What Are Your Daily Revenue Goals for A Service Department?

A Contractor University Member recently utilized the Ask-The-Expert Q&A feature within the member dashboard by submitting the following question and received the response below.

Contractor Question:

“What Are Your Daily Revenue Goals for A Service Department?”

Contractor University Expert Response:

“Department revenue goals are usually forecast during strategic planning in early November of the prior year for all classes of revenue. They can be based on the number of technicians you have and what percentage of residential versus commercial work you anticipate performing.

Here is an example of what that can look like.

First, we need to make a few assumptions. The first is the expectation that revenue will equal five times what the W-2 wages are per technician when completing demand service and scheduled maintenance.

This excludes W-2 commission for installs as a result of a “flip” to a salesperson and system sales if you happen to use selling technicians. You just want to focus on service and maintenance revenue and the pay associated with those services.

If you pay a technician $30 per hour and he works eight hours a day, you’ve paid him $240 for the day.

$240 × 5 = $1,200

If your technician ran four calls that day, the average ticket must be $300. If the technician ran two calls, the average ticket would have to be $600.

The point is that his daily revenue goal would be $1,200.

If the technician makes $25 per hour, then his revenue goal would be $1,000 per day.

Some months your folks can hit this number easily. Some months they will struggle, especially if they are running a lot of maintenance calls.

If you have four technicians and the average pay between those technicians is $29.14, the formula works out like this:

$29.14 × 8 hours = $233.12

$233.12 × 4 technicians = $932.48

$932.48 × 5 = $4,662.40 in daily service and maintenance revenue

Multiply that by 22 working days in a month and you have a monthly revenue goal of approximately $102,572.80.

Annualized, that equates to a service and maintenance revenue goal of approximately $1,230,873.60.

Of course, each month will have a different revenue goal depending on where you are in the country. In Oregon, for example, revenue may be spread a little more evenly throughout the year than it would be for a contractor in South Texas.

If you find your technicians are not hitting that five-times-pay revenue mark, I like to diagnose what I call the “3 Ps”: Pay, Price and Process.

Most contractors struggle to hit the five-times mark. With coaching and a few subtle changes, you can improve your service and maintenance offering process and begin moving that number in the right direction.”

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