I sat on a review call earlier this year with the owner of a commercial service company, walking through his numbers line by line. We got to one technician who had billed two hours that day.
Two hours does not sound like a disaster. It sounds like a slow Tuesday.
That day cost him $213.
Not $213 of missed opportunity. $213 out the door, because the truck, the wage, the insurance, the phone and the share of overhead that technician carries kept running whether he billed eight hours or two. That is the number almost no owner can produce on demand, and it is the only one that answers the question in the title.
Your technician’s hourly wage is a lie
Ask most owners what a technician costs and they will tell you the wage. Thirty-five an hour. Forty.
That number is not wrong so much as it is a fraction. Here is what sits on top of it: payroll taxes, workers comp, health insurance, paid time off, the truck payment, fuel, insurance on the truck, the phone, the tablet, tools, uniforms, training, and every hour that technician is paid but not billing.
One plumbing owner I work with guessed his burden at fifteen to twenty dollars an hour on a thirty-five dollar wage. When we built it out, his loaded cost landed between fifty and seventy-five.
That is the pattern, and the guess is almost always low. Most owners do what he did, which is plug in a number that feels about right. “I figure if I pay him thirty, it costs me an extra fifteen, so he’s forty-five.” Then they price off forty-five and wonder why a busy year produced no profit.
Published figures for the trades usually put burden at forty to fifty percent on top of the wage. Those numbers generally cover payroll taxes, workers comp and benefits. Workers comp by itself runs roughly eight to twelve percent of payroll on the HVAC side and five to nine on plumbing. Once you add the truck, the fuel, the insurance on it, the phone and the tools, fifty-five to sixty percent is closer to what I see.
Use that as a placeholder if you have nothing better. It is not an answer. The answer is your own payroll and overhead divided by your own billable hours.
Burden is also what sets your pricing. What good HVAC profit margins look like runs the same arithmetic from the department level down.
One more thing worth stealing. Some of the better operators price off their highest-paid technician rather than the average. If your top tech is at forty an hour and you build your rates around the guy at twenty-eight, every job that top tech runs is quietly underpriced. Price for the expensive truck and every truck is protected.
The four hour rule
Every technician needs to bill four hours a day to roughly break even. Anything above four is where you make money.
That sounds low until you do the arithmetic on the calendar. There are 260 workdays in a year. Between vacation, sick days and holidays, a technician misses about 25 of them, a little over a month. So you are working with roughly 235 days.
Now take the eight hour day. Five billable hours out of eight is 63 percent, and 63 percent is the floor I want to see, not the target. Four hours is 50 percent, which is break even. Below that you are paying for the privilege of sending someone to a customer’s house.
On that same review call, one technician was averaging 4.4 billable hours a day. He was not in trouble. He was also not making the company any money. He was sitting directly on the line.
The technician on that team averaging 6.5 hours was carrying him, and neither of them knew it.
What a truck has to produce
The hours version is useful for managing people. The dollars version is what you take to a pricing decision. What you do with it once you are there is a question of markup and target margin.
For that commercial operation, break even worked out to about $5,500 a week per technician. To earn a twenty percent margin on that truck, the number was closer to $7,000 a week.
Rates fall out of the same math. Fully loaded break even on the commercial side was $69.38 an hour, with a run rate of $86.72. On residential service, ten percent margin needed $86.90 an hour, fifteen percent needed $92, and twenty percent needed $97.77.
Those are that company’s numbers, not yours. The method is what transfers. Pick your margin, work backward through your burden, and you get the rate you should have been charging.
On the monthly view, Dustin Marx put a floor on it when he was on the podcast: each truck in his plumbing operation should produce at least $50,000 a month of revenue, materials and equipment included.
What I liked more than the number was the habit behind it. His technicians forecast their own truck’s P&L every Friday. That changes what the number is. It stops being something the office calculates about a technician and becomes something the technician calculates about himself.
Why your revenue per technician number is probably wrong
Most owners can quote a revenue per technician figure. Very few can tell you how it was built, and four things break it. They compound.
The denominator. Do helpers and apprentices count? Does the owner who runs calls on Fridays? Move three people in or out of that divisor and the number swings enough to change a decision.
The mix. Blending install crews and service technicians produces an average that describes neither one. Their ticket sizes, margins and utilization have nothing in common.
Booked or collected. Revenue that never gets paid is not revenue. If you are measuring off booked work and carrying aged receivables, you are grading your technicians on money you do not have.
The credit. A maintenance visit turns up a failing system and someone else closes the replacement. Who gets the revenue? Whatever you decide, decide it once and apply it the same way every time, because this single choice can move a technician from your bottom quartile to your top one.
Here is why it matters beyond bookkeeping. When you compare your number to one you saw in a Facebook group, you have no idea whether they counted the same way. You might be measuring service-only, collected, technicians-only against a blended, booked, everybody-included figure. That is not a benchmark. That is noise you are about to make a hiring decision on.
Percentages do not pay the bills
Even a correctly computed revenue number only gets you halfway, because revenue is not the point. Margin is.
“Percentages don’t pay the bills. The dollars do.”
Jason Noel, on Profit & Grit
He ran a sixty percent gross margin target, but he paid bonuses on gross margin dollars, not the percentage. Hit $40,000 of revenue at sixty percent and that is $24,000 of margin. The bonus rode on the $24,000.
That distinction is not academic. I have had owners tell me proudly they were making sixty percent on the dollar, and when I looked at the work it came out to about two dollars an hour. A high percentage on a small ticket is a rounding error in a nice suit.
Jason also described walking into a company doing $10 million in revenue where, as he put it, the number on the sign looked great but nobody inside was winning. That is the exact company I get called into. I walk through why home service companies stall at $3M, $5M and $8M separately.
His other habit is worth copying. He ran a miniature P&L for each truck, tracking materials by purchase order, equipment, subcontractors and financing fees. Everything except burden, which he applied as a flat percentage. His reason: he wanted to know whether the truck made money on everything, not just on labor.
A technician who bills well but wastes materials and generates callbacks can look fine on a labor report and lose money on a job costing report. Only one of those reports is telling you the truth. If that second report is not trustworthy yet, fixing job costing in ServiceTitan comes before any of this.
The efficiency number nobody wants to hear
An industry study covering roughly 300 HVAC companies found technicians average 5.7 billable hours against 8.8 paid hours. That is about 65 percent, and another 1.13 hours a day goes to driving that never gets recovered through a trip charge.
Sixty-five percent is the average among companies that are measuring it. The shops I walk into for the first time are usually nowhere near that. Forty percent is common when nobody has ever tracked it, which means the technician is billing roughly three hours of an eight hour day.
Closing that gap is the largest lever most companies have. In one review, direct labor was running twenty-six to twenty-seven percent of revenue against an industry range of seventeen to twenty. That gap was not a pricing problem. It was hours being paid for and not sold.
Overtime is where this hides best. One owner told me plainly that he pays a lot of overtime and none of it shows up on his job gross margin. The premium gets absorbed into an overhead bucket, the job looks profitable, and the company is not.
The other version is capacity. If a technician runs 1.5 calls a day and could run 2.5, and every visit averages a thousand to twelve hundred dollars, that is not a small improvement. Same truck, same wage, same insurance, considerably more revenue.
When a truck is below the line, it may not be the technician
Sometimes it is the technician. Some people are slow, some will not sell, and some should not be in a truck at all. You know it when you see it and this article is not going to talk you out of it.
But the number by itself does not tell you which situation you are in. That is the whole reason to slow down here. A report that says a technician is unprofitable looks like a verdict, and it usually is not one yet.
Check these before you decide:
- Dispatch and cancellations. The tech who is good at diagnostics gets routed to tune-ups all week and his numbers fall through no fault of his own. Cancellations hit the same way. He cannot bill a call that got called off.
- Pricing. If the rate was built on a guessed burden, every hour he bills loses money. He can work perfectly and still show up in the red.
- Windshield time. Drive time is paid and not billed. A routing problem shows up on a report looking exactly like a performance problem.
- Capacity. Not enough calls to fill the day is a marketing and scheduling issue, not a technician issue.
- Attribution. He found the replacement and somebody else got credited for it.
- The back office. If jobs are coded to the wrong department, or tickets get closed late, or material costs land on the wrong job, the technician’s numbers are wrong before anybody looks at them.
Evaluate those before you make a determination on how well a technician is doing. If they all check out and the number is still bad, then you have a technician conversation, and you get to have it with information behind you instead of a hunch.
Tying pay to the number
Once you can measure this, the temptation is to bolt an incentive onto it. Worth going carefully.
What I have seen work: tier your scorecard past the first target. One client set a $60,000 revenue goal and watched technicians hit it and coast for the rest of the month. Adding $70,000 and $80,000 tiers kept them climbing. Targeted SPIFFs on high-margin replacements like water heaters and boilers also shift a team out of a pure repair mindset.
What matters more than the plan design is the data behind it. Technicians lose trust immediately when bonus numbers are wrong, and you do not get that trust back cheaply. A comp plan launched on top of messy job costing is worse than no plan at all.
The counterargument deserves airtime, because it comes from an operator. Ashley Stroud told me spiffs created an environment that was not exactly a team environment, with a sense of entitlement attached. Her approach is a minimum gross margin floor of fifty-seven percent instead, with finance charges moved into cost of goods so the margins she reads are true ones.
Both work. What does not work is a plan built on numbers your team does not believe.
One caution from the CFO chair: think hard before you show technicians their own effective hourly rate. It invites comparisons with what the shop down the road or the private equity rollup is paying, and that is a conversation you will not control.
The broader frame comes from Paul Kelly, who built Parker & Sons to $260 million: a thousand small things done right beat one big swing every time. Technician profitability is a thousand small things. It is not a comp plan you install once.
Your trade and your departments have their own numbers
Before you compare yourself to anything, understand that these figures do not travel well.
One chimney company I work with has technicians producing around $80,000 a month. Set that next to a $50,000 plumbing floor and you might conclude the plumbing operation is failing. It is not. Different trade, different ticket, different mix of work, different season.
The same thing is true inside your own company. Install, service and maintenance behave differently, and plenty of technicians do some combination of all three. A maintenance tech will never post install numbers. Grading him against them is a mistake you make on a spreadsheet and pay for in turnover.
This is why departmental reporting matters more than a company-wide average. A single blended revenue per technician figure for the whole company is close to useless. It hides the department that is carrying you and the one that is bleeding, and it tells you nothing you can act on.
Set your targets by department, and compare each technician to the work he actually does.
The scorecard
| Metric | Benchmark |
|---|---|
| Billable hours per day, break even | 4 hours |
| Billable hours per day, profitable | 5 or more |
| Billable share of paid hours | 63% floor, 65 to 70% target |
| Direct labor as a share of revenue | 17 to 20% |
| Weekly revenue per technician to break even, commercial service | About $5,500 |
| Weekly revenue per truck at 20% margin, commercial service | About $7,000 |
| Monthly revenue per truck, plumbing, materials and equipment included | $50,000 floor |
| Gross margin, residential service | 55 to 60% |
| Burden multiplier on base wage | 55 to 60% |
If your numbers sit outside these, that is information, not a verdict. Note that the weekly and monthly revenue figures come from different trades and count different things. The commercial weekly numbers are labor driven. The plumbing monthly floor includes materials and equipment. Compare yourself to the one that matches your business, and never to a figure whose basis you cannot see.
How to actually pull this
The data lives in two systems and the answer requires both.
Your field service platform has the hours, the tickets and the job detail. Your accounting system has the wages, the taxes, the insurance and the overhead. Revenue per technician comes out of the first one. Burden comes out of the second. Margin per technician requires them to agree with each other.
Which is where most companies stop, because they do not agree. If your field system and your books have never been reconciled, every number in this article will be built on sand. That reconciliation is the prerequisite, not an optional cleanup you get to later.
Start narrow. One department, trailing twelve months, collected revenue, billable field technicians only in the denominator. Get that right before you try to build a scorecard for the whole company.
Which system you run changes how hard this is to pull. Comparing field service software on what it does to your books covers that.
If the books are not structured to give you that, start upstream. Setting up HVAC accounting properly is what makes these numbers available in the first place.
If you want help building it, or you want to know what your technician margins look like before you make a hiring decision, schedule a call.
Questions owners ask
How do I know if my HVAC technicians are profitable?
Take the revenue that technician collected over the last twelve months and subtract his fully burdened cost, which is wage plus taxes, insurance, benefits, truck, fuel, phone, tools and paid non-billable hours. What is left is his contribution. If you want a faster read, count billable hours per day. Below four and he is not covering his cost. Above five and he is contributing.
How do I know if my plumbing technicians are profitable?
Same method, different benchmarks. Plumbing service typically runs closer to fifty percent gross margin than the fifty-five to sixty percent you see in residential HVAC service, so compare within your own trade and your own department. The mistake is measuring a plumbing service tech against an HVAC install crew.
How do I calculate fully burdened labor cost for a service technician?
Add up everything you spend on that technician in a year: wage, payroll taxes, workers comp, health insurance, paid time off, truck payment, fuel, truck insurance, phone, tablet, tools, uniforms and training. Divide by the hours he actually bills, not the hours you pay him. That distinction is the whole game. If you cannot get the detail, fifty-five to sixty percent on top of the base wage is a workable placeholder.
What is a good revenue per technician for a home service company?
It depends on your trade and your department, which is why most published figures mislead. As a starting point, roughly $5,500 a week per technician to break even in commercial service and around $7,000 to earn a twenty percent margin. Confirm whether any number you are comparing against counts helpers, blends install with service, includes materials, and uses booked or collected revenue.
Should I pay technicians a bonus based on their profitability?
Only if your job costing is clean. Technicians lose trust fast when bonus numbers turn out to be wrong, and rebuilding it costs more than the plan saves. If your data holds up, pay on gross margin dollars rather than percentage, and tier the targets so your best people do not hit the top and coast.
What is a normal billable efficiency for a service technician?
Industry data puts the average around 65 percent, or 5.7 billable hours out of an 8.8 hour paid day. Shops that have never measured it run far below that, often near 40 percent. Sixty-five to seventy percent is a reasonable target, and the gap is usually a scheduling and dispatch problem rather than a technician problem.
