THE IMPACT OF VARIABLE
AND FIXED COSTS
ON FIELD SERVICE PROFITABILITY
Running a field service business can be quite a challenge. Between managing your teams, keeping customers happy, and making sure you deliver top-notch services, it’s super important to keep your finances in check.
Introductio
n One thing that often gets overlooked is the difference between fixed costs (those expenses you have no matter how many jobs you do) and variable costs (expenses that change based on your workload).
Why is this distinction so important? Well, understanding and managing these costs can really help you to:
• Increase profitability by identifying where to cut unnecessary expenses.
• Make smarter decisions when pricing your services or investing in new tools.
• Achieve long-term stability by planning for both predictable and unexpected costs.
In this blog, we’re going to break down what fixed and variable costs are, why they’re important, and how you can use this knowledge to enhance your field service operations. Let’s dive right in.
Is Crucial For Field Service Companies Why Understanding Costs
First, let’s define what we mean by “costs”. When we refer to costs we are referring to our company’s cost, not our customer’s cost. Our customer’s cost is our ‘price’ or ‘revenue.’ In all businesses, costs are defined either as fixed costs or variable costs. In field service businesses, a lot of the costs are variable costs. In fact, the more variable costs you have as a percentage of total costs (vs. fixed or overhead costs), the better off you are and the more efficient you are. The more variable costs vs fixed costs that your company has, it means you’re more profitable, too, as long as you are in control of your variable costs. So, what are the goals of a successful field service business from the fixed and variable cost perspective?
Fixed Costs Vs. Variable Costs: What’s The Difference?
FIXED COSTS
Fixed costs are the expenses that don’t change with the volume of work. Think rent, insurance, or administrative salaries.
VARIABLE COSTS
Variable costs fluctuate based on the work you do, such as materials, fuel, or subcontractor payments.For a successful field service business, you want most of your costs to be variable.
In A Field Service Business? What Do Fixed Costs Actually Mean
Finding the right level of fixed costs is the easy thing to do. While you definitely want to limit your overhead or fixed costs, if you skimp too much, it can be a problem. If you ran your field service business out of your home and didn’t buy equipment and didn’t hire administrative staff, then your fixed costs would certainly be lo,w but so would your growth.
In Field Service Understanding Variable Costs
For field service, we want to make sure that most of our costs (expenses) are variable costs – those that are incurred only as a result of the services, products, or materials that we provide. If there is no job, then there is no cost.
Variable Costs In Field Service 6 Types Of
Subcontractor
Equipment
Materials
Labour Burden
Vehicle Costs
Other Costs
Insights Drive Success How Real-Time Variable Cost
While accurately estimating variable costs can help field service companies come up with a minimum amount or a competitive amount to propose to customers, we use actual variable costs to determine the profitability of a job. Companies who can get these costs, allocate them to the right job and display them in meaningful ways simply have a distinct advantage over their competition.
Conclusion
Understanding and managing fixed and variable costs isn’t just about crunching numbers—it’s about gaining control over your business’s profitability and scalability. With tools like Swivl, field service businesses can gain real-time insights into their cost structures, create accurate estimates, and make informed decisions that improve efficiency and boost margins.
By leveraging the right tools and adopting a systematic approach to cost management, your field service business can not only survive but thrive in an ever-changing market. Ready to make the leap? Start analyzing your costs today and pave the way to sustainable growth.
THANK YOU
