A flat rate pricing strategy is one in which the customer pays a fixed amount of money for any services rendered. The price of the services is usually decided beforehand. Many companies, especially the smaller businesses adopt this method of pricing because of the numerous advantages it has over hourly billing. For small businesses, adopting flat rate services has been found to be the most preferable option. We will see why:

• PRODUCTIVITY:
  If a business signs up for a flat rate IT service, both the parties know exactly what are the term and conditions. The service provider will be more focused on completing the given task as soon as possible so that they can take over another project and make more benefits. This saves essential time and resources for the organization. This is not the case in hourly billing because the payment done is directly proportional to the time spent on the project. The service provider often prolongs the same work for more time when it can be completed in a shorter period of time.

• TRANSPARENCY:
  The best benefit offered by a flat rate service is the transparency. You know exactly what you are paying for and the service provider knows exactly what amount of money they will be receiving for the work done. There is no discrepancy between the two parties. If at all there arises any problem with the services offered, the hours spent on the work by the service provider does not matter, as it does in case of an hourly billing, where proper reimbursements have to be made on the part of the client. This allows smooth work and smooth transactions, ensuring good relations between the two parties.

• LOCKED-IN RATES:
  Companies hire IT service providers at a fixed rate and if the contract extends for a year or two, you have the advantage of a fixed rate, especially when the present rates in the market hike due to inflation. This may not be the case in hourly billing, where the hourly rates may be subject to change. Many IT service providers usually have schemes that allow you to enjoy their services for a fixed rate for a year or two, with attractive offers. Such advantageous offers may be absent in the case of a short term contract with any service provider.

• AVOIDING COMPLEXITY AND SAVING RESOURCES:
  Many large businesses go for hourly billing because they have the proper resources to estimate the total time, financial expenditure and various other details to complete the project, and allocate tasks to their IT service providers accordingly. Also, in case of any disputes, they have the money and the power to take a stand. But smaller businesses lack such resources. So, it is most advisable for smaller organizations to adopt IT services at a flat rate, although a preliminary estimate is required in this case also so that the company can justify the investment it makes in the near future through a proper cost-benefit ratio. This allows them to concentrate much of their resources on other core infrastructure that will eventually help them to grow.