Paying Your Plumbers and Technicians

Whether you have licensed plumbers or technicians with experience working under your Master License, they each have a cost to the business. Hourly pay systems are the most understandable and most common. The hourly system is also one where most owners pay out the most. Meaning, their staff is overpaid based on the production revenue they bring in. Plus, if there is not enough work and you continue to pay them, it costs the business dearly.

The maximum cost to the business should be 20% of sales revenue. Take the wage paid and divide by the revenue produced to see what they really cost you. This does not include payroll burden or benefits. I see some techs cost 11% of sales and others 30% of sales. The great selling techs are supporting the lackluster counterparts.

I always liked the commission system – no games deducting materials. Any commission system with a lot of deductions is just a way to take advantage. You are not getting the percentage you think you are. I found one system that paid 35%!!! Right! After going through all the deductions, the actual pay was 16%. Don’t be fooled by the percentage. I always ask, a percentage of what?

Straight commission based on total sales price of labor and materials. It fixed my cost, and payroll would rise and fall with sales. If a tech wanted to make more money, he did more – worked a little harder, offered the customer more options, provided plumbing inspections and additional services to increase his ticket total. The tech made more and the company made more. Actually, I found it easier to manage than an hourly system. And, the employees had a greater income.

With an hourly system, where is the incentive to do more? Do you have a bonus in place based on profit margin of jobs? Or on total revenue produced? I will bet you are not even monitoring your payroll by tech at all. You are just wondering why payroll is so high.

I had a client once who converted from hourly to commission. After three weeks, he called and said it was not working. How is that? My best tech is making only half of what he was earning… Obviously, he was not the best tech. Everything should be based on facts, not feelings. The facts don’t lie.

Lastly, do you have an accurate price book for the technicians to use? One that is based on your overhead and market? One that covers coupons and discounts? And if you do, do all your technicians use the book consistently? Just more things for you to think about.

Challenges? I am here to help. I have been building successful plumbing contractors now for over 20 years. Contact me: or call 727.451.9160.

The Plumbers Coach™ Detailed personalized business coaching and training for plumbing and electrical contractors. Like us on Facebook @ThePlumbersCoach, follow us on Twitter @T_PlumbersCoach and LinkedIn @KeithGlass1. More information is available at

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