Time and Materials (T&M)
Billing for actual hours and materials instead of a fixed price.
What it means
Time and materials (T&M) is a pricing structure in which the customer pays for the actual labor hours worked, at agreed rates, plus the cost of materials — often with a markup — rather than one fixed price. It contrasts with a lump-sum contract (one fixed price for a defined scope, with the contractor carrying the overrun risk) and with cost-plus (reimbursed costs plus a fee, usually with more formal cost accounting). T&M contracts frequently include a not-to-exceed cap to limit the customer's exposure.
Why it matters before you sign
T&M shifts the risk of extra hours to the paying party — if you are the customer, ask for a not-to-exceed number; if you are the one billing, keep records good enough to defend every hour.
In a contract, it looks like this
The repair work was billed on a time-and-materials basis at $95 per hour plus materials at cost plus 15%, not to exceed $20,000.
This definition is a general, educational explanation — not legal advice. XOsign provides AI-assisted document tools and does not provide legal advice; consider consulting a qualified attorney for guidance on your specific situation. Requirements vary by state.
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