | Variables | Net | Target Hourly Rate |
|---|---|---|---|---|
| A (Lean) | $84.74 | 8% | 20% | $117–$120/hr |
| B (Typical) | $99.34 | 8% | 20% | $138–$140/hr |
| C (Growth) | $154.17 | 10% | 20% | $220–$225/hr |
If your market’s at $180–$240/hr for service, Example C shows why—heavier overhead or fewer sold hours drive the needed rate up.
Step 3: Pick the right pricing model
1) Flat Rate (Menu)
- Pros: Predictable bills, faster “yes,” easier to train techs.
- Cons: Needs a maintained price book; scope creep must be controlled.
- Best for: Residential service & replacement.
2) Time & Materials (T&M)
- Pros: Simple to launch, good for unknowns/demos.
- Cons: Sticker shock risk; tech speed impacts revenue; harder to upsell.
- Best for: Unscoped troubleshooting, commercial/maintenance.
3) Hybrid
- Pros: Flat rate for common tasks, T&M for true unknowns.
- Cons: Requires clear rules at dispatch.
- Best for: Most mixed service companies.
Owner rule of thumb: Flat rate for 80% of repeatable tasks; T&M for genuine unknowns, dig-ups, or multi-trade work.
Step 4: Build a 3-tier option sheet (Good/Better/Best)
Example: Toilet run/slow fill fix
- Good: Replace fill valve + braided supply + new flapper. $X
- Better: Above + tank bolts + new angle stop. $Y
- Best: New comfort-height, elongated toilet + wax ring + haul-away + shutoff. $Z
Parts margin ladder (typical starting point):
- <$25 → 3.0×
- $25–$99 → 2.2×
- $100–$299 → 1.8×
- $300+ → 1.5×
(Tweak by vendor pricing and freight; respect MAP policies.)
Step 5: Set your trip/diagnostic fee (don’t waive it)
- Diagnostic/Dispatch fee: covers drive time + initial troubleshooting (e.g., $89–$149 in most markets).
- Apply to approved work? Yes—credit it on accepted options to increase conversions.
Step 6: Field script your techs (close more, discount less)
- Anchor: “For repairs like this, we have three options so you can choose what fits best.”
- Present: Lay out Good/Better/Best left to right.
- Pause: “What questions do you have?”
- Assume choice: “Most homeowners choose Better because it protects against leaks at the shutoff too.”
- Schedule next: “If anything changes in 30 days, give us a call—you’re covered.”
Step 7: Guard your profit with 5 controls
- Callbacks: Track by tech and task; if >3%, raise your warranty reserve or fix the SOP.
- Card fees: Bake 2.9–3.5% into your variable %—don’t eat it.
- Return trips: Stock vans by task; add a “parts run” fee internally to your cost calculator so your rate is honest.
- Quote speed: Build a keypad price book (tablet) with live cost feeds; aim for <3 minutes from diagnosis to options.
- Review monthly: Recalculate sold hours, overhead, and update prices—especially after vendor increases.