Guide

Fixed price or hourly? A rule for unknown-scope jobs

A decision rule based on how wide your best-case-to-worst-case estimate spreads, plus a third pricing structure most solo operators never use.

The real question isn't "fixed or hourly" — it's "how wide is my guess"

Most quoting arguments skip a step. Before you decide how to price a job, work out how uncertain you actually are about it. That uncertainty is measurable. Give yourself a best-case hour estimate and a worst-case hour estimate, then check the spread.

Spread = (worst case − best case) ÷ best case.

If that number is under 30%, you know the job well enough to quote fixed. If it's over 30%, you're guessing, and a fixed price turns your guess into a bet you can lose badly.

The 30% rule, worked through

Say you're replacing a section of guttering. Best case: 3 hours. Worst case, if the fascia boards are rotten behind it: 4 hours.

Spread = (4 − 3) ÷ 3 = 33%. Borderline — you'd lean hourly or add a small contingency, but it's close enough to fixed if you've done this job a dozen times.

Now say you're diagnosing an intermittent electrical fault. Best case: 2 hours. Worst case: 6 hours, if it means tracing wiring through two floors.

Spread = (6 − 2) ÷ 2 = 200%. This is not a fixed-price job. Quoting fixed here means you're either padding the price so high you lose the work, or pricing to the best case and hoping — which is how solo operators end up working weekends for nothing.

If you must quote fixed anyway, price at the 75th percentile

Sometimes the customer insists on a number before you start, or the job's small enough that haggling over hourly rates feels petty. Fine — but don't price to your best case. Price to roughly your 75th-percentile outcome: the hours you'd hit three times out of four, not the hours you'd hit if everything goes right.

For jobs in the common 4–8 hour range, that 75th-percentile figure typically lands around best case × 1.35. It's not a universal constant — wider-spread jobs need a bigger multiplier, tighter ones need less — but it's a sane starting point when you have no other data.

Example: best case is 5 hours. 5 × 1.35 = 6.75 hours. Price the fixed quote on 6.75 hours, not 5. If the job comes in at 5, you've made a healthy margin. If it runs to 7, you're still roughly covered.

Track your own jobs for a few months and you'll get a better multiplier than 1.35 — some trades run closer to 1.2, others (anything involving old wiring, hidden pipework, or "just have a quick look" jobs) run 1.5 or higher.

The structure most operators never use

There's a third option that beats both pure fixed and pure hourly for genuinely uncertain jobs: fixed price for the visible scope, plus a named hourly rate for discovery, capped by a written not-to-exceed figure.

How it works in practice:

• You quote a fixed price for the work you can see and measure today — say, replacing a visible section of pipe.
• You state your hourly rate in writing for anything found once you open the wall, floor or panel — say $85/hour.
• You set a not-to-exceed cap — the most you'll charge in total, even if discovery runs long — and you agree that if the job looks like exceeding it, you stop and call the customer before continuing.

This gives the customer a real number for the part that's genuinely known, protects you on the part that isn't, and puts a ceiling on their risk so they don't feel exposed to an open-ended bill. It also gives you something to point to if a customer pushes back mid-job: the cap was agreed before you touched anything.

Write the cap into the quote itself, not into a conversation. "Not to exceed $650 including discovery" on paper is worth far more than a verbal understanding once the invoice lands.

The effective-rate maths that makes fixed pricing dangerous

Here's why guessing wrong on a fixed quote hurts more than people expect. Say you quote a job at 4 hours, priced at $85/hour, for a fixed total of $340. The job actually takes 6.5 hours because of something you couldn't have seen.

Effective rate = $340 ÷ 6.5 hours = $52.30/hour.

That's not a rounding error. It's a rate that sits below what most solo operators need just to cover overheads, insurance, van costs, tools and their own time off — their break-even rate. If you don't know your break-even number, work it out with a break-even calculator before you quote anything with uncertain scope, because that's the number a bad estimate can push you under.

Quoted hours	Fixed price ($85/hr basis)	Actual hours	Effective hourly rate
4	$340	4	$85.00
4	$340	5	$68.00
4	$340	6.5	$52.30
4	$340	8	$42.50

Every hour of scope you underestimate isn't a small dent — it's a straight cut to your effective rate, and it compounds fast on jobs where you were already unsure.

Putting the rule to work

1. Estimate best case and worst case hours honestly, based on what could genuinely go wrong, not what you hope will happen.
2. Calculate the spread. Under 30%, fixed price is reasonable. Over 30%, price hourly or use the hybrid structure.
3. If you're forced into a fixed price on a wide-spread job, price at roughly best case × 1.35 for 4–8 hour jobs, adjusting the multiplier based on your own job history.
4. For anything with hidden scope — old wiring, buried pipework, unknown fascia condition — default to fixed-for-visible plus hourly-for-discovery with a written not-to-exceed cap.
5. Check your rate against your real costs. Use an hourly rate calculator to set the number before you quote, and run finished jobs through a job profitability calculator afterwards to see whether your estimating is actually improving.

None of this removes uncertainty. It just stops uncertainty from quietly eating your margin every time a job runs long — which, on unknown-scope work, is more often than you'd like.