Nationwide, numerous companies have undergone acquisitions, yet the term “locally owned” persists. The transition to a commission-based pay structure, coupled with staff reductions to minimize expenses, and the elimination of apprenticeship programs, has led to significant price increases. Consequently, financing options are now being offered to accommodate these rising costs. While plumbing remains generally affordable for most individuals, the profits are disproportionately distributed among shareholders and investors, at the expense of homeowners and small businesses. This practice has been prevalent across the country for an extended period, even prompting local owners to raise prices in anticipation of missing out on potential profits. As a result, homeowners and small business owners are vulnerable to exploitation.

Understanding that this is a formula is crucial. The hourly rate is calculated by dividing the billable hours annually by the overhead, annual labor cost, and desired profit. Let’s illustrate this with an example.

Suppose the owner’s salary is $100,000, payroll taxes and insurance amount to $15,000, rent and truck payments, fuel, and maintenance cost $18,000, insurance is $6,000, licensing, software, and phone expenses are $4,000, marketing costs are $12,000, and miscellaneous expenses are $10,000. The desired profit is $50,000.

The total needed revenue is calculated by adding overhead, annual labor costs, and desired profit and dividing it by the total billable hours, which is 1200. This results in an honest hourly rate of $180.

In contrast, our hourly rate is $240, which allows us to sustain our business for years. However, the more trucks we have on the road, the higher the billable hours, but the larger the fixed costs annually.

Now, let’s consider a water heater installation. The parts cost between $1200 and $1600, and the installation takes 2 to 8 hours. Therefore, the total cost is $1600 plus $1920, which is the higher end of the range. This calculation shows that many companies are taking advantage of people.

These companies being bought are usually by PE. Pipe dream ventures with Albert Nahman in the East Bay. The Bonney family with Big Air in Concord. Apex with Jazz home services in Pleasanton. And unfortunately many more.

This market even has real locally owned companies feeling like they need to compete. Like Chosen Rooter and Plumbing in the sunset in San Francisco. and Flow Pro Plumbing in Brentwood.

You still have honest folks priced properly and great service. Letts plumbing in Concord. Amesos Plumbing in San Rafael. Guaranteed Plumbing in Lafayette.

They’re the big reason why this evolved from techs selling the work to a salesman selling the work and apprenticeships disappearing. To maximize profits and minimize liabilities with minimal support out in the field for uneducated plumbers with a commission paid mindset all at the cost of the customers.