Pricing models: hourly, flat-rate price book, the service fee, and good / better / best
In one paragraph
How you price is a business model, not a habit. Hourly is honest and unprofitable on small jobs. A flat-rate price book gives the customer a number before you start, pays you for speed instead of punishing it, and produces the 'agreed contract amount in dollars and cents' that a home improvement contract must state. A service fee gets you paid for the diagnosis. Good / better / best lets the customer choose the level instead of arguing the price. Here is each model, its arithmetic, and where California's contract rules push you.
The rule
A home improvement contract must be in writing and state the agreed contract amount in dollars and cents, including profit, labor and materials (B&P 7159.5(a)(1)); the down payment is capped at $1,000 or 10%, whichever is less, and payments may not run ahead of the work (7159.5(a)(3), (5)). A job of $750 or less that the customer initiated, limited to the problem that prompted the call, with nothing due until completion, may be written as a service and repair contract instead (B&P 7159.10(a)).
Why it matters
The law wants a firm dollar figure on residential work before you start. Hourly pricing on a written home improvement contract is a mismatch with that rule, and 'I will let you know when I am done' is how new contractors end up either underpaid or in a dispute. A price book solves the legal problem and the profit problem with the same document.