Guides
How to figure out which locksmith service lines are profitable
Walks through a contribution calculation per job and occupied hour, plus the unbilled hours that hide in travel, no-work visits and records work.
What to take away
- Profitability is a contribution question, not a headline rate question. The line that bills highest often consumes the most unbilled time.
- Contribution per job = invoice value - parts consumed - variable labor - travel attributed - expected rework cost. Every term comes from your own records.
- Divide contribution by the hours the job actually occupies, travel and returns included. That is the only comparison between service lines that means anything.
- Some lines earn their place without earning much money, because they bring the account that pays for the rest. Say which those are on purpose.
Nobody can tell you which locksmith service is most profitable. The answer depends on your travel distances, your stock position, your labor cost and the buildings around you. What can be written down is the calculation, and a calculation you can run beats a ranking you cannot check.
The contribution formula
For any service line:
Contribution per job formula
- Invoice value
- Minus parts consumed
- Minus variable labor
- Minus travel attributed
- Minus expected rework cost
- Equals contribution per job
Contribution per job = invoice value - parts consumed - variable labor - travel attributed - expected rework cost.
Where:
- parts consumed is what left the van, at what you paid, not at list.
- variable labor is technician hours on site multiplied by loaded hourly cost.
- travel attributed is drive time at loaded hourly cost, plus vehicle running cost for the distance.
- expected rework cost is the historical return rate for that line multiplied by the cost of a return visit.
Then the comparison that matters:
Contribution per occupied hour = contribution per job / (on-site hours + travel hours + attributable administration hours).
Run that for every line on the menu using a season of your own job records. The ranking that falls out will be specific to your business, and it will surprise you at least once.
Why the headline rate misleads
Two lines can bill the same and behave completely differently.
Invoice inflators vs profit consumers
What inflates the invoice
- Emergency call-out
- After-hours labor, urgency
- Residential rekey
- Multiple cylinders per visit
- Commercial master keying
- System design and volume
- Access control install
- Parts value, project size
- Automotive credential work
- Tooling depth, scarcity
- Counter duplication
- Volume, no travel
What quietly consumes it
- Emergency call-out
- Unrecovered travel, no-work visits
- Residential rekey
- Low parts value, travel per property
- Commercial master keying
- Design time, records custody
- Access control install
- Site coordination, return trips
- Automotive credential work
- Equipment and subscription cost
- Counter duplication
- Floor hours paid whether or not anyone comes in
What inflates the invoice
- Emergency call-out
- After-hours labor, urgency
- Residential rekey
- Multiple cylinders per visit
- Commercial master keying
- System design and volume
- Access control install
- Parts value, project size
- Automotive credential work
- Tooling depth, scarcity
- Counter duplication
- Volume, no travel
What quietly consumes it
- Emergency call-out
- Unrecovered travel, no-work visits, broken schedule
- Residential rekey
- Low parts value, travel per property
- Commercial master keying
- Design time, records custody, revisits for additions
- Access control install
- Site coordination, return trips, commissioning
- Automotive credential work
- Equipment and subscription cost, strict authority checks
- Counter duplication
- Floor hours paid whether or not anyone comes in
The right column is where the profit goes. A shop that measures only the left column concludes emergency work is its best line, then cannot explain why the year was tight.
The unbilled hours nobody codes
Three costs hide because no one records them.
Unbilled hours to code
- No-work visitaccess unavailable or entitlement missing
- Quoting that does not convertreal time, no invoice
- Records workmaster key schedules and bitting records
The first is the no-work visit. The technician arrives and the job cannot proceed, usually because access was unavailable or the evidence of entitlement to direct work did not arrive. That visit consumed travel and time. Uncoded, it silently reduces the contribution of whichever line it belonged to.
The second is quoting that does not convert. Commercial and access control lines carry more of this than residential ones, and the time is real.
The third is records work. A master keying system produces a schedule and a set of bitting records that have to be maintained. That maintenance is a cost of that line, not general overhead.
Coding all three needs a job record system that captures outcome as well as invoice. The IRS guidance on what records to keep makes the general point: the system matters less than whether it clearly shows what happened.
Lines that earn their place indirectly
Some services are worth keeping even when contribution per occupied hour is unremarkable.
Keep a line indirectly?
Does the line bring in future work or smooth the schedule?
keep it and write down the reason
cut it or re-evaluate
Counter duplication brings people in and starts the relationship that later becomes a rekey or a commercial account. A small residential line keeps a second technician busy between commercial projects. A maintenance agreement with a property manager smooths a schedule that would otherwise be all peaks.
Decide these on purpose and write down why. A line kept for a stated reason is a decision; a line kept because nobody has looked at it is a leak. Which lines you can staff at all is a separate constraint, and the locksmith hiring and training guide covers the competence each family needs.
Before you chase the profitable line
Three checks before shifting the mix.
Check that you may do it. Some work sits inside a licensing or registration boundary that varies by state and city, and the locksmith licensing and compliance guide sets out how to get that answer from your own authorities.
Check that demand exists at your end of the market rather than in general. Pushing a line the surrounding buildings do not need produces marketing cost, not revenue. That is a channel question, taken up in the locksmith marketing and growth guide.
Check that the claims you would make to sell it hold up. Response times, coverage and licensing statements are all claims, and the FTC advertising standards ask that a claim be substantiated. Wage inputs for the labor term can be sanity checked against the Bureau of Labor Statistics wage tables.
If the line is new to the business entirely, the sequencing in the startup sequence for a locksmith business applies again. How the line is presented belongs to the locksmith services and packages guide.
Common questions
Is emergency work profitable?
It can be, and it is rarely as profitable as the invoice suggests. Subtract unrecovered travel, the visits where no work was possible and the damage to the rest of the day, then compare per occupied hour against a scheduled line. Some shops find emergency work funds the business; others find it funds the van.
Which line has the best parts margin?
Parts margin is the wrong lens alone. A line with excellent parts margin and heavy travel can lose to a line with modest parts margin and a dense route. Compare contribution per occupied hour, which includes both.
How often should I rerun the calculation?
Once a quarter for most shops, and after any change in fuel cost, wage cost or service area. Rerun it immediately if you take on a large account, because one account can change the travel pattern the whole ranking rests on.
