Set one comparable decision contract
Record these assumptions before calculating
- Mobilisation and travel cost per visit. (not complete)
- On-site loaded labour cost per hour. (not complete)
- Observed short, base and long visit durations. (not complete)
- Billed-time rounding and minimum rules. (not complete)
- Customer presentation and local review requirements. (not complete)
customer charge = call-out fee + billed hours × hourly rate
- call-out fee
- Fixed visit charge intended to recover stated mobilisation and travel resources (CU per visit) — business pricing decision
- billed hours
- Customer-billable time under the stated rounding and minimum rule (hours per visit) — job and billing record
- hourly rate
- Customer price for each billed hour on one tax basis (CU per billed hour) — business pricing decision
Keep one currency, indirect-tax basis, time horizon and cost boundary throughout. Scenario values below are invented currency units (CU), not benchmarks.
Worked example: Call-Out Fee vs Higher Hourly Rate
Invented tax-exclusive structures: A charges 70 CU call-out plus 90 CU/hour; B charges no call-out and 130 CU/hour. Included visit-fixed cost is 60 CU and on-site cost is 50 CU/hour.
| Line | Calculation | Result |
|---|---|---|
| A charge at 1 hour | 70 + 1 × 90 | 160 CU |
| A contribution | 160 - 60 - 1 × 50 | 50 CU |
| B charge at 1 hour | 1 × 130 | 130 CU |
| B contribution | 130 - 60 - 1 × 50 | 20 CU |
| Case | Changed input | Decision result |
|---|---|---|
| 0.5-hour visit | A contribution 30; B contribution -20 | A ahead by 50 CU |
| 1-hour visit | A 50; B 20 | A ahead by 30 CU |
| 3-hour visit | A 130; B 180 | B ahead by 50 CU |
Turn the calculation into an operating decision
- Measure fixed-per-visit and hourly resources.
- Choose alternative customer-facing structures.
- Calculate each at the same job durations.
- Weight by the observed duration mix only when evidence supports it.
- Review clarity, rounding and minimum terms.
- Pilot and reconcile job contribution by duration band.
- Comparing headline rates without total charge.
- Using one average job duration.
- Recovering travel twice without disclosure.
- Ignoring rounding and minimum-time rules.
- Assuming a lower-looking hourly rate is a lower customer bill.
Questions to settle before acting
- Can the structures be revenue-neutral?
- Yes, solve for a rate using an explicit duration mix, then stress changes in that mix. Revenue-neutral does not guarantee contribution-neutral.
- Should diagnostics be included in the call-out fee or hourly rate?
- State whether mobilisation or diagnostic work is included, and cost it once under each structure.
- What if customers compare hourly rates only?
- Explain the total charge and inclusions clearly; do not hide recovery in ambiguous minimums.
Sources and methodology
- Call-Out Fee vs Higher Hourly Rate: calculation boundary — Margin101: Formula, unit, assumption and limitation reference for the primary decision handoff.
- Manage your finances — U.S. Small Business Administration: General cost-record context; no field-service price or term is prescribed.