Time and materials
Billing by what the job takes: hours worked plus materials used, rather than one agreed sum
Time and materials bills what the job consumes: hours worked at an agreed rate, plus the parts fitted. Finland calls it tuntityö, Sweden löpande räkning, the Netherlands regie or regieprijs. It is a method of arriving at a price after the fact rather than a price given before, which is why it feels like a risk and why the fix is not to avoid it.
Hourly billing with a written ceiling
The arrangement worth asking for is hourly billing with a ceiling written in: the contractor bills what the work takes, and if the total will pass the figure you set, they stop and tell you before continuing. Finland and Sweden each have a native word for that ceiling, enimmäishinta and takpris, which a tradesperson reads without explanation; Dutch practice constructs it as regie met een budgetplafond, as-billed work up to a maximum.
Under the ceiling you pay for the hours the work took. At the ceiling you pay the figure you chose rather than the one the contractor would have set, which is the part that matters: the number is yours. What the ceiling removes is the open-ended outcome, not the variability.
Where confusing it costs money
You accept an hourly rate without asking what counts as chargeable, and travel between the merchant and your house appears on the invoice at the working rate.
An hourly rate looks cheaper than a fixed sum until you ask how many hours. Without that estimate the two figures are not comparable at all.
Sibling frame: fixed price, the alternative basis, mandate, the ceiling that takes the open end off this one, and quote, the offer the arrangement is written into.
Common questions
What should I agree before work starts on this basis?
Four things, all of them cheaper to settle now than to argue over on the invoice. The hourly rate including VAT, and whether it changes for a second tradesperson or out of hours. What counts as chargeable time, specifically whether travel and material collection are billed. How materials are charged, at cost or with a markup, and at what percentage. And the ceiling above which the contractor stops and comes back to you in writing. The first three are questions. The fourth is a mandate, and it is the one that binds.
Is billing by the hour riskier than a fixed price?
Uncapped it is riskier; capped it is not, so the choice is never really between a fixed sum and an open cheque. What decides it is when the ceiling arrives. Put the figure in the first email, before anyone is booked: a ceiling raised once the work is under way is a renegotiation you are having from the weaker side, with the floor already up. Ask for it by the name your market uses, enimmäishinta in Finland, takpris in Sweden, regie met een budgetplafond in the Netherlands, and ask in the same sentence for the obligation to stop and tell you before it is passed.