An interesting conversation with my plumber.
I had some plumbing work that needed to be done at my house. My long-time plumber left the company and I was introduced to a new plumber…who was good too.
It turns out he used to be an HVAC technician and switched careers. Yes, he went through the apprenticeship training again…four years of it.
I asked him why he switched. His answer – my paycheck doubled.
So…perhaps we DO need to raise hourly rates to keep people in our industry.
Here’s an easy way to calculate how much revenue a truck needs to generate at specific pay levels.
Add:
Desired net profit per hour + Overhead cost per hour + hourly wage.
Take this sum and multiply by 2080.
This is the minimum the field employee must generate to pay for him/herself.
If it is a crew of two, then do this calculation twice – one for each wage.
Add the two results together to get the revenues per truck needed.
For example, for one service technician:
· Desired net profit per hour is $75 per hour
· Overhead cost per hour is $40 per hour
· Hourly wage is $50 per hour.
· Sum = $165
· Truck revenues needed are $165*2080 = $343,200.
For a crew of two people – this is person 1:
· Desired net profit per hour is $100
· Overhead cost per hour is $30 per hour
· Hourly wage is $40 per hour
· Sum = $170
· Revenue for person 1 is $170 *2080 = $353,600
If person 2’s hourly wage is $25 per hour and everything else stays the same,
Revenue for person 2 is $155 * 2080 = $322,400
Truck revenues for the crew are: $353,600 + $322,400 = $676,000
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Ruth King is well known as “The Profitability Master.” She is passionate about helping small business owners become profitable and stay profitable. For over 40 years she has coached, trained, and helped contractors and others achieve the business growth and goals they wanted to achieve.
Contact Ruth by emailing ruthking@hvacchannel.tv.
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