What is the difference between fixed price and day rate when hiring a tradesman
When you hire a tradesman to do some work there are 2 different ways they will price the work
These are fixed price or day rate
The easiest way to differentiate these is by the risk involved
On a fixed price the tradesman assumes the risk
On a day rate you assume the risk
Let’s use the example of £200 per day
Imagine you had some plastering to be done
The plasterer may think he can do it in 5 days so gives you a fixed price of £1000
Once he starts he may find the walls are not in as good a condition as he thought and he has to repair them before he can plaster them
He might have a delay in plaster being delivered
His van might break down and he loses half a day
The job might end up taking him 8 days
But he took it on a price so can’t ask you for more money
On the other hand he might have flown through it and finished in 3 days. In this case you still have to give him £1000
And you cant complain that he finished it too quickly and you want to give him less money for it
Now suppose he took it on a day rate
Instead of finishing it in 5 days he takes 8
You now have to give him £1600
There is nothing you can do about it as you assumed the risk
You cant say he should have finished it in 5 days
But if he finishes in 4 days it only costs you £800
That’s why 2 builders will give different quotes for the same piece of work
Its important before starting a project to decide if you will be asking for tenders based on a fixed price or a day rate
You should first do some research into the rates tradesmen charge
You may prefer price work even though it may seem more expensive, at least you will know your total costs before you start
If you choose to hire people on a day rate then it’s up to you to push the work along quickly without making mistakes or compromising on quality
There is nothing wrong with either method but its important to understand the differences between hiring a tradesman on a fixed price or day rate
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