Arkansas HVACR NewsMagazine January 2020

Business

hours. Let’s look at the impact of this on your pricing.

Do you Have Sick Time Built into Your Pricing?

If you have five techs in the field and each is out sick 3 days throughout the year, that’s 15 days that you

won’t bill out. When they are there, not all of their time is billable. On average, your service techs will bill out about 50% of their time and installers will bill out about 30% of their time. If you’re not watching it, the problem is worse. For our example,

As I rarely ever get sick!

In my 35-year career, I can count the number of days I have been out sick on one hand. Last week however, I had to add one to that total. As

the owner of a growing company I struggle to leave the office but I knew it was the best thing to do. I really wasn’t being productive and I certainly didn’t want to get my team sick.

we will say these 5 team members are a mix of service and install. We will use an average of 35% non-billable. When we do that math, 15 days X 8 hours per

The NewsMagazine welcomes Bill Kinnard, President & CEO for Grandy Associates. Grandy Associates and Bill focus on training HVACR owners and their key employees financial, customer, & business services. You can contact Bill at 877-202-8891 or www.grandyassociates.com

day X 65% billable for a total of 78 billable hours that you won’t bill out.

As I was driving home, I started thinking about the conversation I have with business owner’s day in and day out. They tell me “I don’t get sick” so “I don’t need sick days.” Rare as it may be, the reality is there are going to be days that you just can’t make it in or your team can’t make it in. If we don’t account for this, even occasional absences can impact profitability. The rate you bill per hour is based on the number of hours that you think you are going to bill out this year. If you don’t have sick time for you and your team built into your pricing, it can be very costly. Sure, you don’t have to pay them their wages but that’s not the biggest part of the calculation. You also can’t bill out those

As we indicated earlier, it’s more than just the wages that you didn’t have to pay. It’s the hours you won’t bill out. You also need to take into account revenue per billable hour. This is all revenue brought in compared to all hours billed out. The average company, whether two team members or 200, will have a revenue per billable hour between $125 and $175 per hour. If we average this out at $150 per hour, then the math is $150 per hour X 78 hours we won’t bill out for a total of $11,700. That means $11,700 will not be available to help offset overhead expenses. For a recent company I worked with, this meant a one full