The trouble with "we charge $X an hour"
Hourly billing feels honest and simple, which is why so many trades default to it. But it quietly works against you. It penalizes the experienced tech who fixes in 30 minutes what a junior takes two hours to do — you bill less for the better outcome. It invites customers to argue about the clock instead of the value. And it completely ignores the costs that don't show up on a timesheet: the drive, the truck, the parts you stocked, the dispatcher who scheduled it.
If your hourly rate is just "what the shop down the road charges, plus a couple bucks," you don't actually know whether you're making money on a job. You're guessing.
Know what a job costs before you price it
You can't price profitably until you know your fully-loaded cost to deliver a job. That's more than labor:
- Labor — not just the wage, but the loaded cost: the tech's pay for the whole job, including the time spent driving to and from the site, not only the wrench time on-site.
- Drive — the miles and the fuel or charge to cover them. Windshield time is real cost even though no customer is watching it tick.
- Parts — at your actual cost, and only if they actually made it onto the job. Uncharged parts are pure margin leak.
- Overhead allocation — the slice of dispatch, software, insurance, and the building that every job has to carry.
Most operations have never added these up per job, so they price off gut feel and find out at year-end whether it worked. It doesn't have to be that opaque. Hosting Field rolls up a per-job trip cost automatically: fuel plus drive miles plus labor cost, where labor is computed from the tech's hourly rate times the en-route-to-complete minutes. Set a per-tech hourly rate once and every job tells you what it cost to deliver. That number is the floor you price above.
Move toward flat-rate pricing
Once you know your cost per job type, flat-rate pricing beats hourly on almost every axis:
- The price is the price. The customer agrees up front, with no anxious clock-watching and no surprise bill — the single biggest source of disputes, as we covered in customer communication for field visits.
- Efficiency rewards you. When the senior tech finishes fast, you keep the margin instead of giving it back. That's the right incentive.
- It's quotable on-site. A tech with a flat-rate book can give a firm number on the spot instead of "we'll see how long it takes."
Build your flat rates from your cost data: take the loaded cost of a job type, add your target margin, and round to a clean number. Revisit the book as costs move.
Don't underprice the recurring stuff
Maintenance agreements are the highest-margin revenue you have, but only if you price the visit to cover its real cost and the priority-service promise you're making. Price a maintenance plan like a loss leader and you'll resent every visit. Price it from the cost rollup and it becomes the engine it's meant to be — see building a preventive maintenance program that sells.
Watch the right number
Stop watching total revenue and start watching margin per job and revenue per technician per day. Total revenue hides a business that's busy and broke. When you can see what each job actually cleared, you'll spot the job types that quietly lose money — and either reprice them or stop selling them. Pricing isn't a one-time exercise. Cost your jobs, price above the floor, and review the book every quarter as fuel, wages, and parts move under you.