Year three is priced at year one's costs

What’s inside

• Measuring cost drift across a term

  What labor, parts, fuel and insurance increases do to an agreement's margin, year by year.

• Price adjustments in writing

  A stated adjustment method, schedule and notice written into the agreement and reviewed by counsel.

• Fixed step, index or cost-based

  Three ways to adjust a price, and what each does to the contractor's risk and the customer's trust.

• Communicating the increase

  Notice timed and explained so the customer understands the change before the invoice arrives.

• The customer who pushes back

  Holding the increase, adjusting scope instead of price, or letting an unprofitable agreement end.

• Reviewing prices across the whole book

  An annual review of every agreement's price against its cost, so no customer is left years behind.

The measure it works from

Measure

Margin per agreement per year

Which means

What an agreement brought in over its year, less the technician time, drive time, parts, consumables, covered repairs and office time it actually used.

Compared against

The agreement price set on the day it was sold.

Every figure in the document is illustrative, produced by one internally consistent model, and the document says so on its own cover.

The Escalation