Time and materials

Time and materials (T&M) is billing the customer for the hours worked at an hourly rate, plus the parts and materials used, usually with a markup on the materials. The final bill is not known until the work is done.

Example

Say your billed labor rate is $110 an hour, a job takes 3 hours, and the parts cost you $80 with a 20% markup. Labor is 3 x $110 = $330. Parts are $80 x 1.20 = $96. The bill is $426. If the job had taken 4 hours, it would be $536.

Time and materials suits work where the scope is unknown. For how it compares with a fixed price, read flat rate vs. time and materials. To set the hourly rate you bill, use the labor rate calculator.