MarginWorkshopMinimum Job Size Threshold
Find the minimum job size that actually covers your real labor and overhead cost, so you know which jobs to turn down.
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Methodology
Formula: minimum total cost = (loaded rate × crew size × minimum hours) + (overhead per hour × minimum hours). Minimum job price = minimum total cost / (1 - target margin).
Assumption: minimum crew hours per job represents the realistic floor for setup, drive, and work time on any job, even a very small one.
Limitation: this is a floor, not a target price. Most jobs should price well above it; its purpose is flagging jobs too small to be worth taking at any markup.
Frequently Asked
- Why does overhead absorption make small jobs unprofitable?
- Overhead per hour is recovered based on time spent on a job; a job too small to absorb its share of fixed overhead loses money even before markup is applied, regardless of how efficiently it is executed.
- Is this the same as a minimum service call fee?
- Related but distinct: a trip charge (Service Call & Trip Charge Pricing) covers the cost of showing up; this threshold is about total job size being large enough to absorb overhead across the whole job, not just the visit.
- What should happen to jobs below this threshold?
- Either price them at a premium that specifically covers the overhead-absorption gap, or decline them, since taking them at standard rates below this size is a structural loss, not a marginal one.
- Does this threshold change with crew utilization?
- Yes, if overhead-per-hour rises (from lower utilization elsewhere), the minimum job size needed to absorb it rises too; recalculate after a material change in expected billable hours.