Parts Are Covered. The Truck Roll Is on You.
The manufacturer warrants the box. Everything it takes to get a tech up a ladder to swap that box comes out of your overhead for twelve months.
A roofer's callback is a leak in something the roofer installed. Yours is frequently a change somebody else made to a network you don't control, on hardware whose vendor already shipped the fix. That gives this trade an entire class of unbilled labor other trades never see, and it comes due after the job is closed and the margin has already been recognized.
The size of it
Twelve months of service labor gets absorbed against a job that closed long ago. It turns up later as overhead drift the office can't explain.
Manufacturer warranty on a display, DSP, or control processor is parts only, so you get an RMA, a term of one to five years, and advance replacement if you're lucky. No one covers the labor to diagnose, ladder up, swap, and re-verify, and your subcontract already promised a year of it. Then come the callbacks that were never your defect, where the manufacturer pushes firmware or the owner's IT rotates a certificate or re-VLANs the network and a system that passed acceptance stops working. It comes in as a warranty claim, you can't bill it without a dispute, and there's no service agreement in place because the job was sold as construction work.
Three moves, in order
Step 03: Overhead calculation
What indirect cost really comes to at your size, and the rate your estimating template should be using.
What else costs low voltage and AV contractors money
The same mechanism in other trades
What low voltage and AV owners ask
How to charge for AV warranty service calls after handoff?
The manufacturer warrants the box. Everything it takes to get a tech up a ladder to swap that box comes out of your overhead for twelve months.
What does it cost?
Twelve months of service labor gets absorbed against a job that closed long ago. It turns up later as overhead drift the office can't explain.
What do I do first?
Open a work order for every callback, including the ones you absorb, with hours, tech, cause code, and the originating job number. You can't price service you've never measured.
What are low voltage and AV contractors supposed to be making?
Low voltage and AV has 24% gross margin, 16% overhead and 8% net profit after taxes at $1M to $5M. The all-trade average is 7%, so this trade is 1 point above it. The CFOS target is 11.5%.
Which part of the system fixes it?
The step is number 03, overhead calculation. What indirect cost really comes to at your size, and the rate your estimating template should be using. It comes from chapter 3 of CONTROL: C.F.O.S. Construction Financial Operating System.
Everything on this page is something you can install yourself, and CONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for low voltage and AV contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, led by the same author.
What a fractional CFO does for low voltage and AV contractors
Wrote CONTROL, the 8 step system behind these figures. More about the author.