When I did residential service the company I worked for did all work T&M billing.
The owner lived in a 10,000 sq ft house, had a twin engine airplane, single engine airplane, 35' yacht, 5 kids all went to top notch colleges, started in business in 1948, died last year and his company is still operating.
Yeah you have the only method that works, DO NOT assume because you cannot figure out a formula for making a profit with a method that is different than yours, that everyone else is a dolt, it makes you seem VERY NARROWED MINDED or incompetent of grasping that others have a method that works outside your game plan.
As you know there is more to operating a successful business that just a simple billing plan.
I don't think it wise to judge a business' success on how the owner lives. There's two sides to every story; for all we know the guy could've inherited a fortune, won the lottery, or lived modestly his first few years making smart investments along the way.
T&M, for the most part, is not the ideal way to run a service company. You can only bill the hours that were worked. There's no incentive for the tech to work efficiently. The only jobs I will use T&M on is troubleshooting, and that's mostly just the 'T'. Once the troubleshooting is concluded, we use the flat-rate system for quoting a cost to make necessary repairs.
I for one would not hire any contractors on a T&M basis for general service work. I, like most customers, want to know what its going to cost me before any work begins.
The key to flat-rate is knowing how to use the pricing structure; the tech needs to know what each assembly consists of. This helps them to formulate a price. The techs need to have some sense about them in estimating so they'll know if the flat-rate price in the book will adequately cover the costs associated with the job.
There seems to be a misconception here that no matter what the job is, you use the same price always. Each item is limited to a specific amount of time and material; the tech uses his assembly breakdown to see what's included, then understands how to account for the additional material and time. Most of this will be printed to make it easier, but techs should also know hourly rates and markups. This is useful also in case there isn't a task listed that suits the job.
For instance, lets say the job is simply replacing light fixtures. We have a flat rate price for that, but its specific to the type of fixture, weight, ceiling height, and accessibilty. The price for changing 50lbs chandeliers on 14' ceilings would certainly be higher than changing flush-mounts on an 8' ceiling.
Or running new circuits; each task is limited to a certain length of cable or conduit, and differentiates between open attics and wall fishing. There is a price-per-ft for circuits longer than what is specified in the assembly breakdown.
Our flat-rate pricing book is quite extensive listing everything from devices and fixtures, to costs for bucket trucks, standy fees, trenching, scaffolding, motors, automation, pools, etc. . . you name it and we most likely have a price for it already.
And of course, brian, there is more to running a business than a "billing plan", but that's for the owner to handle. The flat-rate concept is for the benefit of the company in that each tech can be self-sufficient in estimating and selling jobs. It also makes it easier to reward hard work with incentive-based pay.
I think its safe to say that everyone doing flat-rate has tried T&M at some point in business, and saw something in this system that appealed to them more.