Plumbing flat rate pricing: how to price plumbing jobs
Plumbing flat rate pricing gives the customer one price for a task before work starts. To build that price, add your yearly overhead to your field labor cost, divide by the hours you really bill, add profit to get a billable hour rate, then multiply by a set task time and add marked-up parts. Alvin helps keep the price book current by checking part costs at your supply house and drafting the changes for you to approve.
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Flat rate vs hourly pricing for plumbing jobs
Hourly pricing (time and materials) is simple to explain and safe on jobs where nobody knows what is behind the wall. The trouble is that the customer watches the clock, a fast plumber earns the shop less than a slow one, and the final bill is a surprise.
Flat rate moves the risk to you and the reward with it. The customer knows the number before saying yes. A skilled tech who finishes early makes the shop more per hour. The cost is the homework: you need a real hourly cost, honest task times and a price book that someone maintains.
How to work out your cost per billable hour
Everything in a flat rate book hangs on one number: what an hour of billable work has to bring in. The example below uses made-up numbers for a three-truck shop. Put your own in.
- Add up a year of overhead. Rent, trucks and fuel, insurance, office pay, software, marketing, licenses, tools, your own salary. Example: $330,000.
- Add up field labor cost. Wages plus payroll taxes, workers' comp and benefits, for every paid hour. Example: 3 plumbers at 2,080 paid hours each and $50 an hour loaded cost is $312,000.
- Count the hours you really bill. Drive time, supply runs, callbacks and meetings are paid but not billed. Example: 6,240 paid hours at 55% billable is 3,432 billable hours. Pull your real percentage from timesheets and invoices.
- Divide to get break-even. ($330,000 + $312,000) divided by 3,432 hours is about $187 per billable hour. Below this, every job loses money.
- Add profit. For a 15% net profit, divide break-even by 0.85. Example: $187 divided by 0.85 is about $220 per billable hour.
That $220 is an example, not a recommendation. A shop with lower overhead or more billable hours gets a lower number.
Part markup and task times
Markup and margin are different. A part that costs $100 and sells for $150 has a 50% markup and a 33% margin. Decide which one you are talking about before you set a rule.
A single markup for every part underprices small parts and overprices big ones. A sliding scale works better. As an example only:
- Parts that cost under $25: sell at 2 to 3 times cost. These carry stocking and handling cost that a low markup never covers.
- Parts that cost $25 to $250: sell at about 1.5 to 2 times cost.
- Equipment over $250 (water heaters, pumps): sell at about 1.3 to 1.5 times cost.
Task time is the average time for an average tech on an average house, including setup, cleanup and the share of drive time you want the task to carry. Pull it from your own job history where you can: look at the last 10 to 20 times the shop did the task and take the middle, not the best day.
A worked example: pricing a water heater replacement
Using the example $220 billable hour rate and the sliding markup above, here is a standard 50-gallon gas water heater swap in the same location.
Scroll sideways to see every column.
| Item | How it is figured (example numbers) | Price |
|---|---|---|
| Labor | 3.0 hour task time at $220 | $660 |
| Water heater | $620 cost at 1.35 times cost | $837 |
| Connectors, valve, pan, fittings | $85 cost at 2 times cost | $170 |
| Flat rate task price | Labor plus parts | $1,667 |
| Permit fee | Passed through at cost where a permit is required | $75 |
| Price to the customer | $1,742 |
Anything that is not in the standard task gets its own line with its own price: an expansion tank, bringing the vent or gas line up to code, a stair carry, haul-away if you charge for it. Permit rules differ by city, so read which plumbing jobs need a permit before you decide how to show the fee.
An example price book
A price book is the list of tasks with a task time, a parts allowance and a price. Start with the 30 to 50 tasks that make up most of your invoices, then add as you go. These rows use the same example $220 rate.
Scroll sideways to see every column.
| Task (example) | Task time | Labor | Parts at markup | Flat price |
|---|---|---|---|---|
| Replace toilet fill valve and flapper | 0.75 hr | $165 | $44 | $209 |
| Install customer-supplied kitchen faucet | 1.0 hr | $220 | $15 | $235 |
| Replace hose bib | 1.0 hr | $220 | $36 | $256 |
| Clear main line through cleanout | 1.5 hr | $330 | $0 | $330 |
| Replace 1/2 HP garbage disposal | 1.25 hr | $275 | $165 | $440 |
| Replace 50-gallon gas water heater | 3.0 hr | $660 | $1,007 | $1,667 plus permit |
All numbers are examples to show the math. Your overhead, wages, part costs and local market set your prices.
Keeping prices current
A price book goes stale quietly. Copper, water heaters and fixtures move in cost, insurance renews higher, a raise goes through, and the book still shows last year's numbers.
- Part costs: check the parts in your top tasks against the supply house every quarter, and any time a supplier sends a price notice.
- Billable hour rate: redo the five steps once a year, and again after any big change such as a new truck, a new hire or an insurance renewal.
- Task times: compare booked time to actual time on your ten most common tasks twice a year.
- One source: keep the book in one place (your field service app or one shared sheet) so the office and every truck quote the same price.
The prices in the book should also match what lands on the bill. The plumbing invoice template shows how to lay the same task out for the customer.
What Alvin handles and what stays with you
| Alvin does | You do |
|---|---|
| Looks up current cost for your price-book parts in the supply-house portal and lists what changed | Decide the markup rules and the billable hour rate |
| Drafts the updated task prices from your own formula and shows old price next to new | Approve, change or reject each update before it goes into the book |
| Remembers your prices and answers "what do we charge for a disposal swap?" for the office and crew leads | Set who on the team can see costs and who can change prices |
| Pulls invoices from QuickBooks or your field service app so you can compare booked and actual time | Judge whether a task time needs to change |
| Keeps a receipt of every change: who asked, who approved, what the price was before and after | Make every pricing decision. Alvin gives no tax or legal advice |
To work out your own billable hour rate, use the free flat rate pricing calculator.
Frequently asked questions
How do plumbers calculate flat rate pricing?
Add yearly overhead to yearly field labor cost and divide by the hours actually billed to customers. That gives the break-even cost per billable hour. Add profit, multiply by the task time, then add parts at your markup. The result is the flat price for that task.
Is flat rate or hourly better for a plumbing business?
Flat rate suits repeatable service tasks because the customer agrees to the price up front and a faster tech earns the shop more. Hourly, or time and materials, suits work with unknowns such as leak searches and large remodels. Many shops use flat rate for the price book and time and materials with a not-to-exceed number for the rest.
What markup should a plumber put on parts?
There is no single correct number. A common approach is a sliding scale: a high multiple on cheap parts, a lower one on mid-priced parts and the lowest on equipment such as water heaters. Set it from your own costs and check that the whole job still hits your target profit.
What is a billable hour in plumbing?
A billable hour is an hour of a plumber's time that a customer pays for. Drive time, supply runs, training and callbacks are paid hours but usually not billable ones. That is why the billable hour rate has to be much higher than the plumber's wage.
How often should a plumbing price book be updated?
Check part costs for your most common tasks every quarter and whenever a supplier announces an increase. Recalculate the billable hour rate once a year and after big cost changes such as a new truck or an insurance renewal. Review task times against real job history about twice a year.
Keep the price book honest.
Ask Alvin to check your part costs, draft the price updates and show you the difference. You approve what changes. See what Alvin does for plumbing shops.