The right price for an hour of mechanical work is your fully loaded cost per billable hour, divided by one minus your target profit margin. Most shops never do that calculation; they look at what others charge and land a little below. This service replaces guesswork with a rate you built yourself, then puts guard-rails on every estimate that leaves the office.
What pricing and estimating discipline is
It is the habit of pricing from cost, consistently, on every job. It has three layers: the labour rate, the material and equipment markup, and the estimate itself, whether that is a flat-rate service price or a 40-page bid.
The worked example below is the one we start every project with. Take a shop with six field technicians, each paid $40 an hour.
| Step | Calculation | Result |
|---|---|---|
| Burdened wage | $40 + 30% for payroll costs, compensation premiums, vacation and benefits | $52.00/hr paid |
| Cost per billable hour | $52 × 2,080 paid hours ÷ 1,500 billable hours | $72.11 |
| Overhead per billable hour | $600,000 overhead ÷ 9,000 billable crew hours | $66.67 |
| Fully loaded cost | $72.11 + $66.67 | $138.78 |
| Selling rate for 10% net | $138.78 ÷ 0.90 | $154.20 |
If this shop charges $135 an hour because "that is the market", it loses about $3.78 on every hour it sells before materials help it out. Your burden percentage and overhead will differ, which is the point: we compute yours from your payroll register and statements. The burdened labour rate guide explains each line.
Who it is for
- Service and replacement shops whose rate has not been rebuilt in two or more years
- Firms that grew from three trucks to twelve and kept the old rate
- Commercial contractors whose bid template has never been reconciled with finished jobs
- Owners who are the only person allowed to price anything, because nobody else knows the rules
What is included
- Cost foundation. Burdened labour by role, billable efficiency by technician group and an overhead budget split between service and project work.
- Rate structure. Hourly, after-hours and flat-rate logic, with material and equipment markups stated as margins so nobody confuses the two.
- Estimate review. We take ten recent estimates or bids and re-price them with the new rules to show what you won, what you gave away and why.
- Guard-rails. A minimum-margin rule, a sign-off threshold for large jobs, and a short checklist covering general conditions, travel, permits, disposal and warranty allowance.
- Rollout. A one-page rate sheet, a training session for estimators and office staff, and a 60-day review.
Timeline
Weeks one and two gather payroll, job and overhead data. Weeks three and four produce the cost foundation and draft rates. Weeks five to eight cover the estimate review, guard-rails and training. Owners who want help applying the rates to live bids move to a short retainer.
How we measure results
We measure what you can see in your own books: average gross margin on new jobs compared with the prior year, the share of jobs priced below the minimum-margin rule, and quoted versus actual hours on a sample of completed work. Close rate is watched too, because a pricing change that kills your close rate is not a success. We report these monthly for the first quarter after rollout. Job-level tracking is easier once job costing is in place, which is why many owners run both.
Mistakes to avoid
- Marking up as if it were margin. A 25% markup produces a 20% margin. Write rules as margins.
- Using paid hours instead of billable hours. Drive time, shop time and callbacks are real costs that must be recovered on the hours you do bill.
- One rate for everything. Service, replacement and new construction carry different overhead and risk. They can share a cost base and still have different prices.
- Forgetting warranty and callbacks. Return visits cost labour. Hold an allowance in the price.
- Never closing the loop. An estimate that is never compared with the finished job teaches your estimators nothing.
For more on how this fits with the other services, see the services overview, or check the rates on the pricing page.
Frequently asked questions
Will higher rates lose us customers?
Some, usually the ones you were losing money on. The aim is not the highest price but a price that covers your true cost and target profit. We test the change on a segment of work first so you can see the effect before rolling it out.
Do you write our flat-rate book?
We build the pricing logic behind it: the hourly rate, task times, material markups and the rules for adjusting them. Your team, or the software you already use, holds the book itself.
How long does a pricing project take?
Most run four to eight weeks, depending on how clean your payroll and job data are. The first useful number, your real cost per billable hour, usually arrives in the second week.
Is this different for commercial bids?
The cost foundation is the same. Commercial bids add labour-unit productivity, general conditions, bonding and holdback timing, so the bid template gets more checks than a service price.