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.[1] Rarely, it may refer to a rate that does not vary with usage or time of use. Another term used is "flate", a hybrid of "flat" and "rate".
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American Telecommunications companies commonly offer a flat rate to residential customers for local telephone calls. However, a regular rate or Message Rate is advantageous for those who only make a few short calls per month. Flat rates were rare outside the USA and Canada until about 2005, but have since become widespread in Europe for both local and long distance calls and are now also available for mobile phone services, both for traditional GSM/UMTS voice calls and for Mobile VoIP.
Most VoIP 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 services, such as SkypeOut offer flat rates for national calls to landlines.
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 companies also offer Pay per view pricing.
For Internet service providers, flat rate is access to the Internet at all hours and days of the year (linear rate) and for all customers of the telco operator (universal) at a fixed and cheap tariff.
Flat rate is common in broadband access to the Internet in the USA 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 uploads and downloads (data transfers). Some GPRS / data UMTS access to the Internet in some countries of Europe 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).
A flat rate for electricity is different from that for other services. An electric utility 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 special type of electricity meter, 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.
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.
In most parts of the world regular users of public transport, especially commuters, 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 Oesterreich Card 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.
Flat rate is a price a customer pays for a specific service based on the amount of time deemed necessary to perform the service, which remains constant regardless of the actual time a particular worker needed to complete the service. Flat rate manuals are used throughout the service industry and are based on timed studies of the time it takes to perform a specific job. Flat rate helps provide a uniform pricing menu for service work and helps establish the worth of the performance of a particular job.
The same flat rate for a particular job is paid, even if it takes the worker longer (and, unfortunately, shorter) to do the job than the time shown for that job in the flat manual. Because of this, the customer does not have to pay more to a worker who takes longer to do a job than the flat rate time.
A worker who works slower than the flat rate time earns less money over time because the worker's slowness means the worker performs fewer jobs over a given period of time because each job takes longer due to the worker's slowness.
In this case, flat rate serves as an incentive for the worker to learn to perform the job in the flat rate time, so that the worker may perform more jobs in a given time, as the worker is paid per job.
Because flat rate pays a set amount for a particular job, a worker who learns to work faster is rewarded for efficiency.
Because the efficient worker is also paid per job, the worker who performs more jobs in a given time period is paid the set amount for each job.
Because the efficient worker can perform more jobs in a given period of time, the worker is paid more because the worker performed more jobs.
Flat rate is used by the service industry because it does not penalize efficiency. A worker who develops the skill to perform a job faster is not paid less per job as a result, so a fast worker is not paid less to work quickly.
Because flat rate pays at a predetermined price per job, the customer pays the same price whether the worker is faster or slower than the flat rate time. This is often a stumbling point for the cost-conscious consumer, because it is very difficult to compare flat rate bids to hourly ones. The result is a fairly predictable rejection of flat rate shops over hourly ones.
The worker is paid in accordance with the work performed.
The efficient worker is rewarded for being skilled enough to do the job in less time than the flat rate manual.
The customer benefits from the worker performing the job in less time than the flat rate manual by having the service completed faster.
However, many shops do not use flat rate manuals and make their own determination without doing any time studies whatsoever.