Time and Materials
Time and materials billing charges for actual hours worked plus the cost of materials.
Under a time-and-materials (T&M) contract, the client pays the provider's hourly or daily rates plus the actual cost of materials used, often with an agreed markup. It suits work where the scope cannot be fixed upfront. Because costs are open-ended, T&M contracts usually include a not-to-exceed cap or regular budget reporting.
Example
A consultant bills 40 hours at $150/hour plus $800 in materials under a T&M agreement.
Related terms
Frequently asked questions
What protects the client under T&M?
A not-to-exceed cap, regular cost reports, and the right to audit timesheets. Without these, T&M can drift — which is why transparency is part of the model.
When is T&M better than fixed fee?
When the scope is uncertain or likely to change — research, exploration, emergency repairs. If the scope is well defined, fixed fee usually gives the client better cost certainty.
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