Flat Fee
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A flat fee, also referred to as a flat rate or a linear rate refers to a pricing structure that charges a single fixed fee for a service, regardless of usage. Less commonly, the term may refer to a rate that does not vary with usage or time of use.


Advantages

* A business can develop a dependable stance in a market, as consumers have a well-rounded price before the service is undertaken. For instance, a technician may charge $150 for his labor. * Potential costs can be covered. The service may result in inevitable expenses like the parts needed to fix the issue or the items required to complete the order. * No restricted structure is needed, as the pricing system can be adjusted to suit the business using it. Management can thus work out the pricing that best matches the company's objectives, efforts, costs, etc.


Disadvantages

* The fixed pricing restricts the company's capability to meet the needs of individual consumers, and people search for cheaper alternatives. * Pricing competition thickens, with other companies in the same industry compete for the lowest pricing, and tough competition occurs. * Inflation can cause unprecedented losses, and companies must raise the charge to keep up with costs.


Examples


Postage

There are flat rates in the postal service, regarding the delivery of items. Postage companies use different forms of post, boxes or envelopes, to avoid having to weigh items. The on-hand cost lets consumers identify the cost and removes the hassle of estimate the cost for items. The United States Postal Service offers flat-rate pricing for packages selling different postage options varying in size and shape. That provides consumers with an array of options upfront, creating a sense of ease. When shipped in higher volumes, it saves money but there are issues if both the flat rate and regular delivery systems are used simultaneously.


Advertising

Flat rate also passes into advertising. Purchasing advertisements on websites such as Facebook, Twitter and YouTube is sold a flat rates on the size (with a surcharge for images and posts) and length of the advertisement (video costs extra). Advertising on YouTube pitches at a flat rate of $0.30 per view. When a person runs by the YouTube home page, search page, or wherever the ad is running, the charge is $0.30.


Tradesmen

Tradesmen such as electricians, plumbers, and mechanics, also often charge flat rates to cover their labour for their services. In a survey in 2014 in Australia, the average labour rate for a painter was $39.92 per hour.


Telephony

American
telecommunication Telecommunication, often used in its plural form or abbreviated as telecom, is the transmission of information over a distance using electronic means, typically through cables, radio waves, or other communication technologies. These means of ...
s companies commonly offer a flat rate to residential customers for local
telephone call A telephone call, phone call, voice call, or simply a call, is the effective use of a connection over a telephone network between the calling party and the called party. Telephone calls are the form of human communication that was first enabl ...
s. However, a regular rate or ''Message Rate'' is advantageous for those who make only a few short calls per month. Flat rates were rare outside the US and Canada until about 2005, but they have since become widespread in Europe for both local and long-distance calls and are now also available for
mobile phone A mobile phone or cell phone is a portable telephone that allows users to make and receive calls over a radio frequency link while moving within a designated telephone service area, unlike fixed-location phones ( landline phones). This rad ...
services, both for traditional GSM/UMTS voice calls and for Mobile VoIP. Most
VoIP Voice over Internet Protocol (VoIP), also known as IP telephony, is a set of technologies used primarily for voice communication sessions over Internet Protocol (IP) networks, such as the Internet. VoIP enables voice calls to be transmitted as ...
services are effectively flat-rate telephony services since only the broadband internet fees must be paid for PC-to-PC calls, and the calls themselves are free. Some PC-to-
telephone A telephone, colloquially referred to as a phone, is a telecommunications device that enables two or more users to conduct a conversation when they are too far apart to be easily heard directly. A telephone converts sound, typically and most ...
services, such as SkypeOut offer flat rates for national calls to landlines.


Television

Premium television or Pay TV usually charges a flat monthly fee for a channel or a bundle or "tier" of channels, but some
cable television Cable television is a system of delivering television programming to consumers via radio frequency (RF) signals transmitted through coaxial cables, or in more recent systems, light pulses through fibre-optic cables. This contrasts with bro ...
companies also offer Pay per view pricing.


Internet

For
Internet service provider An Internet service provider (ISP) is an organization that provides a myriad of services related to accessing, using, managing, or participating in the Internet. ISPs can be organized in various forms, such as commercial, community-owned, no ...
s, flat rate is access to the Internet at all hours and days of the year (linear rate) and for all
customer In sales, commerce, and economics, a customer (sometimes known as a Client (business), client, buyer, or purchaser) is the recipient of a Good (economics), good, service (economics), service, product (business), product, or an Intellectual prop ...
s of the telco operator (universal) at a fixed and cheap
tariff A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
. Flat rate is common in
broadband In telecommunications, broadband or high speed is the wide-bandwidth (signal processing), bandwidth data transmission that exploits signals at a wide spread of frequencies or several different simultaneous frequencies, and is used in fast Inter ...
access to the Internet in the US and many other countries. A charge tariff is a class of linear rate, different from the flat rate, where the user is charged by the
upload Uploading refers to ''transmitting'' data from one computer system to another through means of a network. Common methods of uploading include: uploading via web browsers, FTP clients, and terminals ( SCP/ SFTP). Uploading can be used in th ...
s and
download In computer networks, download means to ''receive'' data from a remote system, typically a server such as a web server, an FTP server, an email server, or other similar systems. This contrasts with uploading, where data is ''sent to'' a remote ...
s ( data transfers). Some GPRS / data
UMTS The Universal Mobile Telecommunications System (UMTS) is a 3G mobile cellular system for networks based on the GSM standard. UMTS uses Wideband Code Division Multiple Access, wideband code-division multiple access (W-CDMA) radio access technolog ...
access to the Internet in some countries of
Europe Europe is a continent located entirely in the Northern Hemisphere and mostly in the Eastern Hemisphere. It is bordered by the Arctic Ocean to the north, the Atlantic Ocean to the west, the Mediterranean Sea to the south, and Asia to the east ...
has no flat rate pricing, following the traditional "metered mentality". Because of this, users prefer using fixed lines (with narrow or broadband access) to connect to the Internet. A wavy rate is not a linear rate, because the Internet surfer pays the monthly fixed price to use the connection only during a certain range of hours of the day (i.e. only in the morning or, more typically, only at night).


Street lighting

Cities and towns normally arrange a flat fee for the power used by street lights. This is because the lights come on and turn off at predictable times, generally off-peak, and the total draw for the entire town can be accurately calculated in advance. This allows the lamps to be placed on existing poles and wired directly into the electrical wiring without a separate meter.


Electricity

A "flat rate" (more accurately known as fixed rate) for
electricity Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwel ...
is a fixed price per unit ( kWh), not a fixed price per month, and thus different from that for other services. An
electric utility An electric utility, or a power company, is a company in the electric power industry (often a public utility) that engages in electricity generation and distribution of electricity for sale generally in a regulated market. Electric utilities are ...
that charges a flat rate for electricity does not charge different rates based upon the demand that the customer places on the system. A customer pays the same amount whether they use the electricity in bursts during mid-day, when demand and the utility's costs are highest, or if they spread it out over the entire day. However, if the customer uses a different amount of electricity, they are charged a higher or lower amount. Residential customers and small businesses are usually charged a flat rate, though not the same rate per
kilowatt-hour A kilowatt-hour ( unit symbol: kW⋅h or kW h; commonly written as kWh) is a non-SI unit of energy equal to 3.6 megajoules (MJ) in SI units, which is the energy delivered by one kilowatt of power for one hour. Kilowatt-hours are a comm ...
. A special type of
electricity meter file:Hydro quebec meter.JPG, North American domestic analog signal, analog (Galileo Ferraris, Ferraris disk) electricity meter. file:Transparent Electricity Meter found in Israel.JPG, Electricity meter with transparent plastic case (Israel) fil ...
, a time of use meter, is required to charge a non-flat rate. Time of use meters can lower a customer's electricity bill, if they use electricity mostly during off-peak hours. Some utilities will allow a customer to change to a time of use meter, but they charge for the cost of the meter and installation.


Real estate

In real estate, "flat rate" is an alternative, nontraditional full service listing where compensation to the listing agent is not based on a percentage of the selling price but instead is a fixed dollar amount that is typically paid at closing. The rate is generally less than a gross 6% commission, resulting in a lowered cost of selling real estate. "Flat rate" is different from "flat fee" in several ways: i) it is generally substantially more than a "flat fee" rate; ii) it generally represents a full service listing as opposed to a "flat fee" limited service listing; and iii) it is usually paid at closing, as opposed to a "flat fee", which is usually paid when the listing agreement is executed.


Transport

In most parts of the world regular users of
public transport Public transport (also known as public transit, mass transit, or simply transit) are forms of transport available to the general public. It typically uses a fixed schedule, route and charges a fixed fare. There is no rigid definition of whic ...
, especially
commuter Commuting is periodically recurring travel between a place of residence and place of work or study, where the traveler, referred to as a commuter, leaves the boundary of their home community. By extension, it can sometimes be any regular o ...
s, make use of weekly, monthly or yearly '' season tickets'' that allow unlimited travel for a fixed fee. In some countries year passes are available for the entire national railway network (e.g. the Bahncard100 in Germany for about €3000 and the ''Österreichcard'' offered by the Austrian Federal Railways). Some, such as the Eurail Pass, are intended for foreigners, in order to encourage tourism. Road users are normally charged a combination of fixed and variable fees, in the form of vehicle duty and fuel duty. Motorway tolls in some countries (Switzerland, Austria, Czech Republic, Slovenia) are paid by purchasing weekly, monthly or annual stickers attached to the windscreen. At some stage, the concept of the flat rate was even introduced into passenger air traffic in the form of American Airlines' AAirpass.


Parcel/document delivery

In dealing with the shipping of parcels and documents, a "flat rate for international deliveries of packet size #1" would mean that the same shipping charge (for example US$15.00) would be applicable to all packets of this size, regardless of their designated destination (country of recipient), and regardless of the quantity of their contents, i.e. whether they contained one sheet of paper or were filled to the maximum.


Labor

Flat rate is a pricing scheme whereby the customer pays a fixed price for a service regardless of how long the worker takes to carry out the service. Flat rate manuals are based on timed studies of the typical time taken for each type of service. Flat rate helps provide a uniform pricing menu for service work and helps establish the worth of performing a particular job. In recent times some automotive companies have begun using computer algorithms to calculate labor times with a high degree of accuracy. The benefit to the customer is that if a worker takes longer than this, the cost does not rise. The downfall to the customer is that this can lead to overpaying in some cases. The benefit to the worker is that it promotes incentive to learn how to do the work more efficiently. This system can also cost the worker if they do not perform a job within the allotted time such as in the case of an inexperienced worker or on a job where there is something preventing the service from being performed that the labor manual can't take into account. In automotive shops this is common due to rusted, seized, or stripped bolts or aftermarket installations. In some circumstances automotive technicians can get paid 0 hours for working a 12-hour day. It can be difficult to compare prices between hourly-paid and flat-rate services, and this sometimes causes rejection of flat rate shops over hourly ones.


Medical

One of the newest areas where flat rate pricing is just beginning to make inroads is the medical industry. The concept has held a particular interest because of the high and rising costs of health care delivery despite legislative attempts to address them, such the
Affordable Care Act The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act (PPACA) and informally as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by Presid ...
(Obamacare). While there have been
pilot program A pilot experiment, pilot study, pilot test or pilot project is a small-scale preliminary study conducted to evaluate feasibility, duration, cost, adverse events, and improve upon the study design prior to performance of a full-scale research ...
s launched by major insurance carriers such as UnitedHealthcare to control costs in the most costly medical conditions like
cancer Cancer is a group of diseases involving Cell growth#Disorders, abnormal cell growth with the potential to Invasion (cancer), invade or Metastasis, spread to other parts of the body. These contrast with benign tumors, which do not spread. Po ...
, for now the primary application of flat-rate pricing has been in
medical imaging Medical imaging is the technique and process of imaging the interior of a body for clinical analysis and medical intervention, as well as visual representation of the function of some organs or tissues (physiology). Medical imaging seeks to revea ...
, such as
x-ray An X-ray (also known in many languages as Röntgen radiation) is a form of high-energy electromagnetic radiation with a wavelength shorter than those of ultraviolet rays and longer than those of gamma rays. Roughly, X-rays have a wavelength ran ...
s, MRIs, mammograms, and
ultrasound Ultrasound is sound with frequency, frequencies greater than 20 Hertz, kilohertz. This frequency is the approximate upper audible hearing range, limit of human hearing in healthy young adults. The physical principles of acoustic waves apply ...
s. Regional companies such as Med Health Services Inc. in the
Pittsburgh Pittsburgh ( ) is a city in Allegheny County, Pennsylvania, United States, and its county seat. It is the List of municipalities in Pennsylvania#Municipalities, second-most populous city in Pennsylvania (after Philadelphia) and the List of Un ...
area and Northwest Radiology Network of
Indianapolis Indianapolis ( ), colloquially known as Indy, is the List of capitals in the United States, capital and List of municipalities in Indiana, most populous city of the U.S. state of Indiana and the county seat of Marion County, Indiana, Marion ...
have been among the first in the nation to implement the practice on a trial basis.


See also

* Flat fee MLS * Flat rate (finance) *
Flat tax A flat tax (short for flat-rate tax) is a tax with a single rate on the taxable amount, after accounting for any deductions or exemptions from the tax base. It is not necessarily a fully proportional tax. Implementations are often progressi ...
*
Rural Internet Rural Internet describes the characteristics of Internet service in rural areas (also referred to as "the country" or "countryside"), which are settled places outside towns and cities. Inhabitants live in villages, Hamlet (place), hamlets, on far ...
* Too cheap to meter


References

{{DEFAULTSORT:Flat Rate Pricing Internet access Mobile web