How to Maximize Profits in your Plumbing Business with KPI’s

Article by Kristaps Brencans Kristaps Brencans

Last updated

The way to maximize profits with a Key Performance Indicator, or KPI, is to learn which ones are the most important to pay attention to. There are several different metrics you could be looking at, but finding the right ones can make a huge difference for your plumbing business’ marketing.

As a business that directly helps your client base, you have certain KPI’s that pertain to your business specifically. Learning to read the metrics and adjust your strategies accordingly can ensure that your profits continue to rise without issue. Maximizing profits requires that you look at the correct metrics and those include:

Gross Revenue

Or Gross sales, depending on the services outside of just plumbing you provide via your website. This KPI takes a look into the total money your business has earned and provides insight into your sales abilities. Make sure to take a close look at the increase or decrease of the profit margins in order to make the adjustments required. Will you be able to handle the increase in margins without requiring new employees? If so, then you may even need cuts to handle the lower revenue. Make sure that your decisions are fully informed, however, or you risk unbalancing the whole system.

Labor Cost Per Employee

This one is less important for smaller plumbing businesses, but it still has its merits. This KPI calculates the costs of employees including insurance, overtime, and so on. Full-time employees who work on salary pay or hourly are calculated differently and change the end results. As a plumbing business, all of your employees matter and you need to check the labor costs to make sure that the scale is balanced. If the cost is increasing, then you are fine. But a decreasing metric means that there may be someone being paid too much or there is a problem with the payment system. You may need to lower the amount of overtime provided or hire at lower wages to raise the overall profits returned.

Revenue Per Hour

This one ties into the labor cost per employee and measures the amount of money earned during work hours. Your employees will have their hours measured and from there you can see if they are fully utilizing the time they are paid to effectively do their work. This is an important metric to watch, particularly for smaller businesses that need to make every hour count. If the metric is going upwards, then it is important to recognize the work of your employees and reward where you can to encourage further growth. Try to recreate old successes and hire new employees with similar values or traits. When the metric is going down, it will require that you look into your staff more in-depth to find the issue. You may need to lay off some employees if improvement is not possible in order to prevent any further losses.

Net Income

The bottom line metric, where you can see the profitability of a business and whether you are bringing in more money than you spend. If you see an increase in this metric, your business model is working and you should see what you have been doing right. You can use your previous actions to determine what needs repeating and from there set up a whole new campaign to push profit margins up. If you see a dip in gross revenue, then it is best that you figure out if this decrease is a continuing trend or just a small setback. Adjustments should be made quickly if the dip looks to be a consistent issue. To maximize profits and raise the bottom line, try lowering the spending used on non-essential activities or see if you can ensure that employees are working at their top efficiency.

I started as a project manager at On The Map Marketing in 2015 and now run the day-to-day operations as the company’s chief executive officer. In the last few years, I have overseen thousands of successful SEO campaigns in numerous industries, including lawyers, contractors, E-commerce, and other markets. I am also a proud dad of three divas and take a keen interest in running and calisthenics.