Pricing for Tradespeople: Hourly vs Fixed Price

Pricing is the single biggest lever in a field-service business. Two firms with identical craftsmanship can end the year hundreds of thousands of kronor apart in profit, purely because of how they calculate their rate, how they choose between fixed price and time-and-materials, and how disciplined they are about protecting margin when a job goes sideways. This guide walks through all three, with numbers you can run yourself. It is written for the Swedish market, so figures reference Swedish rules — but always verify current rates with the authorities, since they change.

Build your hourly rate from the ground up

Most tradespeople set their hourly rate by looking at what the firm down the road charges. That is building your economy on a guess. Calculate it instead from the bottom up, starting with your own costs.

Begin with what a technician actually costs you. An employee earning, say, 200 SEK an hour costs far more than that: employer contributions (arbetsgivaravgifter, currently just over 31 percent of gross pay, but verify the current rate with Skatteverket), holiday pay, sick pay, pension, insurance, workwear and tools. The rule of thumb that an employee costs roughly 1.5 to 1.8 times their gross salary often holds, but do your own calculation.

Next, subtract the time you cannot bill. Out of a working year of roughly 1,800–2,000 hours, you lose travel, holidays, training, quoting, stock handling and admin. Many firms land at 60–75 percent billable time. If a technician costs you 350,000 SEK a year but only invoices 1,300 hours, every sold hour has to carry 270 SEK just to break even on that person.

Then add your share of fixed overheads: premises, vehicles, leasing, insurance, telephony, software, and your own salary as owner. Finally, add the profit margin you actually want. The result is your floor price — below it you make no money, regardless of what a competitor charges.

Fixed price or time-and-materials?

This choice is about who carries the risk that the job runs over.

With time-and-materials (löpande räkning), the customer pays for actual hours and actual materials. The risk sits with the customer, which suits jobs where the scope is hard to predict: fault-finding, renovating older buildings, or any work where you do not know what is behind the wall. The downside is that customers feel uncertain about the final bill, and Sweden's Consumer Services Act (konsumenttjänstlagen) gives private customers the right to have an estimate reviewed afterwards — you cannot charge substantially more than is reasonable without having agreed it. Confirm the current rules with Hallå Konsument or a legal adviser.

With a fixed price, you carry the risk. It often sells more easily because the customer knows exactly what it costs, and you can earn more if you are efficient. But an underestimated fixed price eats straight into your margin. The key is to only quote fixed price on jobs you can genuinely scope, and to always build in a buffer. A common approach is to calculate the hours, add 10–20 percent for the unforeseen, and clearly define what is included.

A practical middle ground is fixed price with clear change-order terms (in Sweden, ÄTA — additions, changes and deductions). You quote a fixed price for the defined work, and anything outside that scope is billed on time at an agreed hourly rate. That spares both the customer's price anxiety and your own exposure to scope creep.

ROT and green-tech deductions don't change your price — only the customer's payment

A common mistake is to drop your price so the customer can claim the ROT deduction. Don't. The ROT and green-technology (grön teknik) deductions are tax reductions that affect what the customer pays, not what your work is worth. You invoice your full labour price, deduct the customer's reduction on the invoice, and claim the rest back from Skatteverket.

Two things matter here. First, the deduction applies only to labour, not materials — so the split between labour and materials on your invoice must be accurate and reasonable. Second, deduction percentages, ceilings and which jobs qualify change periodically. Always verify current rules and rates with Skatteverket before promising a customer a specific figure.

In FieldApp, the ROT and green-tech split is built into the quote and carried all the way through to the invoice, so the correct amount is deducted automatically and the documentation sent to Skatteverket stays consistent.

Protect your margin job by job

Setting the right hourly rate helps little if margin leaks out during the job. The most common leaks are:

• Unlogged time. The half hour in the morning, the extra site visit, the evening phone call — if it isn't recorded, it isn't billed. Logging time in the field, the same day, is the single most profitable habit you can build.
• Forgotten materials. Screws, cable, junction boxes and consumables that never make it onto the invoice. Log materials as you fit them, not afterwards.
• No markup on purchases. You buy materials and carry the risk and handling for them — a markup on cost price (often in the region of 10–20 percent, but set your own level) is both customary and reasonable.
• Silent change orders. The customer asks for "just one more little thing" and you say yes without writing it up. Every change should be confirmed — ideally in writing, with a price, before you do it.

Review after the fact, too. Compare quoted hours against actual hours on completed jobs. If you systematically underestimate a certain job type by 30 percent, you now know exactly how much to adjust your next quote.

Raise prices without losing customers

Many tradespeople are terrified of raising prices. But a 5–10 percent increase almost always flows straight to the bottom line, because your costs are unchanged. If you lose the odd price-sensitive customer, it is often precisely the least profitable ones.

Raise prices with confidence: justify them with quality, guarantees, documented self-inspection (egenkontroll), and the fact that you turn up at the agreed time. Those are values the customer genuinely pays for. And communicate the increase clearly and in advance to existing customers rather than slipping it in.

Make pricing a system, not a gut feeling

To sum up: build a floor price from the ground up, choose deliberately between fixed price and time-and-materials based on who should carry the risk, keep the ROT deduction separate from your own pricing, and plug the margin leaks with disciplined time and materials logging.

When quoting, time tracking, materials logging and invoicing live in one system — as in FieldApp, with ROT- and green-tech-aware quotes and Fortnox sync for the bookkeeping — pricing becomes something you review with numbers instead of guessing. See pricing and start a 14-day free trial and begin measuring what every job actually returns.