Cost Per Install Explained: A Guide for Installation Businesses
Why Knowing Your Cost Per Install Matters
For installation businesses whether you specialise in fire alarms, electronics, or general installations understanding the cost per install is critical.
It allows you to:
- Set accurate and competitive pricing
- Improve profit margins on every job
- Identify inefficiencies in labour or materials
- Make informed decisions on hiring or equipment
Without knowing this number, you risk under-pricing services, losing money, or misjudging profitability.
What Is Cost Per Install?
Cost per install is the total expense of completing a single installation job. It includes all direct and indirect costs associated with delivering the service.
Direct Costs:
- Labour (hours worked by technicians)
- Materials, parts, and components
- Travel expenses specific to the job
Indirect Costs (Overheads):
- Vehicle running costs
- Insurance, licenses, and permits
- Office, admin, and support costs
- Marketing and sales expenses
- Reginal cost variations
By combining all direct and indirect costs and dividing by the number of installations completed, you calculate your true cost per install.
Step-by-Step Calculation
- List All Direct Costs
Example for a fire alarm installation: - Labour: £180
- Materials: £60
- Travel: £20
- Total Direct Costs: £260
- Allocate Indirect Costs
Overheads should be spread fairly across jobs: - Monthly overheads: £800
- Number of installs in the month: 10
- Indirect cost per install: £80
- Add Direct and Indirect Costs
- £260 + £80 = £340 per install
- Review Pricing Against Costs
Compare the calculated cost to your current price. If the price is lower than the cost, the job may be losing money.
Benefits of Tracking Cost Per Install
Knowing your cost per install helps installation businesses:
- Price jobs accurately for fire alarm or electronics installations
- Identify and reduce wasted time or materials
- Plan for staff scheduling and resource allocation
- Make informed decisions on equipment or expansion
For electronics and fire alarm installation businesses, precise costing is vital to maintain profitability and ensure sustainable growth.
Frequently Asked Questions (FAQ)
- Do I include travel costs in the cost per install?
Yes. Any travel or mileage directly related to a job should be included as a direct cost. - Should overheads like insurance and office costs be included?
Absolutely. Overheads must be allocated fairly across all jobs to get the true cost per install. - Can I calculate cost per install for part-time staff?
Yes. Include their wages proportionally based on hours worked on each job. - How often should I calculate cost per install?
Ideally, monthly or after every major project. Regular updates help maintain accurate pricing and profitability. - Can this method be used for all installation businesses?
Yes. It works for fire alarms, electronics, security systems, and general installation services. Adjust costs based on the specific materials and labour required. - How does cost per install affect pricing?
By knowing your cost per install, you can set prices that cover all costs and ensure a profit margin, making your business more sustainable.
Final Thoughts
Calculating cost per install is essential for any installation business, from fire alarms to electronics. By tracking both direct and indirect costs, you can set accurate prices, improve profit margins, and run a more efficient business.
If you run an installation business and want expert help calculating cost per install, optimising pricing, and boosting profitability, get in touch today.
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Written by Yesim Tilley Founder of Skynet Accounting
Follow me on LinkedIn: www.linkedin.com/in/skynet-yesim-tilley
www.skynetaccounting.co.uk