Written for plumbers, electricians, water heater and heat pump installers, drain and sewer shops, and small multi-trade firms serving homeowners and property managers, with Texas, California, Florida and New York in detail.
The short version
- Count the hours your techs actually sell.Efficiency is billable hours over paid hours. Drive time, supply house runs, callbacks and training are paid but never sold.
- Build your hourly rate from your costs.Break-even is burdened wage over efficiency, plus overhead over billable hours. For example, divide it by 0.80 for a 20% net margin.
- Price every task from that rate.Task hours times your rate, plus materials times your markup factor. Reprice the book whenever wages, overhead or supply prices move.
It is tempting to set flat rates by copying a competitor's book or picking a number that felt right. The problem is the hours your techs are paid for but never sell: drive time, supply house runs, callbacks and training. Build the hourly rate from billable hours, then build every task price from that rate.
The hourly rate
Cost per billable hour is the burdened wage divided by efficiency, plus overhead divided by billable hours. The burdened wage adds payroll taxes, workers' comp and benefits to the hourly wage. Efficiency is billable hours over paid hours, and it is the lever to work on.
| Labor per billable hour: $41.60 burdened wage / 0.60 efficiency | $69.33 |
| Overhead per billable hour: $780,000 / 7,488 billable hours | $104.17 |
| Break-even per billable hour | $173.50 |
| Hourly rate for a 20% net margin | $216.88 |
$173.50 / 0.80Six techs at $32.00 an hour with a 30% burden ($41.60), 2,080 paid hours each (12,480 in all) and 60% efficiency give 7,488 billable hours. The $780,000 of overhead covers trucks, fuel, insurance, office staff, software, rent, marketing and the owner's salary. At the unrounded rate, 7,488 hours bring in $1,623,960 against $519,168 of labor and $780,000 of overhead: $324,792 profit, 20.0%. Margin on marked-up materials comes on top.
From the hourly rate to the task price
A flat-rate task price is the task hours times the hourly rate, plus materials times your material markup factor.
| Labor: 3.5 hours x $216.88 | $759.08 |
| Materials: $850 x 1.5 markup factor | $1,275 |
| Flat-rate price | $2,034.08 |
| Set in the price book at | $2,034 |
$2,034.08, roundedRecheck the book whenever wages, overhead or supply house prices move.
Keep margin and markup apart: margin is profit over price, markup is profit over cost. For example, a 25% markup on cost is only a 20% margin on price, and a 1.5 material markup factor is a 50% markup but a 33% margin.
Two shops paying the same wages can need very different rates, because efficiency and overhead decide what each sold hour has to carry.
Memberships and the trip charge
Price memberships from the labor cost per billable hour, and remember that what is left still has to cover overhead.
| Annual visit: 1.5 hours at $69.33 | $104 |
| Parts | $15 |
| Left to cover overhead and profit (50.4%), before the repair discount | $121 |
| Membership income a year | $240 |
| From 500 members | $60,500 |
500 x $121.00Steady revenue in the slow months, and first call on replacements.
A membership that promises free repairs may be a regulated product
Visits, priority dispatch and discounts are service agreements. A fixed-fee promise to repair a failed system may be a regulated service contract or home warranty: Texas residential service-contract providers register under chapter 1304 and keep required financial security, California home protection needs Department of Insurance licensing, Florida home warranties need OIR licensing, and New York service contracts need DFS registration. Bill repairs at the member discount unless you sell a registered or licensed provider's product. As of Oct 2026.
Tex. Occ. Code ch. 1304; Cal. Ins. Code sec. 12740; Fla. Stat. ch. 634, part II; N.Y. Ins. Law art. 79
Auto-renewing memberships
In California, an auto-renewing membership needs the customer's express consent and an annual reminder, and a member who joined online must be able to cancel online. New York has its own auto-renewal law, and Florida has notice rules for service contracts. The FTC click-to-cancel rule was vacated in July 2025, but ROSCA still requires clear terms, express consent and simple online cancellation of a recurring charge. Noncompliant charges risk refunds and unfair and deceptive practices claims. As of Oct 2026.
Cal. Bus. and Prof. Code secs. 17600 to 17606; N.Y. Gen. Bus. Law sec. 527-a; 15 U.S.C. secs. 8401 to 8405
State your trip charge before dispatch and say what it covers. If your policy is to credit it against approved work, put that policy in writing.
Track your own average ticket, close rate on options, callbacks, efficiency, membership count and renewal rate. An industry benchmark is only worth using with a named, dated source behind it.
Asked in Greymill
Labor: $41.60 burdened wage / 0.60 efficiency = about $69.33
Overhead: $780,000 / 7,488 billable hours = about $104.17
Break-even: $173.50
For 20% net: $173.50 / 0.80 = about $216.88
Burdened wage is $32 plus 30% for payroll taxes, workers' comp and benefits. Billable hours are 6 techs x 2,080 paid hours x 60%.
Why the copied book fails: it carries another shop's efficiency and overhead. Yours decide what each sold hour must carry, including paid hours you never sell: drive time, supply house runs, callbacks, training.
Task prices: hours x rate, plus parts x markup factor. For example, a 3.5-hour water heater swap with $850 of parts at a 1.5 markup factor is about $2,034.
Reprice whenever wages or supply prices move. Want me to reprice your ten busiest tasks at $216.88?
Ask it about your own business
Paste this into Greymill with your own figures, and Cash & Profit works it through for your business.
I run a plumbing, heating or electrical business in [state], in the US. I have [number] techs at [hourly wage] with a burden of about [percentage], each paid around [hours] a year, and I think we sell [percentage] of paid hours. Overhead is about [amount] a year and I want a [target] net margin. Work out my hourly rate, then reprice these tasks in my book: [task, hours, materials cost, markup factor].
More for plumbing, heating and electrical in the US
- Service pays at the truck, warranty companies and GCs pay late: can I afford another truck?Service work pays on the spot, but installs, home warranty companies, property managers and commercial pay apps do not, so plan cash by the week and test any new loan against what is left.Read the lesson
- Do I charge sales tax on this repair? Why the same job is taxable in one state and not the nextWhether a plumbing or electrical job carries sales tax turns on the state and on whether it repairs or improves real property, and a wrong guess can build up for years.Read the lesson
- Who can pull the permit, and what happens if a helper runs the gas line?The license holder of record carries the work, so who does the job, who pulls the permit and who supervises decide whether you keep the license and can enforce the contract.Read the lesson
- How much can I take up front on a home job, and when can the customer cancel?Down payment limits, cancellation rights and required contract wording all change by state, and getting them wrong can mean refunds, misdemeanor charges or license discipline.Read the lesson
- I pay techs flat rate and helpers on 1099s: am I building up back pay?Flat-rate and commission pay, drive time, on-call and 1099 helpers are where shops in this trade build up back pay without noticing.Read the lesson
- Selling the replacement at the kitchen table: options, financing and what I can claimPresent replacements as clear priced options with honest financing, and know the rules on dealer fees, fear selling and reviews before you start.Read the lesson
- A customer says my work flooded their house months later: what do I do?When a leak or failure is blamed on your work, report it, keep the evidence and watch the deadline on any defect notice, or you can lose the right to fix it first.Read the lesson
Open the interactive lesson · Every plumbing, heating and electrical lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- Enrolled HB1560 (2021) sections 4.10 and 6.02 repeal and commence; section 4.12 legacy-security transition ended September 1, 2026 (Memberships, service contracts, auto-renewal and financing)
- Ins. Code sec. 12740 (Memberships, service contracts, auto-renewal and financing)
- ch. 634 part II (Memberships, service contracts, auto-renewal and financing)
- Ins. Law art. 79 (Memberships, service contracts, auto-renewal and financing)
- secs. 17600 to 17606 (Memberships, service contracts, auto-renewal and financing)
- 15 U.S.C. secs. 8401 to 8405 (Memberships, service contracts, auto-renewal and financing)
- sec. 7159.5 (Hard cases: money, CONTRACTS and people)
- Texas Occ. Code ch. 1304; TDLR provider registration and financial security (Hard cases: money, CONTRACTS and people)
- 12 C.F.R. 1026.4 (Hard cases: money, CONTRACTS and people)
- Lab. Code secs. 226.2, 510 (Hard cases: money, CONTRACTS and people)