Sell Time Twice

I’ve been on a lot of demo calls lately (yesterday alone I had 10). And when I ask business owners what keeps them up at night, the answer has shifted.

It used to be about getting leads. Then it was about close rates.

But right now? It’s labor efficiency.

I hear the same frustration over and over:

When a job rolls over, it messes up the entire schedule. It kills momentum. And in a market where employees have a lot of leverage, you can’t just fire everyone and start over.

So, how do you fix it?

You have to stop looking at hours worked and start looking at Billable Efficiency.

If you look at how most private equity roll-ups evaluate home service companies, they aren’t just looking at top-line revenue. They are looking at billable efficiency as the single most important leading indicator of gross margin percentage.

Billable Efficiency is simple: Actual Hours vs. Expected Hours.

If you quote a job for 20 hours, that is the expected time. If your tech takes 25 hours, you are losing money. If your tech takes 15 hours, you have unlocked the holy grail of service businesses: selling time twice.

Most owners I talk to are conceptually on board with performance-based pay, but they get stuck on the "nuts and bolts" of the math. They worry that paying a bonus will hurt their bottom line.

But let’s look at the math of efficiency.

Imagine a job is bid for 20 hours.

Scenario A (Hourly Pay): Your tech is paid $20/hour. They have no incentive to hurry, so the job takes the full 20 hours (or bleeds into 22).

Result: You pay for 20 hours of labor. You get revenue for 20 hours. You have 0 hours left to sell.

Scenario B (Efficiency Mindset): The tech is motivated. They finish that same 20-hour job in 15 hours.

Result: You still get the revenue for 20 hours (because that’s what you bid). You only "used" 15 hours of inventory. You now have 5 hours of labor capacity back. You can take those 5 hours and sell them to another customer or to get ahead on the next job.

You are paying for the labor once, but you are effectively selling the hours twice.

The problem with the hourly model is that the incentive structure is inverted. If a tech works slower, they get paid the same (or more, if they hit overtime). Why would they rush to close out a ticket?

To fix this, you have to share the win.

When owners ask me how much they should pay to get this efficiency, my recommendation is to target a 30% bonus on top of their base.

If a tech makes $20/hour, you should build a bonus structure where they can earn an additional $6/hour if they hit their efficiency targets.

Now, I know what you’re thinking. "Ryan, why would I pay $26/hour when I could pay $20?"

Because you are happy to pay $26/hour if it gets you an extra 10 hours of billable capacity a week.

That extra $6/hour is a fraction of the profit you generate by getting the job done faster and freeing up the schedule for the next call.

You can buy the best software in the world to route your trucks, but if the guy in the truck doesn't care about efficiency, your software won't save you.

This isn't about pushing the team to work harder. It's about alignment.

When you clarify types of incentives and show a tech exactly how they can earn that extra 30%, their behavior changes overnight. They stop letting jobs roll over. They stop idling in the truck. They start treating your time like their money… because it is.

The market is tight. Leads are expensive. You cannot afford to have 20-hour jobs taking 25 hours.

Focus on billable efficiency. Align your team's paycheck with that metric. When you do that, you stop managing people and start managing a system that prints profit.

Want to discuss billable efficiency and how incentives can help boost your team’s productivity? Grab a time in my calendar here.