5.4 Pricing Service Labor Rate

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Pricing Service Labor Rate - Service Pricing

Proper service pricing is one of the most critical areas for a company to create an overall profit of 15% to 20%. The service business is generally a complicated set of processes and has many areas where profit can slip away. A properly set labor rate is essential to ensuring the service department is capable of producing its gross profit dollars and ultimately profitability. A properly set service labor rate also helps us sell service agreements when they are combined in a set strategy.

Service Department Street Labor Rate Pricing - Set the Rate Correctly

Learn how a labor rate needs to be viewed and ultimately priced based on a cost of doing business in service. So many companies in contracting are improperly priced as a result of not understanding the cost structures of service. Still others blend in costs from other business segments and muddy the waters of accountability. This video explores the details you will need and explains the template for creating a proper street labor rate.

Run Time: 24:07

Pricing the Company Service Labor Rate

Creating the service price for labor is a key element to successful operations, paying technicians, and profitability. Learn how in the article and use the tools and templates to execute.

Pricing Service Labor Rate Template and Tools

Utilize the tool available here to base your street labor rate on efficiency, productivity, and your wage costs. The prices will be based off KPI's and will organize to produce a target margin of 60-65% and a profit target of 15-20% EBIT. This tool combines a service agreement discount with an efficiency planner and profit calculator.

Pricing WHAT-IF Calculator - What if I raise My Prices?

This template is designed to allow a contractor to analyze the changes in the profitability by reviewing what price changes do, increase or decrease in customer attrition, and costs all in one model. The tool is built to allow a contractor to have a reason based discussion about price changes and the effects on the company, the labor, and the overall profitability.