Tracking productivity is a task that makes many integrators ask, “Why bother?” but there’s one simple reason it matters:
It measures the efficiency of your company’s production process and, if it fails to meet a standard and improve over time, can lead to…
- Limited potential gains and wages
- Decreased company profits
- Lowered investability
In short, decreased productivity negatively affects your blended gross margin, the #1 metric to manage the health of your CI business.
So how productive should your techs be? Use these 3 metrics:
- Set your billable rate for technicians at 4–5x the average technician wage. This may seem high, but a well-managed team should be able to achieve a 60%+ labor margin with that markup.
- Aim for 50% financial efficiency. As a general rule, you should bill 20 hours (at the 5x price markup) for every 40 hours paid. Efficiency is both speed of work and hours estimated versus actual.
- Work towards 60% labor gross margin (the actual financial profit margin difference between what is paid in payroll versus what is collected in labor revenue for the same time period).
To achieve maximum productivity and create subconscious positive change, make these metrics visible, review them monthly, reward improvements, and, most importantly, measure, measure, before you take action.
If you want to go deeper into actionable strategies to improve tech productivity, watch the replay of our CI Business Mastery class here.
Matt & the team