Stop Paying Hourly

Most service business owners treat payroll like a fixed utility bill. You have your team, they work the hours they work, and at the end of the month, you write the check and hope there’s enough left over for profit.

When that labor percentage starts creeping up — say from a healthy 18% to a bloated 24% — the traditional reaction is a tightening of the screws. You hold a morning meeting to talk about overtime. You hover over the GPS tracking. You start looking at your roster, wondering who you have to let go just to keep the lights on.

But here is the truth I’ve learned from years working with business owners: You don’t have a headcount problem. You have an incentive problem.

If your installers are paid a flat hourly rate, they are effectively incentivized to be slow. If a job should take eight hours but they take twelve, they get paid more.

To fix this, you need to change the game. Here’s how…

The solution is the Labor Floor. It’s a performance-pay hybrid that provides the security of an hourly wage (the Floor) but offers a massive upside for efficiency (the Ceiling).

This isn't about paying people less, it’s about paying for outcomes instead of attendance. By shifting your structure, you can realistically shave a few percent off your payroll costs while actually increasing the take-home pay of your best performers.

Here is how you build it:

Let’s say you have a lead installer making $35/hour. In the old model, he makes $35 whether he’s hustling or dragging his feet.

In the Labor Floor model, you might set his base rate at $25/hour. This is his guaranteed floor, so they know that’s the least they can take home. But, to get to that $35/hour (and beyond to $40 or $45), he has to hit specific KPIs:

When an installer beats the labor budget, they’ve created extra money for the business. Instead of pocketing all of that as the owner, you split it.

If a job was budgeted for 10 hours and the crew finishes in 8, they receive a percentage of those saved hours as a bonus. Suddenly, they aren't looking for ways to milk the clock, they’re looking for ways to finish the job efficiently.

This is the non-negotiable safety valve. You can’t pay an efficiency bonus if there is a callback.

If a crew rushes a water heater install and forgets an essential fitting, they haven't saved you money, they’ve cost you time and money in return trips. The quality gate ensures that efficiency never replaces done right.

When you implement this, something magical happens to your P&L.

In a flat hourly model, your labor cost is a variable that usually moves in one direction: up. In the Labor Floor model, your labor cost becomes a fixed percentage of revenue.

By tying pay to the labor budget, you effectively cap your labor spend. If your target is 20% labor, and your incentive plan is built around that 20%, you stop the 4–5% drift caused by unearned overtime.

Of course, the math can get tricky. You need to ensure the base plus the bonus doesn't exceed your target margins.

ShareWillow was built specifically to handle this complexity. It plugs into your existing job tracking and calculates these incentives automatically, so you don't need a PhD in Excel just to pay your team. By using ShareWillow, you can calculate incentive pay that’s tied directly to the health of your balance sheet.

The biggest fear owners have is that your techs probably don’t love change. 

That’s why we recommend a Shadow Period.

Before you announce a single thing to the team, run the numbers in the background for 30 days.

Take your last month of ServiceTitan (or whatever CRM you use) data. Apply the Labor Floor math. See what your top performers would have made versus what your bottom performers made. Usually, you’ll find that your A-players would have seen a pay bump, while the C-players (the ones costing you that 5% in payroll) would have seen a dip.

So when you roll it out to the team, you frame it as a raise for the best and a target to aim at for the rest of your crew.

You can’t grow a service business on the back of hope. You can’t hope people work hard, and you can’t hope the payroll doesn't eat your margin.

The Labor Floor Framework replaces hope with math. It protects your downside, rewards your best people, and systematically carves that 5% of waste out of your business.

If you're ready to stop guessing and start scaling, it's time to design an incentive plan that actually works.