A Clear Results client, a foundation repair and waterproofing company, cut direct labor from 15.8% to 11.6% of revenue by scheduling jobs by the hour. Margin also leaks through crew pay, materials, and discounts. This guide covers 4 ways to stop those leaks and the system Clear Results installs for each.
| # | Way | The system Clear Results installs |
|---|---|---|
| 1 | Give every job an hours budget | An hours budget per job, with truck prep moved to the afternoon before |
| 2 | Tie crew chief pay to a labor target | An incentive plan with a lower base percent and a labor review against the target |
| 3 | Set a materials target for the people who order | A target percent with a bonus attached, reviewed year to date |
| 4 | Set a discount limit and pay commission on the price held | A commission ladder that pays the full rate only at full price |
Way 1 of 4
Quote a job in 3 days, and the crew has 3 days to fill it. Stuart Trier of Clear Results heard the owner's cost: "This is a 3-day job, and they'll spend 36 hours on it if I let them." Crews now get 26 hours for that job. Weeks of 55 hours, 15 of them overtime, for about $25,000 of revenue dropped to 42 to 44 hours for the same revenue. For the fall in his labor percentage, the owner credited the hours budget plus 3 afternoon habits (fueling, cleaning the truck, and loading the next morning's material).
Crews that get jobs quoted in days tend to use every day. Technicians who put in 50 hours or more most weeks are a second sign, and overtime above a few percent of payroll is a third. Any one of them raises direct labor and leaves revenue flat.
Clear Results helps the owner in 4 steps:
Each step saves little by itself, as the owner puts it: "You're going to save a half a percent here, a half a percent there, maybe three quarters."
Go deeper: how one schedule change cut direct labor from 15.8% to 11.6%
Way 2 of 4
Each crew chief earned a flat 25% of the job. Stuart cites 14% to 17% as the standard for direct labor in the trade, and he pairs a lower base percent with incentive pay, since a straight cut feels like working hard to make less.
If they put their hearts and minds into it, they'll end up making more per hour.
Stuart Trier, Clear Results, explaining incentive pay to the client's owner.
Crew pay is a flat share of the job or an hourly wage, and nobody scores the percentage each week. Direct labor tops 18% of revenue.
Clear Results helps the owner in 3 steps:
Go deeper: how job costing discipline cut direct labor from 18% to 11.6%
Way 3 of 4
Two staff members did the client's buying. Stuart suspected that over-ordering and waste were behind the 25%, with material thrown out because the orders never matched the jobs.
14% to 18% is pretty standard in the industry. This is significantly higher. I'm putting a target of 20% on it.
Stuart Trier, Clear Results, setting the materials target with the client's owner.
Materials take more than 20% of revenue; nobody checks an order against the materials the job used, and leftover stock ends up in the trash or in the shop. Each of these hides inside one materials line on the P&L, which shows only the total.
Clear Results helps the owner in 3 steps:
Way 4 of 4
The 10% discount was automatic, so it never made it to an approval list and nobody asked what it cost. A Clear Results crawl space client had a smaller version of the same habit. Reps could knock up to 8% off to close a sale, and about 90% of sales used all of it. Two years after Stuart modeled a commission change for him, the owner summed up the new plan in one line: "We incentivize them to not discount, and then we even incentivize them to upcharge."
Reps set the discount, and most jobs use the full limit. Commission pays the same whether the price is held or discounted.
Clear Results helps the owner in 4 steps:
Go deeper: how one contractor found the single discount that held net margin at 3%
Across the 4 ways, the same 3 types recur: job costs nobody has capped, pay rules that give no one a reason to save, and leaks you only see at year-end. Each type gets one system from Clear Results, and the table shows which ways belong to which.
| Type | Ways | What the owner sees | The system Clear Results installs |
|---|---|---|---|
| Job costs nobody has capped | 1 and 3 | Crews and buyers use as much time and material as the job allows | An hours budget (26 hours for the 3-day job) and a materials target (20% of revenue) for every job |
| Pay rules that give no one a reason to save | 2, 3, and 4 | Crew pay and commission stay the same however much a job costs or discounts | Pay tied to a labor target, a materials target, and a commission ladder |
| Leaks you only see at year-end | All 4 | The year-end books show a margin the owner never saw coming | Direct labor, materials, and discount by job on the weekly scorecard |
In ways 1 and 3, no one sets a limit on the job: the crew has no hours budget, and the people ordering have no materials target. Clear Results sets each limit with the owner and reviews it every week.
Imagine a crew chief who is paid a flat 25% of the job. That chief earns the same whether the crew works 26 or 36 hours. Also, imagine a rep who earns the same commission on a job sold at a 10% discount as on one sold at full price. Neither of them has a reason to watch the cost. Clear Results helps the owner rewrite each rule so savings pay: a lower base plus a bonus for crew chiefs in way 2, a 1% bonus on the materials target in way 3, and about a quarter of the discount saved for the rep in way 4.
The figures above (15.8%, 22%, 25%, and a net margin near 3%) are full-year numbers. Because of this, an owner who waits for the year-end books finds each leak after it has run all season. By contrast, a home service coaching engagement at Clear Results puts direct labor, materials, and discounts on a weekly scorecard by job, so any drift shows up the same week. But the books have to be current: a labor percentage built on books a week behind describes the week before.
Answer each question yes or no, then count your yes answers.
0 to 1 yes: Your labor, materials, and discounts probably stay near their ranges. Even so, a weekly look at each percentage would show a drift early.
2 to 3 yes: Questions 1 and 2 point to way 1, questions 3 and 4 to way 2, question 5 to way 3, and question 6 to way 4. Start with the ways your yes answers point to and use the system described under each. After that, put those 3 percentages by job on one weekly page.
4 or more yes: Margin is leaking in several places at once. Take the Value Gap Scorecard to see which constraint to address first.
This week, pull direct labor and materials as a percent of revenue for the last quarter, plus a list of the jobs sold at a discount. Next month, give the next 10 jobs an hours budget.
After that, rewrite crew pay and commission so whoever controls each cost shares in the savings. Pick the order by the numbers. When direct labor is above 18% of revenue, begin with ways 1 and 2; otherwise, begin with whichever of materials or discounts is further above its range.
Compare each cost with its range, then start with the one furthest above it. Stuart Trier's ranges are 14% to 17% of revenue for direct labor and 14% to 18% for materials. For the French drain client from ways 2 and 3, labor was 22%, and materials were 25%, putting materials 7 points above the top of its range and labor 5 points above. Discounts come last because they need a job-by-job report, and the other two come straight from the P&L.
Stuart's range for crew-based home service work is 14% to 17% of revenue. Payroll taxes and benefits raise the figure: the French drain owner's direct labor read 22% on one count and 22.5% fully loaded. Choose one count and write down what it includes. Then compare every month against it.
No, because it raises the total for every customer who pays by card, and those customers see a price increase. A crawl space owner started passing on card fees after one $187,000 job cost the business $5,800 in fees, about 3%. Stuart's first reaction was that customers would object and the change would add admin work. Still, he made the change. Surcharge rules differ by state and card network, so check yours before copying the policy.
Yes. Home service coaching at Clear Results starts with the owner's job costing, which is where direct labor, materials, and discounts show up by job.
Stuart Trier is the Founder and CEO of Clear Results. Over the past 20 years, Stuart has built, bought, and sold 11 companies across the home service, healthcare, and marketing industries. He built his first company from startup to $8M in revenue in 3 years before a successful exit, then built a chain of 28 healthcare clinics and sold the business to a publicly traded company. Following that acquisition, Stuart spent 3 years working alongside the CEO, helping lead the organization through a take-private transaction before participating in a nine-figure exit to a Fortune 10 company. Today, he's the lead investor behind an electrical services platform operating across 3 U.S. states, and has worked directly with owners through 1,800+ strategic advisory sessions.
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A foundation repair company cut its direct labor cost from 15.8% to 11.6%, a 4.2-point drop, by changing how it scheduled jobs and when its crews loaded their trucks. Neither change cost a dollar, and neither one involved hiring anyone new. Reid just moved a 15-minute chore to a different point in the day.
Most contractors price jobs off the wage they pay a crew, not the real cost of a field hour. One foundation repair company learned the hard way that the difference was 18% of revenue. A weekly labor burden scorecard brought it to 11.6%, without losing a dollar of weekly production.
Every job at one foundation repair contractor came with an automatic 10% discount, until it was cut and net margin rose to 15-18%.
