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Flat Rate vs Time-Based Billing: Which One Should I Use?

EasyTruckShop supports two ways to bill for labor: flat rate and time-based (hourly). This article explains how each works and when to use them.

Written by Derek Batishev
Updated over a week ago

Flat Rate Billing

Charge a fixed price for a service regardless of how long it actually takes.

Example: "Oil change β€” $75.00" whether it takes 20 or 45 minutes.

When setting up a flat rate service type, set the Duration to your standard time estimate and the Labor Rate to your flat rate amount. The invoice will charge that fixed amount even if the technician clocks more or fewer hours

πŸ“Œ Use flat rate when jobs are well-defined and predictable. It protects your margins on fast jobs and is simpler for customers to understand.


Time-Based (Hourly) Billing

Charge based on actual hours clocked by the technician.

Example: 2.5 hours clocked at $120/hr = $300.00 billed.

The technician clocks in when they start and clocks out when done. ETS calculates the total time, multiplies it by the service's labor rate, and the invoice reflects actual time worked.

πŸ“Œ Use time-based when work is unpredictable β€” diagnostics, electrical, complex repairs. It ensures you capture the full cost of labor-intensive jobs.


How the Duration Field Works

The Duration field behaves differently depending on your billing type:

  • Flat rate: Duration Γ— Labor Rate = the amount billed. Setting Duration to 0 means $0 billed for labor.

  • Time-based: Duration is a scheduling estimate only. Actual clocked time determines the invoice amount.

  • Both types: Duration blocks out the bay or technician slot on the schedule.

⚠️ Common mistake: Setting Duration to 0 on a flat rate service will bill $0 for labor on every invoice that uses it. Always set a duration that reflects your flat rate charge.


Mixing Both Billing Types on One Work Order

You can apply different billing types to different services on the same work order β€” ETS handles each one independently. For example:

  • Oil change β€” flat rate $75.00

  • Brake inspection β€” flat rate $50.00

  • Electrical diagnostic β€” time-based at $120/hr


FAQ

Q: Can I change the billing type after a service is created? Yes, as long as the invoice hasn't been finalized. Edit the service and adjust the labor type or rate before finalizing.

Q: What if the technician clocks more hours than the flat rate covers? The billed amount stays fixed regardless of clocked hours. Hours are still tracked internally for payroll and productivity reporting, but they don't affect what the customer is charged.

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