Glossary
What is time and materials billing?
Time and materials is a pricing model where you bill for hours worked plus the cost of materials. See how it works, with a worked invoice and tips.
Updated · By PayToMe Editorial
Time and materials is a pricing model in which you bill the client for the hours you work, at an agreed hourly rate, plus the actual cost of materials used. The final price depends on how long the job takes, rather than a fixed quote agreed in advance.
How it works
Two meters run on a time and materials job. The first is labor: hours multiplied by your rate, sometimes with different rates for different roles. The second is materials: parts, supplies or expenses, billed at cost or with an agreed markup.
- Agree the rates. Put the hourly rate, the markup on materials and the billing schedule in writing. Use the hourly rate calculator to set a rate that covers your costs.
- Give an estimate. An estimate is not a promise, but it sets expectations. Many clients also want a cap.
- Track hours and receipts. Keep a simple log of dates, hours and purchases.
- Invoice with detail. Each line item shows what was done and what was bought.
For long jobs, you can bill at intervals using progress billing, so you are not carrying costs for months.
The strength of time and materials is fairness when scope is uncertain. You are paid for the real work, and the client pays only for what happens. The weakness is that clients cannot know the final cost, which can cause friction. Clear estimates and itemized invoices reduce that risk.
Example
An electrician replaces a faulty panel. The rate is $95 per hour, with materials billed at cost plus 15 percent.
Build a clear itemized invoice with the free invoice generator. PayToMe’s AI invoicing, which is in development, is designed to turn a spoken job summary into a draft like this one for your review.
Related terms
- Progress billing: invoicing in stages as a project advances.
- Line item: a single labor or material entry on an invoice.
- Retainer: prepaid fees you draw down over time.
- Deposit invoice: an upfront payment request before work starts.