Guides
Handyman services: logging paid hours to find the gap
Log the hours behind your handyman services, split paid from billed, sort the gap by cause, and turn the recovery ratio into a rate that holds its margin.
What to take away
- A time log shows what you pay for and what you bill. The ratio between the two is the recovery ratio, and almost nobody measures it before setting a rate.
- Log every paid hour, including driving, supplier trips, quote visits that did not convert, restocking and phone time.
- Count as billed only the hours that appeared on an invoice a customer paid.
- Tag each unbilled block by cause, because the cause decides the fix: routing, stocking or qualification.
- Repeat the log when the shape of the work changes, not when the calendar turns over.
Why log the hours instead of estimating them
A log beats a guess because memory flatters. An owner who estimates billed hours recalls the good jobs and forgets the supplier trip, the quote visit that went nowhere and the half hour restocking on Friday. A log written as the day happens catches all of them.
The ratio you are after is billed hours divided by paid hours, r = Hb / Hp. Define the inputs for one technician, or for yourself, over a period that includes a slow week, and use the same period for every input.
Pricing variables and formulas
- WWage or owner draw
- BuPayroll burden
- OvOverhead allocated
- HpPaid hours
W is wages or an owner-labor allowance, Bu is labor burden beyond wages, Ov is operating overhead allocated to the technician, Hp is all paid hours, and Hb is billed hours on invoices customers paid.
The log: four columns
The log needs only four columns, filled in at each change of activity. A sheet completed on Friday night from memory is the estimate again, only with columns.
| Column | What to write | Why it earns its place |
|---|---|---|
| Start and stop | Clock times | Durations remembered later drift |
| Activity | A few words, such as "supplier run" | Lets you sort blocks afterwards |
| Paid and billed | Did the business pay for it, and will it reach an invoice | Gives you Hp and Hb directly |
| Cause tag | Drive, supplier, quote, restock or phone | Tells you where the fix lives |
Keep the log over a period that includes a quiet stretch. Measuring across your busiest fortnight produces a flattering r and a rate that fails the rest of the year.
Sorting each block into paid and billed
Count every paid hour into Hp. If the business paid for the time, it belongs there, whether or not it earned anything on the day. The measure fails the moment a convenient hour is left out.
Counting paid vs billed hours
- Driving between jobs
- Supplier trip
- Unconverted quote visit
- Friday restocking
- Phone qualification time
- Invoiced hours only for Hb
- Driving between jobs.
- The supplier trip.
- The quote visit that did not convert.
- The half hour restocking on Friday.
- Time on the phone qualifying a caller.
All of it is paid, all of it is consumed, and none of it is billed. Hb is stricter: only hours that appeared on an invoice a customer paid, not hours worked.
Driving between jobs belongs in Hp. The Department of Labor's hours worked fact sheet states that travel from job site to job site during the workday is work time. For an owner the same rule applies in practice once your own time carries a wage.
Reading the gap by cause
Once Hp and Hb sit side by side, sort the gap by its tag. A price rise fixes none of the causes, and each one is fixed in a different place.
| Cause tag | What the log shows | Where the fix lives |
|---|---|---|
| Drive | Long runs between jobs | Routing and service area |
| Supplier | Mid-job runs for a missing part | Stocking and consumable minimums |
| Quote | Time on site with no invoice after it | Qualification on the phone |
| Restock, phone | Small blocks that never reach an invoice | Weekly routine, call script |
Supplier trips are usually solvable through the opening equipment checklist and better consumable minimums. Unconverted quote visits are a qualification problem, fixed on the phone rather than at the door.
A business that fixes drive time raises r without charging anyone more. A business that only raises its rate leaves every leak open and gets busier without getting better paid.
From the logged ratio to a rate
The cost of a paid hour is Ch = (W + Bu + Ov) / Hp. The rate required for each billed hour before margin is Ch divided by the share of paid hours recovered as billed hours.
Let R0 be that rate: R0 = Ch / r = (W + Bu + Ov) / Hb.
Rate derivation with margin
- Cost of paid hour: Ch = (W + Bu + Ov) / Hp
- Recovery ratio: r = Hb / Hp
- Base rate: Rate = Ch / r
- Margin rate: Rate = Ch / (r x (1 - m))
Let m be the intended margin, expressed as a fraction of the final rate. The billed-hour rate that earns it is R = R0 / (1 - m) = Ch / [r × (1 - m)]. This treats margin as a share of revenue, not a markup on cost.
The rate moves sharply with r. If the same costs and target margin are spread across fewer billed hours, r falls and the required rate rises. The result depends on your own inputs, so it is not a market rate.
The work and wage did not change, yet price must move anyway. An owner who has not logged r sees an unexplained profit decline, not a pricing input. For the other side of the same arithmetic, see break-even in jobs per week.
Three ways the log misleads
- Counting hours worked instead of hours invoiced. Hb takes only the hours that appeared on an invoice a customer paid, so a day of unpaid return visits adds nothing to it.
- Logging the busiest fortnight. It produces a flattering r, and the rate built on it fails in the quiet months.
- Treating the owner's hours as free. If W for the owner is zero, every service looks profitable and no comparison between services means anything. Put a number on your own time even when nobody pays it to you.
When to run the log again
Ch and r drift for different reasons. Ch moves when overhead moves: a new vehicle payment, an insurance renewal, a software subscription that quietly grew. Recalculate it when a fixed cost changes rather than annually.
The ratio r moves when the work's shape moves: a wider service area, a service that needs more sourcing, a new technician who is still slow. Adding a person changes it twice, first during training and again once they are up to speed.
Keep the log as job-level records captured at the time. IRS Publication 583 states that everyone in business must keep records, and the practical addition for this trade is a drive time field and a service family tag on every job.
Is the resulting rate fair?
Two tests, and neither involves a published benchmark. Fair means the price covers the real cost of delivering the work and leaves a return you could defend out loud. The structural argument for the minimum charge is in the pricing overview.
Two fairness tests
Can you explain the price without changing your account?
Price is fair
Presentation problem
The first test is whether you can explain the price to the customer without changing your account of it. If the explanation depends on concealing a required charge or presenting it as optional, the problem is the presentation, not the price.
The second is that the price survives a bad week. A rate that only works when the calendar is full is a rate that fails in the months you most need it to hold.
Common questions
What is a reasonable recovery ratio?
There is no published figure worth repeating, and any number you read is a number for a different business in a different geography. What matters is your own, measured over a representative period, and whether it is rising or falling.
Does this apply to fixed price work?
Yes, with one extra step. Estimate the hours the job will take, price them at the derived rate, then check the estimate against what similar jobs actually took. Fixed pricing is the same arithmetic with your estimating error added on top.
Should every service carry the same margin?
Not necessarily. Work that ties up scarce capacity or requires kit that would otherwise sit idle can reasonably carry more. Work that fills a gap in the day can carry less. What should not vary is whether the cost of the hour has been covered.
