Hiring · Playbook
How to build a technician compensation plan
Compensation drives behavior. The pay structure, performance bonuses, and benefits design that attracts quality techs, motivates productivity, and retains your team for years.
Technician compensation is the single largest operating cost for service businesses and the primary lever for hiring and retention. Get the structure right and you attract quality techs and retain them; get it wrong and you compete with PE-backed platforms with deeper pockets.
Compensation structure also drives behavior. Hourly-only pay rewards time on the clock. Commission-based pay rewards revenue generation but can create perverse incentives. Most successful structures combine base + performance components.
The phases
Phase 1
Define base structure
Week 1-2
Base structure options:
1. Hourly only: simple, predictable for tech, no productivity incentive. Common for new techs and for trades with hard-to-measure productivity.
2. Salary: predictable for both sides. Often used for senior techs and lead positions. Doesn't incentivize productivity.
3. Hourly + performance bonus: hourly base for predictability, bonus for productivity metrics. Most common modern structure.
4. Commission percentage: tech earns percentage (typically 25-40%) of revenue they generate. Strong productivity incentive but creates pressure for upselling and sales tactics.
5. Hybrid hourly + commission: hourly base + commission percentage. Balances predictability and incentive.
Base hourly rates (loaded labor cost reference): - Apprentice/Helper: $16-$24/hr - Junior tech (1-3 years): $22-$32/hr - Mid-level (3-7 years): $30-$45/hr - Senior/Master (7+ years): $40-$60/hr+
Checkpoints
- Base structure selected
- Hourly rate ranges defined per tier
Phase 2
Add performance components
Week 2-4
Productivity bonuses (paid monthly or quarterly): - Revenue per billable hour exceeding target: 5-10% bonus on excess revenue - First-time fix rate above target (e.g., 80%): $200-$500 quarterly bonus - Customer satisfaction (Google reviews, customer survey scores): $200-$500 quarterly bonus per metric
Plan signup commission: $25-$75 per maintenance plan signed up. Motivates active selling without making techs salespeople.
Tenure increases: annual review with documented raise structure (2-7% per year typically). Predictable raises reduce flight risk to competitors.
Spiffs and one-time bonuses: $50-$200 for specific accomplishments (highest-revenue week, perfect customer feedback, tech-of-the-month). Variety keeps motivation fresh.
Checkpoints
- Productivity bonus structure defined
- Plan signup commission
- Annual review and raise structure
Phase 3
Benefits package and total compensation positioning
Week 4+
Benefits that matter: - Health insurance (employer contribution $400-$1,000/month) - Dental and vision (smaller cost, high perceived value) - 401(k) with match (3-5% typical) - Paid time off (1-3 weeks vacation, 5-10 sick days) - Tool allowance ($500-$2,000/year) - Continuing education / certification reimbursement - Truck and gas (provided, saves $4,000-$8,000/year vs personal vehicle)
Total compensation positioning: when communicating with prospective hires, present total compensation (base + bonuses + benefits) not just hourly rate. Often $20-$30K of additional value beyond hourly that's invisible if not explicitly communicated.
Annual review: review all compensation elements annually. Adjust for performance, market shifts, and individual contributions. Document and communicate clearly.
Checkpoints
- Benefits package finalized
- Total compensation communication ready
- Annual review process
Common pitfalls
Base rate too low to attract quality
Underpaying base rate creates churn that costs more than the savings. Pay competitive base; differentiate on bonuses and culture.
Commission-only pressure creating bad behavior
Pure commission can create high-pressure sales tactics that damage customer trust. Hybrid structures protect against this.
Bonus targets unrealistic or unmeasurable
Bonus targets that techs can't realistically achieve, or that depend on factors outside their control, demotivate rather than motivate. Targets should be meaningful but achievable.
What good looks like
- Compensation structure attracts quality techs
- Annual turnover under 15%
- Tech satisfaction high (informal feedback, exit interviews)
- Total compensation competitive with PE-backed platforms
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