The financial challenges behind the work
- Inconsistent pricing between service callsWhen similar jobs are priced differently, some quietly lose money and it’s hard to tell which.
- Underestimated labor burdenPayroll taxes, benefits, insurance and vehicles make each plumber hour cost far more than the wage.
- Untracked materialsParts pulled from truck stock that never reach an invoice are pure lost margin.
- Emergency calls with insufficient marginsAfter-hours work costs more to deliver. If pricing doesn’t reflect that, busy nights don’t add profit.
- Technician downtimePaid hours spent driving, waiting or at the shop raise the cost of every billable hour.
- Hiring without financial projectionsA new plumber adds payroll, a truck and insurance immediately, while the revenue builds over time.
The numbers that matter
These are the measures that tell plumbing company owners the most about how the business is really doing.
Gross profit per service call
What it measures: What each call earns after labor, parts and materials.
Why it matters: Reveals which kinds of calls are worth more of your capacity.
Revenue per billable technician hour
What it measures: Revenue generated for each hour actually billed to a customer.
Why it matters: Shows whether pricing keeps pace with your true labor cost.
Labor burden
What it measures: Employer taxes, benefits, insurance and other costs added on top of wages.
Why it matters: Without it, rates are built on a cost that’s too low.
Average service ticket
What it measures: Average revenue per completed call.
Why it matters: A falling average often signals discounting or missed billing.
Callback costs
What it measures: Labor and parts spent returning to completed work.
Why it matters: Shows the true cost of rework and where quality or training needs attention.
Cash required to support additional employees
What it measures: Payroll, vehicle and equipment costs that come before a new hire’s revenue.
Why it matters: Tells you whether you can afford the ramp-up period.
Can your business afford another plumber?
Hypothetical illustration—not a client result and not a guarantee of results.
| Illustrative annual employment cost | $85,000 |
|---|---|
| Additional annual vehicle, tools and related costs | $15,000 |
| Total additional annual cost | $100,000 |
| Assumed annual revenue from the added plumber | $200,000 |
| Materials and other direct non-labor costs | $50,000 |
| Illustrative contribution before shared overhead | $50,000 |
$200,000 − $100,000 − $50,000 = $50,000 contribution before shared overhead.
All figures are hypothetical. Actual results depend on pricing, capacity, costs and how expenses are classified.
The business lesson
In this illustration the hire covers its own costs and contributes $50,000 toward overhead and profit, but only once the plumber is fully busy. Hiring decisions should weigh the added revenue, direct costs, the cash needed during the ramp-up, and whether you have the work to keep another plumber billable.
How AM Financial helps
Reliable financial reporting can help you understand service costs, pricing, labor efficiency, and the financial implications of adding employees or equipment.
- Job-profitability reporting: See margin by type of work and make sure materials, including parts pulled from truck stock, reach the right job.
- CFO services: Financial advisory on pricing and hiring decisions, tested against your real costs with a budget and forecast.
- Bookkeeping for contractors: Keep labor, materials and vehicle costs in the right categories so your cost per billable hour is reliable.
- Packages and pricing: see which core package includes the reporting and planning you need.
Monthly bookkeeping is included in every package. Job-profitability reporting and a monthly cash outlook are part of Profit & Cash Flow and above. Budgeting, forecasting and decision analysis are part of Strategic CFO Partnership. Cleanup, initial job-costing setup and financial operations support (such as payroll, invoicing or advanced construction reporting) are scoped separately. Your written proposal spells out exactly what’s included.
What working together looks like
What we review
To build an accurate picture of the business, we typically review:
- Invoices and work orders by type of call
- Payroll reports and technician hours
- Parts and materials purchases, including truck stock
- Vehicle and equipment costs
We work from your accounting software, bank and credit card activity, and the records your team already produces. Documents are shared through our secure client portal or a shared folder, and you don’t have to change field or estimating software to get started.
Reporting you may receive
Depending on your package and agreed scope, reporting for your business can include:
- Margin by work type: service and repair, remodel and new construction
- Materials used by job, including parts pulled from truck stock
- Cost per billable hour, including overhead, as a basis for pricing
How it supports your decisions
With reliable numbers, you can set rates that cover the true cost of each hour, see whether materials are being billed, and decide when another plumber or truck makes financial sense. We walk through the numbers with you in plain English at your agreed review meetings.
Questions plumbing company owners ask
How much revenue should a plumbing technician generate?
Enough to cover their fully burdened cost, their share of overhead, and your profit target. That number is specific to your business, so it’s best calculated from your own labor cost, overhead and billable hours rather than an industry average.
How do I know whether I can afford another employee?
Compare the full cost of the hire, including taxes, insurance, a vehicle and tools, with the gross profit their added work would produce, and check your cash flow forecast for the months it takes them to get busy.
Why is revenue increasing while profit stays flat?
Usually costs are growing as fast as revenue: more labor and drive time, materials not fully billed, discounts, or new overhead. Margin by type of work and labor as a percentage of revenue show where the growth is going.
What should I track for each service call?
The type of work, labor hours, parts and materials used, the price charged, and any callback. A consistent habit of recording parts on each work order is what makes call-level profitability reliable.
How do I price plumbing services to cover labor and overhead?
Start with labor cost per billable hour, add overhead per billable hour, then the profit you need. Materials should carry their own markup. Our hourly rate calculator walks through the steps.