What an hour of a field technician's time really costs

Ask the managing director of an industrial SME what an hour of a technician's time costs, and you will almost always get a variant of the same calculation: gross salary, multiplied by an employer-contributions coefficient, brought down to an hourly figure. That gives a reassuring number, around twenty-five or thirty euros, which makes a charge-out rate of sixty-five look comfortable.

That calculation is wrong, and by a factor of two. Not because the contributions are underestimated, but because it divides by the wrong number of hours. A technician is paid for all of their hours and bills only some of them — and it is that share, and that share alone, that has to carry the entire cost.

This article sets out the complete method, a worked example from start to finish, and the only lever that really moves the result. The amounts below are orders of magnitude intended to illustrate the method: replace them with your own — that is the whole point of the exercise.

Why the headline hourly rate lies

French statutory working time (durée légale du travail) is 1,607 hours a year. That is the figure people instinctively use as the divisor. It is already too high once you take out additional leave, training, sick leave and days spent in the workshop — you end up closer to 1,500 hours of actual attendance.

But above all, attendance is not billing. Of those 1,500 hours, some are spent behind the wheel, some writing, some looking for the right drawing or the reference of a part, some waiting for someone to come and unlock a building. Those hours are paid, but they are not sold.

That is where the gap opens up. Dividing by 1,607 instead of by the number of genuinely billable hours gives a cost price half of what it really is. On that basis, a company can work at a loss for years while believing it makes a thirty per cent margin.

The four cost items

The numerator of the calculation has four items. The first two are obvious; the next two are the ones people forget.

Employer cost. Gross salary, employer contributions, health insurance, provident cover, bonuses, meal allowances. This is the main item, and the only one everybody counts.

Vehicle and tools. Depreciation or lease of the van, fuel, insurance, servicing, tyres, tolls, tool replacement, personal protective equipment, workwear. Spread over a year and one technician, this item is far from marginal.

Equipment and support. Phone, mobile plan, tablet, software licences, professional memberships and qualifications, ongoing training and mandatory refresher courses.

Share of overheads. This is the item most often missing from back-of-the-envelope calculations. The premises, the accounts, company insurance, the time of the person who answers the phone and does the scheduling, the time of the person who does the invoicing. This cost exists because the technician goes out on jobs: it has to be carried by their billable hours.

The figure nobody measures

The denominator is the real issue. You get it by taking everything that is not sold away from the hours of attendance.

Travel. Depending on how dense the customer base is, it commonly accounts for ten to twenty per cent of time. A company whose customers are all within thirty kilometres does not have the same profile as one covering three départements (French administrative areas).

Admin. Writing the report, sorting photos, copying everything into the office spreadsheet, sending it to the customer. When this is done in the evening or on a Saturday, it is still paid time — and it disappears from the time sheets, which makes it invisible without making it free.

Searching and waiting. Tracking down a machine's history, looking for the report from the last visit, calling the office for a part number, waiting outside a locked building. This is the most frustrating item, because it produces nothing at all.

The sum of these three items defines the billable utilisation rate: the share of attendance hours that ends up on an invoice. In maintenance SMEs, it commonly sits between sixty and seventy-five per cent. But the general figure is of no interest: only yours counts.

A complete calculation, from start to finish

Take a maintenance technician in a six-person SME. The amounts are orders of magnitude: substitute your own.

Now for the denominator. Out of 1,607 theoretical hours, take away additional leave, training and absences: around 1,500 hours of attendance remain. Then take away fifteen per cent for travel, ten per cent for admin and eight per cent for searching and waiting — a billable utilisation rate of sixty-seven per cent.

That gives 1,005 genuinely billable hours, and a cost price of 61,000 ÷ 1,005 ≈ €61 an hour.

The contrast is worth setting out side by side. The instinctive calculation — €42,000 of salary divided by 1,607 hours — gave €26 an hour. The complete calculation gives €61. On an hour charged at €65, the margin is not €39: it is €4.

It is not the hourly rate that decides whether a job is profitable. It is the number of hours you had to pay for in order to bill one.

The only lever that really changes the result

Faced with this, the first reflex is to raise prices. It can be done, but it is slow, it has to be negotiated customer by customer, and it is noticed immediately.

Let us redo the calculation without touching any price, and raise the utilisation rate from sixty-seven to seventy-two per cent — in other words, by recovering about twenty minutes per technician per day from admin and looking up information.

Billable hours rise to 1,080. The cost price falls to €56.5 an hour. On an hour sold at the same price as before, the margin goes from €4 to €8.5: it doubles, without renegotiating anything with anyone. Over a thousand hours, that is €4,500 per technician per year.

That is why non-billable time is where the real gains lie. And of its three components, two are hard to reduce — travel depends on geography, waiting depends on the customer. The third, on the other hand, depends entirely on your organisation: the time spent writing and searching.

A report written on site, during the job, does not get written in the evening. A machine history that can be looked up from the field saves a call to the office. That is exactly what a field tool is for, and it is the only argument that matters when deciding to adopt one: we go through this reasoning in our article on field service management software.

What to measure to find out

Everything above rests on a figure most companies do not have: their actual billable utilisation rate. It cannot be estimated, it has to be measured — and two weeks are enough.

Ask each technician to note down, for ten working days, four durations per day: travel time, billable time on site, report-writing and admin time, waiting and searching time. A notebook will do; accuracy to within five minutes does not matter at all.

After ten days, divide billable time on site by total attendance time. You will have your actual rate — and you will know which of the three non-billable items is yours. In most cases, the surprise does not come from travel, which people overestimate, but from admin, which they underestimate because it is done outside working hours.

With that figure in hand, the rest is arithmetic. And it makes possible a conversation that, without it, always comes down to gut feeling: whether a job forty kilometres away for two hours' work is worth taking on.