The 2-minute check
Where is your margin leaking?
Six numbers you already know off the top of your head, against the benchmarks we run every client on. Conservative on purpose — if the estimate stings, the real number is worse.
A margin leak is profit a contracting business earns and then loses before it reaches the bank — not lost sales, but work already sold. In home services it escapes through eight recurring places: pricing, labor utilization, material variance, callbacks and rework, discounting, capacity mismatch, marketing conversion loss, and unbilled or delayed work. Each one is measurable, and each hides in a different report — which is why a busy year can still end thin.
Your six numbers
Best guesses are fine — this is directional. Your books will tell the real story.
Estimated annual margin leak
$135,360
7% callback rate vs <5% benchmark — excess jobs redone at ~50% of job value.
55% billable utilization vs 60%+ benchmark — gross profit on the revenue your current crew could already produce.
42% close rate vs 50%+ benchmark — the share of annual spend feeding estimates that never become jobs.
Counted separately — this is pricing and job-costing headroom against the 50% benchmark, not waste. Closing even part of it usually outweighs every leak above.
How we compute this
- Callback & rework: (callback rate − 5%) × revenue × 50% job cost.
- Idle capacity: gross profit on the extra revenue your crew produces at 60% utilization (capped at +25% of revenue).
- Marketing waste: annual spend × the shortfall of your close rate against 50%.
- Benchmarks come from the Home Services Metrics Scorecard — the same catalog M1COS dashboards run on. Estimates are deliberately conservative and directional, not a financial statement.
The framework
Eight places margin escapes
The order Margin One works through with an operator. This is our operating guidance from running and coaching home-services businesses — not survey data, and deliberately without invented percentages attached to each row.
| Leak | The tell | Where to look | Go deeper |
|---|---|---|---|
| Pricing leakage | Jobs priced off the wage instead of the fully loaded cost of labor. | Quotes and rate cards | calculate your loaded labor cost |
| Labor utilization | Paid hours that never reach an invoice — drive, shop, and idle time. | Dispatch and scheduling | billable utilization explained |
| Material variance | Actual material spend consistently above the estimate, job after job. | Job costing after close | cost a job properly |
| Callbacks and rework | Return visits absorbed for free and buried in cost of goods sold. | Warranty and service history | callback and rework rate |
| Discounting | Field-level price concessions that never appear in a report. | Invoice vs. quoted price | close rate without discounting |
| Capacity mismatch | Crew sized for a demand curve the business no longer has. | Utilization by week | capacity planning in M1COS |
| Marketing conversion loss | Paid leads that never become booked jobs — cost per lead looks fine, cost per booked job does not. | Lead source to booked job | cost per lead vs. cost per booked job |
| Unbilled or delayed work | Completed work invoiced late, partially, or not at all. | Aging and completed-not-invoiced | financial intelligence module |
Most shops leak in three or four of these at once. Pricing is the usual first stop, because it compounds on every job — start by confirming your fully loaded labor cost and comparing the result against Margin One’s KPI operating thresholds.