HVAC business owners are encouraged to track a number of KPIs (Key Performance Indicators).
These metrics help them understand how their business is performing, whether they’re meeting KPI goals, and what they might be able to do to grow future profits.
Your business can choose as many KPIs to track as you wish, but some insights are vital to the HVAC industry. They’ll tell you where you’re spending your money, where your customers are coming from, and much more.
In this series, we’ve covered several industry-specific KPIs already. So, in today’s article, we’ll be discussing the HVAC service technician labor rate. Let’s get started…
What’s the HVAC Service Technician Labor Rate?
While your business might be charging flat rates, this should always be based on an estimated hourly rate.
Unfortunately, many companies choose their flat fee based on a perceived industry-standard or what sounds like a fair rate to them. When they start tracking what their technicians make per hour, however, they could be in for a surprise.
How to Track Service Technician Labor Rate
If you’re not sure how your hourly rate for service technicians works out, this HVAC KPI will start helping you keep track. To calculate the hourly rate, you first need to collect vital information:
- What is the revenue of the average service ticket?
- How many services can your technicians complete in a day?
- How long does it take to perform a specific install?
You can roughly calculate your current service technician labor rate by dividing the profit of a project by the hours it took to complete. Then, subtract any costs from that technician’s rate (overhead costs, expenses).
This number might quickly show you whether a substantial hourly rate remains. For example, if the flat fee is high and the task can be completed promptly, your labor rate might be increased.
If, however, lessons often take longer than the flat fee credits them with, your hourly rate might suffer substantially and means you lose profits on man-hours.
Setting Measurable Objectives for Your Labor Rates
By keeping an eye on your hourly labor rates, you can track whether you are making good profits or losses on certain services.
With this information, you’ll be able to recalculate your flat fees for services that are consistently falling below the desired rate.
Remember, your service technician labor rate should be based on your highest-paid technician.
Keep in mind taxes, benefits, overheads, and more. Most importantly, you need to decide on your desired profit per hour of labor and calculate this on top of your expenses.
Use our hourly rate calculator and flat rate calculator to get an estimation of your ideal rates.
Set Fair Hourly Rates for Your Technicians and Stop Selling Yourself Short
We hope you learned something new about HVAC service technician labor rates for your HVAC business. This is just one of many KPIs that your business could track to grow profits and better predict shortcomings.
To learn more about growing your HVAC business, get in touch and ask about our free demos!