Guide
Emergency call-outs or scheduled work: which one actually pays
The premium looks large until you count the hour of driving and the job it pushed.
Reviewed by Darren Lim, US CPALicence CPA.742536027 min read
Almost every plumbing shop charges more after hours, and almost none of them can tell you whether the premium covers what the call costs.
It feels obviously profitable. The ticket is bigger, the customer is grateful, and the money arrives the same night. But the ticket is not the margin, and emergency work carries costs that scheduled work does not.
What an emergency call actually costs
The hour nobody bills. A 10pm call is rarely eight minutes away. Drive time out, drive time back, and the trip to a supply house that is closed so the part comes off the truck at whatever it cost you.
Overtime burden, not overtime wage. If the tech is on overtime, the wage is time-and-a-half — but payroll taxes and workers comp ride on the higher figure too. The loaded cost rises by more than the wage does, and most shops price against the wage.
The job you displaced. This is the one nobody counts. If the tech who took a 10pm call starts late the next morning, or works slower, the scheduled work that shifted is a real cost of the emergency. It just lands on a different day and never gets connected.
Stock you cannot control. Emergency work is whatever is on the truck. You are not buying to a job, you are consuming inventory at whatever mix happens to be loaded, and reordering at retail more often than you would like.
Working out whether the premium covers it
You need three numbers, and they all come from books that separate the two kinds of work:
- Revenue per emergency call against revenue per scheduled call
- Loaded labour cost per call, including the overtime burden and the drive
- Materials cost per call, which is usually higher on emergency work because there is no chance to buy properly
Take a month of emergency calls, total the revenue, subtract the loaded labour and material, and divide by the number of calls. Do exactly the same for scheduled work. Then compare gross profit per call and gross profit per hour.
Per hour is the one that matters. An emergency call with a bigger ticket and three hours attached can easily earn less per hour than two scheduled jobs in the same window.
What people find
Three patterns come up repeatedly.
The premium is real and the margin is thin. Ticket up 60%, cost up 55%. The work is worth taking because it fills hours you would not otherwise sell, but it is not the profit centre everyone assumes.
The premium has not moved in years. It was set when a tech cost less and fuel was cheaper, and nobody has revisited it. This is the most common finding by some distance.
Emergency work is a customer acquisition channel, not a profit line. Break-even on the night, and genuinely valuable — because a household that has met you at 10pm calls you first for the water heater in April. That is a legitimate reason to run it at a thin margin, but it should be a decision rather than an accident.
Do not let it hide inside "service"
If both kinds of work post to one Service Revenue account, none of this is answerable. The fix is small: separate revenue lines for emergency and scheduled, with labour coded the same way, and the burden carried at the rate actually paid rather than the base wage.
That is a chart of accounts decision, not a software problem. A contractor's chart of accounts sets it up properly, and the true cost of a billable hour gives you the loaded rate to cost it with.
The question to answer first
Before changing a price, answer this one: how many of your emergency calls are for existing customers?
If most are, emergency work is a retention cost and a thin margin is defensible. If most are strangers who never come back, you are subsidising one-off work with your best hours, and the premium needs to cover the whole cost rather than most of it.
Neither answer is available from a company total. Both are obvious once the two kinds of work are separated.
Related
How we do this
We build this into your books. Starting with a month that costs you nothing.
Emergency and scheduled work split into separate revenue and cost lines, with drive time and overtime burden carried where they belong, so the premium can be measured rather than assumed.
- Every transaction categorized, accounts reconciled, the month closed
- Reviewed and signed by Darren Lim, US CPA — licence CPA.74253602
- The Two-Day Guarantee: Your first month back in two days, or the next month is free.
Most plumbing shops charge an after-hours premium that was set years ago and has never been checked against what the call actually costs. One month of books tells you whether yours covers it.