The three ways plumbing companies pay their plumbers
Most plumbing companies pay their plumbers one of three ways. Straight hourly pays for time on the clock. Commission pays a share of the work sold or completed. A hybrid pays a base wage and puts commission or a bonus on top. This guide treats technician performance pay, commission, and hourly pay structures as one decision with three answers.
No single plan is the industry standard. Shops pay in all three ways, and we are not going to name a most common one without a named survey behind it. If you see a share quoted somewhere, check who published it and in what year.
The real decision is not hourly versus commission. It is what you want to pay your technicians for: hours on the clock, dollars on the invoice, or margin kept. Each choice teaches the tech what to do on the next service call.
That holds for a service plumber on residential plumbing calls just as it does for a service tech in any other trade, HVAC included. A pay plan is a set of instructions about behavior, written in dollars. The rest of this guide covers how each of the three plans works, what it does to the people on it, and how to test it before you sign anything.
The real decision is not hourly versus commission.
Paying plumbers an hourly wage
Hourly pay makes the tech's weekly check predictable. It also makes diagnostics, training and callbacks easy to staff, because he earns the same hourly rate whether the job runs long or short. Nobody has a reason to rush a hard diagnosis or to avoid a ride-along with a new hire.
The cost sits with you. A slow tech and a fast tech earn the same hourly pay for each hour worked, so the shop has to supply the pressure to work efficiently. That means dispatch discipline, job tracking and a manager who reads the numbers.
We are not putting a market wage in this article. The current published figure for an experienced plumber, and for the average hourly rate across the trade, lives in the U.S. Bureau of Labor Statistics Occupational Employment and Wage Statistics. Pull the number for your own area from there instead of from a blog.
There is one more thing to weigh. A fast tech who is good at selling can earn more on commission than on a straight hourly wage for the time he works. That is the reasoning behind commission and hybrid plans, and it is why a shop that stays purely hourly may find its best sellers earn less than they could elsewhere. That is a point about incentives, not a claim about who leaves.
A slow tech and a fast tech earn the same hourly pay for each hour worked, so the shop has to supply the pressure to work efficiently.
How commission pay works for a plumbing technician
The base matters more than the percentage. Three commission bases are common: a percentage of the invoice total, a percentage of gross profit on the job, and a flat dollar amount per completed job or service call. Each rewards a different thing.
A percentage of the invoice pays for ticket size, whether or not the shop kept any margin on it. A percentage of gross profit pays for margin, but you need job costing to run it, because someone has to know what each job cost.
Here is an illustration, with round numbers and no real shop behind it. Take a $1,000 invoice. At 10% of the invoice, the tech earns $100. If the job carried $400 of gross profit, 10% of that is $40. The same percentage on a different base pays two and a half times as much, and only one of the two figures tells the tech anything about what the shop kept.
Commission fits techs who sell and run their own calls. It fits poorly for helpers, new hires, and drain or warranty work where there is little sale to make. Putting a helper on commission pays him for decisions he does not get to make.
Commission versus hourly pay comes down to who carries the risk of a slow week. On hourly pay, the owner does. On commission-based pay, the tech does. Commissions increase his income in a busy week and drop it to almost nothing in a dead one, so a salesperson on a commission plan will feel a slow month far more than your payroll will.
A percentage of the invoice pays for ticket size, whether or not the shop kept any margin on it.
The hybrid model: base pay plus commission or bonus
A hybrid pays a base wage that covers the hours worked and adds commission or a performance bonus on top. It keeps the check steady and still pays for results. Base wage plus commission asks the tech to carry some of the risk, not all of it.
The bonus does not have to be only about sales. When performance bonuses are tied to quality measures such as callbacks, reviews and completed paperwork, the tech has less reason to push sales at the expense of the work. Pay it monthly, or often enough that the tech connects the money to what he did. A bonus that arrives once a year reads as a gift, not as pay for performance.
A hybrid has four design choices to set: the base wage level, the commission base (invoice, gross profit or flat amount), a threshold before commission starts, and whether commission is paid when the invoice is issued or when it is collected.
Top performers are the ones who most want uncapped earning potential. A hybrid with no cap keeps them, without paying the whole crew a commission rate they have not earned.
A hybrid pays a base wage that covers the hours worked and adds commission or a performance bonus on top.
What commission does to behavior: upselling, callbacks and workmanship
A pay plan changes what techs do on a call, and that is where plans succeed or fail. Paying on sales encourages upsells. Some of those will be real needs, and some will be reaching. The customer feels the difference, and that feeling is where the word gouging comes from.
Paying on speed can lower quality. A tech paid per job has a reason to skip diagnostics, and a reason to stay away from the plumbing problem that takes two hours to find. The cost of cut corners lands on workmanship, and you see it later as a callback.
Some guardrails work in practice. Pay on completed and paid jobs. Charge callbacks back, or make low callbacks a condition of the bonus. Pay a small flat amount for each service agreement sold, so the tech is not pushed toward high prices on a single ticket and away from the customer relationship.
Tie any chargeback to a number you can pull from your own system, such as callbacks per tech over a quarter, and not to a judgment call. A tech can argue with an opinion. He cannot argue with a count from your field-service software.
A pay plan changes what techs do on a call, and that is where plans succeed or fail.
Test any pay plan against your own gross profit
Check a plan against your books before you offer it. Start with the shop's own financials: revenue per tech, gross profit per tech, and fully loaded labor cost, which is wages plus payroll taxes, insurance, truck and tools. Every one of those comes from your own financial statements and field-service reports.
Then run the plan backward. At the commission rate you are considering, what does an average tech earn, and what is left as gross profit? If either answer is uncomfortable, the plan is wrong before anyone signs it. The worked numbers are yours, which is the point; no one else's profitability applies to your shop.
Pay is only half the equation. A commission on a flat-rate price book means the prices set the tech's pay. That makes flat rate pricing, price books, and markup strategies the companion decision to any pay plan, and the two should be settled together.
We are not giving a target labor percentage here. We have no named source for one, and a number without a source is the kind of benchmark you should distrust.
If either answer is uncomfortable, the plan is wrong before anyone signs it.
Wage laws, written agreements and subcontractors
The law sets limits that apply whichever plan you pick. A commission-only plan does not remove minimum wage or overtime obligations for employees. Pay must still meet the federal minimum wage, and any higher state rate, for the hours worked. The U.S. Department of Labor Wage and Hour Division publishes the Fair Labor Standards Act fact sheets; read those and do not rely on a paraphrase from an article.
Overtime rules for commissioned employees depend on how the employer classifies the job and on the exemptions in the Act. Confirm your own case with a payroll provider or employment counsel before relying on any single article, this one included. This is not legal advice.
Put the plan in writing. Cover the base, how commission is calculated, when it is paid, what happens on chargebacks, and what happens after a tech leaves. Written agreements prevent most pay disputes, because both sides can read the same page.
Paying a tech as a subcontractor so you can pay him commission only is a classification question, and the label does not decide it. A subcontractor is defined by the relationship, not by the paperwork. The U.S. Department of Labor and the IRS publish the tests for worker classification, and they are the place to look for the answer.
A commission-only plan does not remove minimum wage or overtime obligations for employees.
Rolling out a new plan without losing your best tech
The change itself is where shops lose people, so the sequence matters. Before you announce anything, model each current tech's last 12 months of pay under the new plan, using your payroll records. Find out who loses money. If your best tech is on that list, you have learned something important while it is still cheap.
Then run the old and new plans side by side for a stated period, and guarantee that no tech earns less than before during that time. The guarantee costs you something, and it buys the trust the change needs.
Set the labor rates the plan relies on first. Commission on a low labor rate pays little and invites complaints about plumber jobs that were hard but paid thin. The plumbing labor price list covers how a shop prices a labor hour, and that figure should be fixed before the pay plan is built on top of it.
After a quarter, review the plan against callbacks, gross profit per tech and turnover, all from your own system. If the numbers moved the wrong way, you have your answer on whether the plan works.
The change itself is where shops lose people, so the sequence matters.
How do I figure out how much to charge people for my plumbing services?
Work from cost up: the fully loaded hourly cost of a tech, plus overhead per billable hour, plus the margin the shop needs. You supply all three figures from your own books.
The pay plan is part of that cost, so a commission plan changes the labor cost per job and the price has to cover it. For the full method, use the plumbing labor price list and the flat rate pricing article, not a price table dropped into this one.
Can a plumber make $200,000?
It depends on the plan and the market. The current published median for plumbers is in the U.S. Bureau of Labor Statistics Occupational Employment and Wage Statistics, and we are deliberately not quoting a figure from it.
Pay at that level takes either ownership income or a commission or bonus plan where production is high. As an illustration with round numbers, not a real tech: at a 10% commission on invoices, $200,000 of commission needs $2,000,000 of invoiced work in a year. Lower the rate and the volume required goes up.
For an owner, the more useful question is whether the shop can afford a tech earning that much. The section on testing any pay plan against your own gross profit answers it.
How to tell if your plumber is overcharging you?
Where a tech sets the price and is paid a share of it, overcharging is a pay-plan and pricing-system problem. A flat-rate price book removes the tech's discretion over the price.
You can check for it in your own field-service data: ticket size per tech far above peers on the same job types, callbacks, and complaint or refund rates per tech. We are not stating how often overcharging happens in the trade, because we have no source for a rate.
Key Takeaways
The three structures are hourly, commission and hybrid. The right one depends on who should carry the risk of a slow week.
The commission base matters more than the percentage. Invoice pays for ticket size, and gross profit pays for margin.
A base wage plus commission or bonus, with callbacks charged back or made part of the bonus condition, controls the behavior risks of commission.
Test any plan against the shop's own gross profit and fully loaded labor cost before anyone signs it.
Commission-only pay does not remove minimum wage and overtime obligations, so confirm with the Department of Labor's guidance and counsel.
Put the plan in writing, and model each tech's last 12 months under it before announcing the change.
Where pay plans meet the rest of your numbers
A pay plan is one lever on margin among several. Pricing and job mix move it too, and the three interact. A commission rate that works on one price book can fail on another.
That is also why a sales pitch is not a diagnosis applies to pay plans too. A vendor's promise about a pay plan or a tool says nothing about how your own jobs are priced and where your margin goes. Only your own numbers do.
Anchorfield's audit is a review of your own numbers: how your jobs are priced, what they cost to deliver, and where margin goes between the call and the cash. It starts from your books and field-service reports, not from a benchmark.
If you already know your gross profit per tech and your fully loaded labor cost, you can test a pay plan yourself with the steps above. The audit is for the owner who cannot yet pull those figures, or who finds they do not agree with each other.
You already know something is wrong.
Ninety seconds will tell you how big it usually is.
