Truck Rolls are Expensive – Ihiji is Not
In a recent survey many of our vendors have talked about the fact that Ihiji has saved them from rolling many a truck to a problem site. This benefits are obvious when a client is in a remote location but what about just a run-of-the-mill truck roll? How much do those actually cost?
Let’s consider that most integrators are passionate about taking care of their customers and many offer a free warranty support period usually from 90 days to a year. While this is a noble endeavor, a warranty call often results in the integrator taking on the entire cost of support.
Forward-thinking technology integrators have developed proactive maintenance plans with their clients paying a monthly fee, this route is excellent because these plans can be customized for a client’s particular needs and budget. However many integrators simply charge clients per truck roll which can be a problem especially for jobs that are in difficult to reach locations, how do you charge per truck roll in such a way that is fair to the client but still profitable? The answer gets exponentially more complicated as a company adds on new clients and their respective job sites, so we will take a look at just the basic elements that comprise the cost of a truck roll.
The Labor: It’s important to remember that no matter what your company’s compensation structure is, (hourly, salary or sub-contracting to a third party) it’s that a major percentage of the cost of a truck roll will be human labor. If your technicians are your own employees, also factor in the individual employee’s benefits and other miscellaneous working expenses in order to get an accurate monthly cost of services rendered. You then divide the total monthly cost by the number of calls each technician deals with per month and you will have a simple straight line number. However it’s always good to do deeper analysis by breaking down what percentage of the calls were for paid support, under a warranty plan, for sales or a brand new design altogether.
Remember that time is perhaps the most important factor considering the fact that it’s so difficult to bill for travel time in a way that is profitable.
Let’s make a few assumptions:
+ Each truck roll takes 30 minutes to reach a site
+ 15 minutes to get started
+ additional 15 minutes to complete paperwork and transition to the next service call
= at least 60 minutes of completely unbillable time outside the client’s door*
* Remember that these estimates are conservative because travel is unpredictable by nature, and a particular far or difficult service call can use up an entire day that could have been used more productively.
The Truck: The costs associated with the actual truck are far more tricky to calculate and will probably need to be done by your company’s accountant for a truly accurate measurement. But once you have it all you need to do is divide the average monthly dollar amount spent on trucks by the number of times each truck drove out to complete a job.
While there are various elements of cost that factor into your company’s service vehicles (including insurance and gasoline) it’s imperative to consider depreciation. For example you might calculate the cost of each individual truck roll and find that you do enough service calls that it’s worth the effort. But the more often the trucks are used the faster your vehicle assets will depreciate, and thus the need to conduct more maintenance on vehicles to keep them in commission becomes unavoidable.
The Opportunity Cost: Technicians of technology integrators are employees that are talented and adaptive enough to tackle all sorts of service calls. The average day of a technician might include a visit to an old client for an emergency warranty repair, suddenly followed by visiting a new client to give estimates or get started on a new site installation. This is especially true with smaller teams that must tackle a wider variety of problems and complications due to the lack of specialty employees that they can transfer specific issues to. Consider the many talents and skills of your company’s technicians and how they can be best applied across a given month of work. Then think about what kinds of calls your company receives from clients.
Which generates more revenue?
Which generates higher costs?
Estimate a rough number as a monthly opportunity cost that you might see per technician.
The Calculations: Here are the simplified formulas for calculations if you’re interested in seeing the impact of site visits on your business. If you aren’t entirely sure about the exact numbers start off with your best most educated guess. Remember that you should be visiting this numbers and recalculating often if you want to increase your profitability.
Cost of Providing Service:
_____ Service Calls Per Month X _____ Cost Per Truck Roll = _____ Cost / Month to Provide Service
_____ Service Calls Per Month X ( _____ Average Travel Time + _____ Time for transition ) = _____ Unbillable Hours Per Month
Some Considerations Once you figure out exact numbers and apply them to the above equations chances are you will be shocked at how much truck rolls cost you and your company. In our experience, from speaking with many customers over the years, we found that this expense can easily exceed $150 for each and every truck roll. The Technology Service Industry Association have published reports that estimated the cost of a typical truck roll at an upwards of $1,000 each time! But they aren’t the only ones that talk about the high cost of truck rolls. According to a CE Pro survey, a majority of dealers have at least 6 site visits or more per month (and about 40% of dealers have more than 10 site visits per month). At the conservative assumption of $150 per truck roll, this means the average company is spending at least $1,500 to serve their customers per month. Under that consideration it’s easy to see how technicians waste more than 10 hours per month doing work activities that do not generate revenue of any kind. So how do we continue to keep clients happy with their service while simultaneously lowering the cost of providing this service? Remote network management is key to this objective, and Ihiji can help.
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