Flat rate
Encyclopedia
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. 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".
s companies commonly offer a flat rate to residential customers for local telephone call
s. 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.
companies also offer Pay per view pricing.
s, flat rate is access to the Internet
at all hours and days of the year (linear rate) and for all customer
s 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).
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.
, especially commuters, make use of weekly, monthly or yearly season ticket
s 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.
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.
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
that charges a single fixed fee
Fee
A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup.Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account...
for a service, regardless of usage. 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".
Telephony
American TelecommunicationTelecommunication
Telecommunication is the transmission of information over significant distances to communicate. In earlier times, telecommunications involved the use of visual signals, such as beacons, smoke signals, semaphore telegraphs, signal flags, and optical heliographs, or audio messages via coded...
s companies commonly offer a flat rate to residential customers for local telephone call
Telephone call
A telephone call is a connection over a telephone network between the calling party and the called party.-Information transmission:A telephone call may carry ordinary voice transmission using a telephone, data transmission when the calling party and called party are using modems, or facsimile...
s. 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
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
services, both for traditional GSM/UMTS voice calls and for Mobile VoIP
Mobile VoIP
Mobile VoIP or simply mVoIP is an extension of mobility to a Voice over IP network. Two types of communication are generally supported: cordless/DECT/PCS protocols for short range or campus communications where all base stations are linked into the same LAN, and wider area communications using...
.
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
Plain old telephone service
Plain old telephone service is the voice-grade telephone service that remains the basic form of residential and small business service connection to the telephone network in many parts of the world....
services, such as SkypeOut
Skype
Skype is a software application that allows users to make voice and video calls and chat over the Internet. Calls to other users within the Skype service are free, while calls to both traditional landline telephones and mobile phones can be made for a fee using a debit-based user account system...
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 televisionCable television
Cable television is a system of providing television programs to consumers via radio frequency signals transmitted to televisions through coaxial cables or digital light pulses through fixed optical fibers located on the subscriber's property, much like the over-the-air method used in traditional...
companies also offer Pay per view pricing.
Internet
For Internet service providerInternet service provider
An Internet service provider is a company that provides access to the Internet. Access ISPs directly connect customers to the Internet using copper wires, wireless or fiber-optic connections. Hosting ISPs lease server space for smaller businesses and host other people servers...
s, flat rate is access to the Internet
Internet access
Many technologies and service plans for Internet access allow customers to connect to the Internet.Consumer use first became popular through dial-up connections in the 20th century....
at all hours and days of the year (linear rate) and for all customer
Customer
A customer is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services...
s of the telco
Telephone company
A telephone company is a service provider of telecommunications services such as telephony and data communications access. Many were at one time nationalized or state-regulated monopolies...
operator (universal) at a fixed and cheap tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
.
Flat rate is common in broadband
Broadband
The term broadband refers to a telecommunications signal or device of greater bandwidth, in some sense, than another standard or usual signal or device . Different criteria for "broad" have been applied in different contexts and at different times...
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
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
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).
Electricity
A flat rate for electricityElectricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
is different from that for other services. An electric utility
Electric utility
An electric utility is a company that engages in the generation, transmission, and distribution of electricity for sale generally in a regulated market. The electrical utility industry is a major provider of energy in most countries. It is indispensable to factories, commercial establishments,...
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
Electricity meter
An electricity meter or energy meter is a device that measures the amount of electric energy consumed by a residence, business, or an electrically powered device....
, 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 transportPublic transport
Public transport is a shared passenger transportation service which is available for use by the general public, as distinct from modes such as taxicab, car pooling or hired buses which are not shared by strangers without private arrangement.Public transport modes include buses, trolleybuses, trams...
, especially commuters, make use of weekly, monthly or yearly season ticket
Season ticket
A season ticket is a ticket that grants privileges over a defined period of time.-Sport:In sport, a season ticket grants the holder access to all regular-season home games for one season without additional charges. The ticket usually offers a discounted price over purchasing a ticket for each of...
s 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
BahnCard
BahnCard is a loyalty card offered by Deutsche Bahn , the German national railway company. Unlike airline loyalty programs, but similarly to the UK Young Persons Railcard, the BahnCard entitles the passenger to a discount price and must be purchased prior to travel.Like most contracts in Germany,...
in Germany for about €3000 and the Oesterreich Card offered by the Austrian Federal Railways).
Some, such as the Eurail
Eurail
The Eurorail Group G.I.E. is a Netherlands-based company, registered in Luxembourg, that sells passes and tickets for European railroads...
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.
Labor
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.
See also
- Flat fee MLSFlat fee mlsFlat Fee MLS generally refers to the practice in the real estate industry of a seller entering into an "à la carte service agreement" with a real estate broker who accepts a flat fee rather than a percentage of the sale price for the listing side of the transaction. The buyer's broker is still...
- Flat rate (finance)Flat rate (finance)Flat interest rate loans are often used by traditional moneylenders in the informal economy of developing countries. They are also used by many microfinance institutions. One reason for their popularity is their ease of use...
- Flat taxFlat taxA flat tax is a tax system with a constant marginal tax rate. Typically the term flat tax is applied in the context of an individual or corporate income that will be taxed at one marginal rate...
- Rural InternetRural InternetRural Internet is the access to the Internet from rural areas , which are settled places outside towns and cities. Inhabitants live in villages, hamlets, on farms and in other isolated houses...
- Too cheap to meterToo cheap to meterToo cheap to meter describes a concept in which a commodity is so inexpensive that it is more cost-effective and less bureaucratic to simply provide it for a flat fee or even free and make a profit from associated services....