time-and-materials rate
Definition
A time-and-materials rate is a pricing arrangement where a customer pays for the actual hours worked plus the actual cost of any materials or supplies used to complete the job. Instead of agreeing on one fixed price upfront, the final bill depends on how long the work takes and what it costs to get the job done. This approach works well for projects where the full scope of work is hard to predict from the start.
Example
A plumber might charge $85 per hour for labor plus the cost of whatever pipes and fittings are needed to fix your leak, so your final invoice reflects exactly what the job required rather than a flat estimate.
Watch Out
Always set a spending cap in your contract so the customer cannot be surprised by a runaway bill and you cannot be stuck absorbing unexpected costs.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.