The service pricing guide: flat rate, options and add-ons

Many pricing problems in the trades are not about being too cheap or too expensive. They come from pricing each job on the fly, in the driveway, with a customer waiting. A service menu fixes that: a set list of tasks, each with a price you worked out in advance, grouped into clear options and sensible extras. This guide shows you how to build one, step by step, with worked examples. All the numbers in the examples are hypothetical, so swap in your own. Pricing decisions touch tax, payroll and consumer rules, so run anything you are unsure about past your accountant.

What a service menu is, and why it beats pricing on the fly

A service menu is the list of work you sell, with a price for each item. Restaurants have menus; trades usually call it a price book or a flat-rate book. It covers the tasks you do most often, such as clearing a main line, replacing a capacitor, swapping a breaker or installing a garage door opener, plus the options and add-ons that go with them.

A good menu does four things:

• It protects your margin. Every price is built from your real costs, not a hunch or what the last guy charged.
• It makes your team consistent. Two techs quoting the same job give the same price, so customers do not hear different numbers from the same company.
• It speeds up the sale. The tech diagnoses, picks the task from the menu and presents it. No calculator, no calling the office.
• It makes choices easier for the customer. A clear list of options with clear prices is easier to decide on than a single number with no context.

If you have never built a price book, start small. List the 20 to 30 jobs you do most often and price those first. Our step-by-step guide to building a price book your team will use covers the structure in more detail.

Know your numbers before you set a price

Every price on your menu rests on two numbers: what an hour of billable work needs to earn, and how you mark up materials. Get these right and everything else is arithmetic.

Your billable hourly rate

Your billable hourly rate is what each hour a tech spends on paying work must bring in to cover all your costs and leave the profit you want. The formula:

Billable hourly rate = (annual overhead + annual field labor cost + target profit) ÷ annual billable hours

Here is a hypothetical example. Imagine a two-tech plumbing company:

The number that is easiest to get wrong is billable hours. A tech may be paid for around 2,000 hours a year, but a big share of that goes to driving, loading the truck, waiting on parts, training and unpaid callbacks. Track your own ratio for a few weeks rather than guessing. For the full method, see how to calculate your billable hourly rate.

Markup and margin are not the same thing

Materials need a markup to cover the cost of buying, stocking, carrying and warrantying them. Be clear about which number you mean:

• Markup is added on top of cost. A $100 part with a 50% markup sells for $150.
• Margin is the share of the selling price you keep. That $150 part leaves $50, which is a 33% margin, not 50%.

If you want a target margin rather than a markup, use: price = cost ÷ (1 − target margin). A $100 part at a 40% target margin sells for $100 ÷ 0.60, or about $167.

One common approach is a sliding markup: a higher percentage on small, cheap parts and a lower one on expensive equipment, so a $4 fitting and a $2,000 condenser are both priced sensibly. Whatever you choose, write it down so everyone uses the same rule.

Know your cost per job

Your billable rate tells you what an hour must earn. Job costing tells you whether it actually did. Compare what you charged with what the job really cost in labor, materials and drive time. Our guide to job costing shows how to set it up with a simple spreadsheet.

Flat rate or time and materials

There are two main ways to charge for service work. Plenty of shops use both, for different kinds of jobs.

Time and materials (T&M) means you charge an hourly rate for the time spent plus the cost of materials, usually with a markup. The customer's final price depends on how long the job takes.

Flat rate means you quote a fixed price for a defined task before you start. The price is the same whether the job goes smoothly or takes longer than expected.

When flat rate fits

Flat rate works best when the task is well defined and happens often: replacing a toilet fill valve, clearing a sink drain, replacing a capacitor, installing a GFCI outlet, replacing garage door springs. You know from experience how long these take on average, and you can build that into the price.

The customer knows the price before you start, so there is no running meter to worry about. Techs are rewarded for being efficient and doing it right the first time. The risk is that a job that goes badly costs you, so your average time needs to include the difficult ones.

When time and materials fits

T&M fits when you cannot know the scope until you are into the job: tracing an intermittent electrical fault, finding a hidden leak, remodel work where walls hide surprises, or commercial customers who want hourly billing. It is also common for the first diagnostic hour on complex problems.

If you use T&M, give the customer a written estimate with a range, say when you will check in if the job heads past the top of that range, and track time honestly.

The hybrid most shops use

A common setup is a flat diagnostic or trip fee, flat-rate prices for common repairs and installs, and T&M for unclear or large jobs. Whatever mix you choose, explain it to customers before you arrive, so the first number they hear is not a surprise.

Building a flat-rate price

A flat-rate price is built from four parts:

Flat-rate price = (task time × billable rate) + (materials cost × (1 + markup)) + any fixed extras

Fixed extras are things like disposal fees, permit handling or a charge for specialist equipment.

A worked example

Say you want a flat price for replacing a standard toilet, with you supplying the toilet. Using the hypothetical $150 billable rate and a 50% materials markup:

You might round it to $555 or $549, whichever fits how you present prices. The customer sees one number: "Replace toilet, standard model, including removal and disposal of the old one: $555."

Getting task times right

The task time is the average time the job takes from arrival to leaving, including setup, protecting the floor, testing and cleanup. It is not the time your fastest tech takes on a perfect day. The best source is your own job history. If you do not have it, time the next 10 jobs of that type and average them.

Access adders instead of guesses

Some jobs are harder for predictable reasons: a water heater in a tight attic, a panel behind finished drywall, a second-story window, a crawlspace with little clearance. Instead of stretching every price to cover the worst case, create a few standard adders, such as "attic or crawlspace access" or "second-floor carry", and price them the same way. The customer sees why the price differs, and your base prices stay competitive.

Diagnostic and trip fees

Decide how you charge for showing up and finding the problem. Common approaches:

• A diagnostic fee that is credited toward the repair if the customer goes ahead
• A diagnostic fee that is always charged, with the repair priced separately
• No trip fee inside a core service area, with a fee beyond it

Any of these can work. What matters is that you say which one you use on the phone, on your website and on the booking confirmation.

Good, better, best

Good-better-best means presenting two or three options for the same problem instead of a single price. Each option solves the problem; the higher ones add longer protection, better equipment or fewer future problems. The customer chooses.

It works because it changes the question in the customer's head from "Should I hire this company?" to "Which of these options suits me?" It also respects the customer: someone on a tight budget gets a real solution, and someone who wants the most durable fix can have it. For the thinking behind it, see how option pricing works for service businesses.

Rules for building options

• Every option must genuinely fix the problem. Never build a "good" option designed to fail.
• Each step up must add something the customer can understand, such as a longer warranty, an inspection, better parts or a preventive step.
• Keep it to three options at most. More than that turns a decision into homework.
• Price each option from costs, using the same billable rate and markup rules as everything else.
• Name options by outcome, not just "Good" and "Best". "Clear the clog", "Clear and inspect", "Clean and protect" tells the customer what they get.

A worked example: a kitchen drain clog

Imagine a homeowner with a slow kitchen sink that keeps coming back. Using the hypothetical $150 rate:

Two details are worth copying. First, the camera and jetting charges cover the real cost of owning, maintaining and replacing that equipment. Second, the top option includes a reserve for guarantee callbacks. If you offer a longer guarantee, price in the cost of honoring it.

Presenting the options

Show all three at once, on a tablet or a printed sheet, and explain each in a sentence or two. Then stop talking and let the customer think. A simple script:

"You've got three ways to go. The first clears the clog today. The second clears it and we run a camera down the line, so you'll know whether there's a bigger problem behind it. The third cleans the whole line so it's less likely to come back, and we guarantee it for longer. Which sounds right for you?"

If the customer picks the first option, do it well and thank them. The goal is an informed choice, not the biggest ticket.

Add-ons that help the customer

An add-on is a separate, smaller item that makes sense to do during the same visit. Because there is no extra trip, add-ons can be good value for the customer and good margin for you. Done badly, they feel like a sales pitch. The difference is whether the add-on relates to what you found.

What makes a good add-on

• It is connected to the job or the home. A whole-house surge protector suggested during a panel repair makes sense. The same suggestion on a faucet call does not.
• It solves or prevents a real problem. You can point to what you saw: a failing shutoff valve, worn rollers, a missing drain pan.
• It is priced on the menu, so every tech offers the same thing for the same price.
• It is optional and easy to decline. "Not today" should end the conversation.

Add-on ideas by trade

These are examples of add-ons that commonly fit the job. Only recommend one when you have seen a reason for it in the home.

• Plumbing: replacing an old main shutoff valve, a pressure regulator check or replacement where pressure is high, an expansion tank where the system needs one, a water heater drain pan, fixture supply lines.
• HVAC: a condensate float switch, a surge protector for the outdoor unit, an upgraded filter setup, a thermostat upgrade, duct sealing where you found leaks.
• Electrical: whole-home surge protection, GFCI or AFCI protection where it is needed, smoke and carbon monoxide alarm replacement, labeling the panel.
• Garage doors: a tune-up and lubrication, new rollers, a bottom weather seal, a battery backup for the opener.
• Cleaning: inside the oven, inside the fridge, interior windows, baseboards, inside cabinets on a move-out clean.
• Landscaping: a mulch refresh, seasonal color, aeration and overseeding, gutter clearing on a fall cleanup.
• Pest control: exclusion work such as sealing entry points, a seasonal mosquito treatment.
• Painting: doors and trim, ceilings, a touch-up kit with the colors you used.

For more on raising your average ticket without pressure, see how to raise your average ticket without being pushy.

Bundle the obvious pairs

Some add-ons are so often needed together that a bundle makes sense. A water heater replacement might come with a new shutoff valve and supply lines as a standard part of the "better" option. A garage door spring replacement might include a full tune-up. Bundles save explaining the same item on every call.

Maintenance plans

A maintenance plan (also called a membership or service agreement) is a recurring agreement where the customer pays a set amount, monthly or yearly, for scheduled maintenance visits and some benefits. HVAC tune-ups, water heater flushes, quarterly pest treatments, recurring cleaning and seasonal landscape care all fit.

Plans can smooth out your revenue and keep customers coming back to you instead of searching again next time. They also cost money to deliver, so price them with the same care as everything else.

Build the plan from its cost

Take the hypothetical shop from earlier. Its fully loaded cost per billable hour, before profit, is (overhead + labor) ÷ billable hours: ($180,000 + $150,000) ÷ 2,600, or about $127.

Now imagine an HVAC plan with two tune-ups a year, each taking 1.25 hours including drive time:

• Cost of two visits: 2 × 1.25 × $127 = about $318 a year
• A plan priced at $19 a month brings in $228 a year, which is less than the cost of the visits
• A plan priced at $29 a month brings in $348 a year, which covers the visits with a small margin

Then add the cost of any benefits:

• A repair discount comes straight out of your margin on every repair for members. Decide the percentage with that in mind.
• Priority scheduling costs nothing in cash but needs capacity. Don't promise same-day service you can't give in peak season.
• No trip fee means giving up that fee on member calls.

The plan does not need to earn a big profit on the visits alone. One approach is to price it so the visits roughly cover their cost, and to earn on the repairs and replacements that members bring to you. But know which one you are doing, and check the numbers every year.

Schedule visits for your slow season

Plan visits scheduled in your quieter months fill time that might otherwise sit empty. Plan visits squeezed into your busiest weeks displace paying work. Set the visit windows with that in mind: AC tune-ups before summer, heating tune-ups before winter, and so on.

Rules and paperwork

• Write the terms in plain language: what is included, how many visits, the price, how billing works, how to cancel and what happens if the customer moves.
• Check your state's rules. Some states regulate service contracts and automatic renewals, including how you disclose terms and how customers cancel. Ask an attorney to review your agreement once.
• Ask your accountant about prepaid plans. Money collected up front for visits you haven't done yet may need special treatment in your books and taxes.

For a fuller walkthrough, see how to build a maintenance membership program.

How to present prices

A good menu can still lose jobs if the prices are presented badly. The aim is simple: the customer should understand what they are getting, what it costs and what happens next.

On the phone

When someone asks "How much do you charge?", they usually want to know whether you are in their range and what happens next. A script:

"It depends on what we find, so we don't guess over the phone. What I can tell you is how it works: our diagnostic visit is [$ amount], and if you go ahead with the repair, [we credit it / the repair is priced separately]. Once the tech has looked, they'll give you a fixed price, usually with a couple of options, before any work starts. Would [day and time] work?"

If you do publish a few common prices, such as a drain clearing or a tune-up, quote them exactly.

In the home

• Diagnose first, then present the options together, with prices, before you start work.
• Use a tablet or printed sheet so the customer can see the options, not just hear them.
• Explain in terms of outcomes: what each option fixes, how long it should last, and what it protects against.
• Say what is not included, such as drywall repair after opening a wall.
• Get approval in writing, on paper or in your field app, before you begin.
• If something changes mid-job, stop, explain and get a new approval before continuing.

On written quotes

A written quote for larger jobs should include the options, what each includes and excludes, the price, the payment terms, any financing details, how long the price is valid, and the warranty. If you offer financing through a lender, use the lender's approved language and check the current terms. Lending comes with disclosure rules.

On your website

Publishing prices is a choice. Some owners list starting prices for common jobs so customers can see they are in range. Others describe how pricing works without numbers. Either way, explain your diagnostic or trip fee and your approach to options. Surprises at the door are what customers remember.

Taxes, card fees and discounts

• Whether sales tax applies to labor, materials or both depends on your state and the type of work. Ask your accountant.
• Rules on passing card fees to customers, such as surcharges or cash discounts, vary by state and by card network. Check before you add one.
• If you offer discounts for seniors, veterans or members, put them on the menu so every tech applies them the same way.

Reviewing and adjusting your menu

A menu is never finished. Material costs change, techs get faster or slower on certain jobs, and some items stop selling. Review it on a schedule, at least once a year and after any big cost change.

Sort your menu into four groups

Take your last few months of jobs and, for each menu item, note how often it sold and the margin it actually earned, using real job times and material costs. Then sort each item into one of four groups:

This is the same idea restaurants use to engineer a menu, applied to service work.

Check book time against real time

For your most common tasks, compare the task time in the book with the average actual time from your job records. If a job consistently takes longer than the book says, either the price is too low or something in the process is slowing techs down, such as missing parts on the truck.

Update material costs

Recheck the cost of your most-used parts and equipment regularly. If your supplier raises prices and your menu does not change, your margin quietly shrinks on every job.

Raising prices

When you raise prices, do it for a reason you can explain, such as higher material costs, better warranties or added training. Update everything at once: the menu, the field app, the website and phone scripts. For maintenance plan members, give notice before a renewal and explain what changed.

Test before you roll out

Before you change a price or option set for everyone, try it with one or two techs for a few weeks and look at what customers chose and what the jobs actually cost. Then decide.

Where to go next

If you want more examples, service price list examples by trade and how to price your services go deeper on specific trades. And if you would rather let customers see clear options before you even arrive, Zome's Instant Quotes lets customers see a starting price or range you set, right on your website, before they request a visit.