This article was written by Ron Giuntini, Founder and Principal at Giuntini and Company. Ron is a Subject Matter Expert (SME) on outcome-based product support, with specific expertise in forecasting the expenditures of the processes employed during the entire product lifecycle maintenance/sustainment stage.
Commercial machine skilled technicians are engaged in the Maintenance, Restoration and Modification [MRM] of the Capabilities, Appearance, Productivity and Employability [CAPE] of an asset; to be referred to as “MRM:CAPE”.
The annual estimated US technician spend for MRM:CAPE is $100 billion, with an estimated $50 billion provided by suppliers and the remaining supplied organically by machine operator employees.
The suppliers of technicians are derived primarily from OEMs, OEM distributors/dealers, product suppliers to the OEM production line and firms independent of OEMs.
When a technician supplier calculates an hourly rate, being for a specific event-based transaction (i.e. emergency break-fix) or employed in a fixed-fee multi-year performance-based service contract (i.e. extended warranty, managed services), the elements comprising that rate are many.
The table below presents one way of deriving the rate for technicians. Note that the data sets are a compilation of several studies, as well as anecdotal; they may not be precise, but I believe they are reasonably accurate for most US-based B2B skilled technicians.
Also note that the rates illustrated below may or may not be transparent to the customer. In many cases, the rate is bundled in a fixed-fee for an on-site transaction-based event (i.e. $1,500 for emergency break/fix), or bundled in a fix-fee multi-year performance-based service agreement (i.e. $20,000 for a 3 year agreement to perform PM work).
One of the challenges in generalizing technician rates is that there are several drivers, besides technician seniority and machine location, which will result in higher rates or lower rates. Some of these drivers are:
|2||Cost of Living of Base Site||Hi||Lo||Hi||Lo|
|4||Fringes; SS, healthcare, retirement||$20,000||$15,000||$30,000||$25,000|
|5||Availability at work; holidays, vacations, personal days||88%||88%||81%||81%|
|Straight time hours available per year of 2,080||1,840||1,840||1,680||1,680|
|Compensation per available hour||$46.20||$32.61||$77.38||$59.52|
|Allocation of available time|
|6||Service delivery; on-site and travel to site||48%||48%||48%||48%|
|7||Preparing for service delivery; parts management, technical review||12%||12%||12%||12%|
|8||Work order administration management; details of work performed||9%||9%||9%||9%|
|10||Education; OJT for others||0%||0%||6%||6%|
|11||General administration; HR, budgeting, correspondence||8%||8%||8%||8%|
|Subtotal available time not allocated to service delivery||52%||52%||52%||52%|
|Compensation per hour delivering service||$96.24||$67.93||$161.21||$124.01|
|Indirect; direct supervision, G&A as % of cost||15%||15%||15%||15%|
|14||Profit as a % of rate||20%||20%||20%||20%|
|Hourly Billable Rate||$138.35||$97.66||$231.74||$178.26|
|Does not include T&E or OT|