Retail appliance prices have increased around 20 percent because like everything else wholesale appliances prices have increased three to five times over the last couple of years.
How about appliance repair companies? Have you increased your service rates to cover the soaring costs of gas and parts? Or did you increase your service rates enough?
Here are calculation steps to set your service rates based on your cost of doing business. The cost to run your truck fleet is similar to a fixed cost of an appliance. Service rates are based on formulas like this:
Service rates = (hourly tech wage + department overhead + profit) x efficiency
· Production hours available to resell
· From 365 days, subtract all the time off you allow your techs
· Multiply number of days & hours worked per day
· Full-time technicians in your company.
· Multiply number of techs by hours available to work
· Average hourly labor cost
· Convert wages to an hourly rate and find the average technician wage.
· Average gross labor cost = average hourly rate
· Average hourly labor cost = average gross labor cost
· Total expenses to run service business (not including labor)
With business and technician overhead, there’s a lot to include; combine rent, utilities, office equipment and supplies, phone, internet, insurance, taxes, management, admin support, uniforms, trucks, cell phone, licenses, subscriptions.
· Parts income per hour
· Part sales – parts costs/available production hours.
· Desired profit margin from service operations.
Efficiency = completed calls per day/technician hours paid daily.
Access this free online calculator www.codbcalculator.com to get actual results. This tool provides an average hourly rate needed in your business and you can modify trip fees and labor codes to get your average service call.
Service operations should be profitable. If number is high, you’ll need to increase efficiency or decrease expenses.
