Technician pay plans: hourly vs flat rate vs commission

There is no single best way to pay technicians. Hourly pay rewards time, flat rate pays per task, and commission rewards revenue or sales, and each one quietly shapes how your team behaves on a call. Most shops end up with a hybrid: a dependable base plus a share of what the tech produces or sells, written down so everyone can check their own math.

This guide explains each option, runs the numbers on one example week, and covers the wage-law basics you should check with an accountant or employment attorney before changing anything.

What does each pay plan reward?

Before comparing numbers, think about behavior. Whatever you pay for, you get more of.

Hourly rewards showing up and putting in time. It's simple and predictable, and it doesn't punish a tech for a slow day caused by the schedule. It also doesn't reward speed, quality or selling.
Flat rate (per task) pays a set amount for each kind of job, regardless of how long it takes. It rewards efficiency and experience. It can tempt people to rush.
Commission on revenue pays a percentage of what the tech's jobs bill. It rewards productive days and doing complete work. It can tempt people to oversell.
Commission on sales (spiffs or sold-quote commission) pays for specific sales, like a replacement quote approved or a membership sold. It rewards spotting real opportunities. On its own it can feel like pressure on the customer.
Salary is uncommon for field techs outside of supervisors and trainers, and most field techs don't meet the requirements to be treated as exempt from overtime.

How does hourly pay work?

The tech earns a rate per hour worked, plus overtime when they cross the threshold. Under the federal Fair Labor Standards Act that is time and a half past 40 hours in a workweek. Some states, like California, add daily overtime and other rules.

Good fit when: your techs are newer, your work is long or unpredictable (commercial, new construction, diagnostics that vary a lot), or you are just starting and want simple payroll.

Watch for: slow days that cost you the same as busy ones, and no built-in reason for techs to recommend needed work.

How does flat-rate pay work?

Flat-rate pay assigns each task a number of pay hours or a fixed dollar amount, often tied to your flat-rate pricebook. A tech who finishes a two-pay-hour task in ninety minutes still earns two hours. One who takes three still earns two.

Good fit when: your jobs are repeatable (maintenance visits, standard repairs, cleaning routes), you trust your task times, and you want to reward experienced techs for working efficiently.

Watch for: rushed work and callbacks. Pair it with a rule that callbacks on a tech's own work are unpaid or paid at a reduced rate, and track callback rates by tech so the rule is fair.

How does commission pay work?

The tech earns a percentage of the revenue on their completed jobs, a percentage of approved quotes they sold, or both. Many shops pay commission on top of an hourly base rather than as the whole paycheck.

Good fit when: your techs present options to homeowners, you sell replacements and memberships, and you want top performers to earn noticeably more.

Watch for: overselling. Protect customers and your reputation by tracking callbacks and complaints by tech, by making the "good" option on every quote a genuine fix, and by paying on collected or completed work rather than just signed quotes.

A worked example: one tech, one week

Here's a hypothetical week to show how the plans compare. These numbers are made up for illustration. Use your own rates and jobs.

The week: 42 hours worked. 16 jobs completed, billing $5,600 before tax. The tech sold one replacement quote of $8,000 that was approved, and two memberships.

Plan A: hourly at $30.

40 regular hours × $30 = $1,200
2 overtime hours × $45 = $90
Total: $1,290

Plan B: flat rate. Suppose the 16 jobs add up to 46 pay hours at $28 per pay hour.

46 × $28 = $1,288

Notice that if the same tech had a slow week with fewer jobs, Plan B would pay less. And there's a legal floor to check, covered below.

Plan C: hourly base plus commission. $22 an hour, plus 8% of job revenue, plus 3% of approved sold quotes, plus $25 per membership sold.

40 × $22 + 2 × $33 = $946 (overtime on the base alone; see the note below)
8% × $5,600 = $448
3% × $8,000 = $240
2 × $25 = $50
Total before the overtime adjustment: $1,684

The overtime note. Under federal law, commissions and many bonuses must be included in the "regular rate" used to calculate overtime. In Plan C, that means the overtime premium isn't just based on the $22 base. Your payroll provider can calculate this correctly, but you need to tell them which payments are commissions and bonuses.

The point of the example isn't that Plan C is best. It's that each plan pays this same week differently, and the differences grow on very good and very bad weeks. Before switching, run your last three months of real jobs through the new plan and see what each tech would have earned.

What are the legal basics?

This isn't legal or tax advice, and wage laws vary by state. Check with an employment attorney, accountant or your payroll provider. A few federal basics most owners should know:

Minimum wage still applies. Flat-rate and commission-only employees must still earn at least the applicable minimum wage for every hour worked in a workweek. If a slow week drops below that, you have to make up the difference. Many states and cities have a higher minimum than the federal one.
Overtime usually applies. Most field techs are non-exempt, so they're owed overtime even under flat-rate or commission plans, calculated on a regular rate that includes the commission or bonus earnings.
Some commission exemptions exist, with conditions. Federal law has a narrow overtime exemption for certain commissioned employees of retail or service establishments. Whether it fits your business and your techs depends on specific tests. Don't assume it.
Track all hours worked. Whatever the plan, you need accurate time records, including travel between jobs during the day and shop time.
Employees vs. contractors. Paying someone "1099" doesn't make them a contractor. Classification depends on how the work is controlled, and the tests differ between federal and state agencies.
Put it in writing. Some states require written commission agreements. Even where they don't, a written plan prevents arguments.

How do you design a hybrid plan that feels fair?

Most shops that move beyond hourly settle on something like this:

A base rate that the tech can live on during a slow week.
A production piece: a percentage of completed job revenue, or flat-rate pay above a minimum.
A sales piece: a smaller percentage on approved replacement quotes, or a flat spiff per membership.
Quality guardrails: reduced pay on callbacks for their own work, and a review of complaint and refund trends before bonuses are paid.

Keep it simple enough that a tech can calculate their own check from their job list. If they can't, they will assume they're being shorted, even when they aren't.

How do you switch pay plans without losing people?

Model it on real history. Show each tech what the last quarter would have paid under the new plan.
Offer a transition period. For example, pay whichever plan is higher for the first couple of months.
Explain the why. "We want our best techs to earn more" lands better than "we're changing payroll."
Show the numbers weekly. Techs should see their hours, jobs, revenue and commissions during the period, not just on payday.
Review after 90 days. Fix what isn't working before people start looking elsewhere.

Pay is a big part of keeping people, but not all of it. See keeping technicians: culture, training and career paths for the rest. If you're hiring for a new seat, our guide to hiring technicians covers how to describe the pay plan in your job post.

FAQ

Is flat-rate pay legal? Yes, in general, as long as employees still receive at least minimum wage for all hours worked and overtime where it applies. Details vary by state.

Should I pay commission on sold quotes or collected revenue? Paying on collected or completed work protects you from paying on jobs that cancel or don't get paid. Many shops pay sold-quote commission after the job is completed.

How often should I pay commission? With each regular paycheck is simplest and keeps the connection between effort and reward. Pay it on the period when the work was completed or approved, and be consistent.

Do tips go to the technician? Customer tips meant for the technician should generally go to that technician. Tip rules can be specific, so check with your payroll provider.

How ServFlo helps

ServFlo's time tracking (Connect plan and above) records shifts, job time, travel and shop time, and the payroll run applies your overtime rules, including daily overtime and California's seventh-day rule. It exports to Gusto, ADP, Paychex, QuickBooks or a generic file. On Pro, commission rules can pay a percentage of job revenue, a percentage of sold quotes, a flat amount per job or visit, or a percentage of membership sales, and techs see their own commission lines. Customer tips are attributed to the technician on the job. Compare plans on the pricing page, or see the quotes and invoicing tools techs use to sell on site.

Technician pay plans: hourly, flat rate and commission