In one line
Billing the hours actually worked plus the materials actually used, rather than a fixed price.
Also called T&M, cost plus, or day rate work.
What it means in practice
Time and materials suits work whose scope cannot be pinned down: emergency repairs, investigation, anything behind a wall. The client carries the risk of the scope, so give them a cap they approve in advance.
Bill it with the detail to back it up: dates, hours, what was done, and receipts for materials at cost plus your usual markup.
Example. 14 hours at $95, materials $420 plus 30% markup, capped at $2,000 without further approval.
Where it shows up on the paperwork
Hours with dates and what was done, materials at cost with the markup shown or built in, and the cap if one was agreed. Receipts attached where the client expects them.
What goes wrong
- Working T&M with no cap, which most clients will not accept twice.
- Recording hours at the end of the week from memory.
- Not saying what the rate includes, so travel and clean-up become an argument at invoice time.
The tools for this
Related terms
- Hourly rateWhat you charge for an hour of work, built from wages, overhead and profit rather than from wages alone.
- Change orderA written record of a change to the scope, price or schedule after the quote was accepted.
- EstimateYour best assessment of what a job will cost, which may move as the work is uncovered.
Common questions
When should I use time and materials instead of a fixed price?
When the scope genuinely cannot be pinned down: emergency work, investigation, anything behind a wall. Fixed price the parts you can see and put the unknown on T&M.
Should a time and materials job have a cap?
Yes, agreed in advance, with the rule that work stops at the cap unless the client approves more. It is what makes an open-ended arrangement acceptable to the person paying.