Pricing field service work from its full cost and a target margin
Updated 16 October 2026
A field service price has to pay for more than the technician's wage and the parts. It also carries the payroll costs on those wages, the drive to the job, dispatch, callbacks, the truck, equipment, insurance, overhead, taxes and the profit the owner expects. A price set from a competitor's list or from habit can fill the schedule and still lose money on each job. This page lists the inputs, builds a price from them, explains margin and markup, and names the signs that a price needs work.
What a price has to cover
| Input | What it includes |
|---|---|
| Direct labor | Technician or crew wages for the time on the job. |
| Labor burden | Payroll taxes, benefits, workers' compensation and insurance on those wages. |
| Materials | Parts, supplies, stock, disposal, permits and anything bought for the job. |
| Travel time | Unbilled drive time that uses technician hours. |
| Truck cost | Fuel, maintenance, insurance, the payment or lease, and depreciation. |
| Callback allowance | The expected cost of return visits and warranty work. |
| Overhead share | Dispatch, office, management, rent, software, marketing and administration. |
| Target profit | The owner's return and the money to reinvest. |
Mr. Rooter charges a 6% license fee, 2% to the marketing fund and local marketing of $50,000 or 8% of last year's sales. Above $625,000 of sales the Mr. Rooter charges come to exactly 16%. At the Mr. Rooter system average of $2,093,531, that is $334,965, with the required local spend of $167,482 larger than the license fee of $125,612. A Mr. Rooter owner adds a 16% line to the overhead share of every price.
Building a price from cost
Add the inputs in order: direct labor, labor burden, materials, the truck and equipment share, travel time, the callback allowance, the overhead share and the target profit. The sum is the price the job needs. Each input comes from the books. Wages and burden come from payroll, materials from the job cost records, truck cost from the fleet report, and overhead from the profit and loss divided across the billed hours or jobs of a normal month.
A two-hour electrical call uses $80 of technician wages and $20 of burden. Parts cost $120, the truck share is $30, half an hour of drive time is $25, and the callback allowance is $10. That is $285 of direct cost. The overhead share adds $95 and the target profit $60. The required price is $440. The figures are an illustration.
Margin and markup
Margin is profit as a share of the price. Markup is profit as a share of the cost. The two give different numbers for the same job, and confusing them sets prices too low. To reach a target gross margin, divide direct cost by one minus the margin. A 55% markup on cost does not produce a 55% margin.
A job carries $285 of direct cost. For a 55% gross margin, the price is $285 divided by 0.45, or $633.33, which is a 122% markup on cost. A 55% markup gives a price of $441.75 and a gross margin of 35.5%. An owner who meant margin and applied markup charges $191.58 less on the job. The figures are an illustration.
Signs a price needs work
- Gross margin swings from one job type to the next with no clear reason.
- Technicians are fully booked and gross profit stays flat.
- Small jobs use a large share of dispatch and drive time.
- Materials are marked up at different rates on different jobs.
- Callbacks are handled as an operations matter and never priced.
- Competitor prices drive decisions more than the company's own costs.
- The company wins nearly every bid, or prices have not moved as wages and parts rose.
Precision Garage Door Service's average ticket runs from $1,975 at the top business down to $425 at the lowest, 4.65 times apart. The Precision Garage Door page puts the first quartile at $1,531 a job and the fourth at $902. A Precision Garage Door owner near $902 checks whether the gap comes from the job mix or from prices set below cost.
What this means for an owner
A price covers labor, burden, materials, travel, truck, callbacks, overhead and profit. A franchised owner adds the brand's fees as a share of sales. Each input comes from the books, and the sum is the required price. A target margin is reached by dividing cost by one minus the margin, which gives a higher price than the same percentage taken as markup. Prices are checked again each time wages, parts or brand fees change, and the job records show whether the new price holds its margin.
Set prices from the books
Averan builds the cost inputs from the closed books and tests prices against the target margin. The fractional CFO service page describes that work. The job costing page shows where the cost inputs come from.
Where to next
Want the books off your plate?
Book a short call, and we'll give you an expert view of your situation.
Free Consult →Also here
If you want this done for you
What happens next
Reading about it and having it done are different things. Here is exactly what happens if you want the second one.
- The call takes thirty minutesYou describe the business and where the numbers are letting you down. We give you an expert view of your situation, and what we would start with. There is no pitch deck.
- We look at the fileYou give us read access to the books as they are. We come back with what is wrong, what it will take to fix, and whether the answer is bookkeeping, controller work, or something else.
- We send a written scope and a priceIt lists what we do each month, what you get, the date it lands and the fee. We agree it before anything starts, and it does not change unless you agree.
- We take over the books and close the first monthWe set up access and systems and enter the opening balances. The first close lands on the date in the scope, and every one after it does too.