Plumbing Performance Pay Structure & Commission Guide (2026)

Every plumbing company that has scaled past five technicians has done it the same way: performance-based pay. The best plumbers in the area will not stay at a shop that pays them a flat wage while they're generating enormous revenue.

This is not for the 55-technician private equity rollup. This is for the shop owner who wants to grow a stable, healthy business that serves the community long term.

The goal of every performance pay plan is to create $100,000-a-year technicians. That is the north star. Everything in this article is built to get there.

Step 1: Calculate Your Burden Rate

Before you touch a commission rate, you need to know what your technician actually costs you per hour. This number is your burden rate, and it is the foundation your entire pricing and pay structure sits on.

The burden rate is every dollar your business spends to have a technician show up and work a job.

That includes but is not limited to:

• Hourly wages
• Payroll taxes (FICA, FUTA, SUTA)
• Workers' compensation insurance
• Health insurance and any benefits you offer
• Vehicle payment, insurance, and fuel per truck
• Tools and equipment
• Uniforms
• PTO and sick days you owe them
• Any training or licensing fees
• Admin overhead and your own salary split across the team

Add all of these costs over a year's timeframe. Divide by the total number of hours your technician actually works in the field. That is your burdened hourly rate.

For a plumbing shop, the burden rate typically runs 1.4 to 1.6 times the base hourly wage. If you are paying a plumber $35 per hour, your burdened cost is probably landing somewhere between $49 and $56 per hour when everything is counted.

This number is integral to making sure you can build a performance pay plan that is scalable as you grow.

Step 2: Build Your Flat Rate Pricebook Around Your Billable Hour Rate

Plumbing is a labor-heavy trade. Materials are not a core expense of the majority of jobs. Your pricing needs to reflect that.

Your minimum billable hourly rate needs to be at least three times your burdened cost. If your burden rate is $50 per hour, your minimum billable rate is $150 per hour. That is the floor. That is what you need to charge before you even think about making money after covering labor, overhead, and the cost of running the business.

If that number makes you nervous, understand what it represents. You are not charging for a guy with a wrench. You are charging for the diagnostic ability to identify a problem correctly the first time, the skill to fix it without making it worse, and the guarantee behind the work. Plumbers with that skill set are genuinely hard to find. Charge accordingly.

Building your flat rate pricebook means baking that billable hour directly into every job price. You know, or you should know, roughly how long each job takes on average. Take that average time, apply your billable rate, add material cost with a significant markup, and that is your flat rate price for that service.

Do this for every job type you run regularly. Yes, it takes time. Do it anyway. Because once this is done, your commission structure becomes simple math.

A few things to bake into your prices that shops often forget:

• Credit card processing fees (typically 2.5 to 3.5 percent of revenue)
• Annual price increases to keep pace with inflation
• Material markup of 200-300%

TeamBuyIn Tip: Most plumbing jobs do not have significant material cost, so when materials are present, mark them up. The actual materials are an expense that requires you to source, stock, and transport them. They aren't core to your business and revenue operations, so you need to make sure that the pricing reflects that reality.

Step 3: The Commission Structure That Creates $100K Plumbers

At-a-Glance Sample Plumbing Tier Structure ($35/hr Base Wage):
• Tier 1 (Base): 3% commission on all revenue up to $40,000/mo
• Tier 2 ($40k+ Revenue): 6% commission on revenue between $40k and $60k
• Tier 3 ($60k+ Revenue): 10% commission on all revenue above $60k

Here is the model that works for growing plumbing shops. It is not complicated, but it requires that you have actually done Steps 1 and 2 first.

Every technician gets a base hourly wage, guaranteed. A technician who is worried about making rent is not focused on doing great work and generating revenue. Pay them a real base wage.

Then, every technician gets a percentage of every item on a ticket they generate, paid on top of their base. No exceptions for job type or difficulty.

Most plumbing shops on TeamBuyIn start that base percentage somewhere between 3 and 5 percent. Use 3 percent as your starting number, and here is why it works.

Say your plumber earns $35 per hour, works 160 hours in a month, and generates $30,000 in revenue that month.

Base pay: 160 hours x $35 = $5,600

Commission at 3%: $30,000 x 0.03 = $900

Total paycheck: $6,500

Labor cost to the business: 21.7 percent

That is workable, but not ideal. The business is healthy. The technician is making meaningfully more than hourly alone would give them.

Now, here is where the revenue threshold model comes in, and this is what separates plumbing performance pay from a generic bonus structure.

How Revenue Thresholds Unlock Plumbing Performance Pay

The base commission percentage applies to every dollar of revenue, but when a technician crosses a defined revenue threshold in a given period, their commission rate increases for everything they generate at and above that threshold. Some shops retroactively increase the commission payout for past jobs within a time period when a threshold is met as well, so it just depends on how you want this threshold to operate.

Regardless of specifics, this is the mechanism that creates $100,000 technicians. Without it, you have a decent pay plan that's a commission structure, not performance pay. With it, you have a pay plan that makes your best technicians want to stay forever and makes everyone else want to become your best technician.

How to Calculate Revenue Thresholds For Your Plumbing Business

The threshold needs to be tied directly to the math of your own business. There are two goals that are your core principles you build everything from: achieve a labor cost of 20 percent or lower when a tech is performing at a high level. Make sure your technician is being paid as much as possible within that constraint. Work backwards from these two core principles.

For example, using a $35-per-hour base with a 160-hour month, the guaranteed base cost is $5,600. At a 20 percent labor cost target, that base alone is already covered when the technician generates $28,000 in revenue. So the threshold to trigger a bump in commission rate should be set above that level, at the point where the technician's output is generating a meaningful profit margin above the floor.

A practical threshold structure for a shop paying $35 per hour with an average ticket around $500:

Base tier (every ticket, no threshold): 3 percent commission

Tier 2 (once monthly revenue crosses $40,000): commission rate increases to 6 percent on all revenue going forward that month

Tier 3 (once monthly revenue crosses $60,000): commission rate increases to 10 percent on all revenue going forward that month

Let's see what that does to the math across three performance levels.

A consistent, solid plumber generating $45,000 per month:

Base pay: $5,600

Commission at 3% on first $40,000: $1,200

Commission at 6% on remaining $5,000: $300

Total paycheck: $7,100

Labor cost to the business: 15.8 percent

A high performer generating $65,000 per month:

Base pay: $5,600

Commission at 3% on first $40,000: $1,200

Commission at 6% on next $20,000: $1,200

Commission at 10% on remaining $5,000: $500

Total paycheck: $8,500

Labor cost to the business: 13.1 percent

A rockstar generating $100,000 per month:

Base pay: $5,600

Commission at 3% on first $40,000: $1,200

Commission at 6% on next $20,000: $1,200

Commission at 10% on remaining $60,000: $6,000

Total paycheck: $14,000

Labor cost to the business: 14.0 percent

With all of these numbers, the thing that I hope is very clear quickly is that there is room to pay your employee more. These are just examples to illustrate the point. Your goal is not to get the lowest labor cost possible. Racing to the bottom is not a business strategy. It's to bring their pay to that 20% threshold. If there is room, it's your obligation as a business owner to figure out how to give them more money in a way that doesn't blow up the labor cost past that 20% threshold. It is functionally impossible to pay a top producer too much money if you understand your numbers and build the right structure.

It would take a few tweaks to get your employee in every example $100,000 a year or more in net earnings, while still maintaining sub-20% labor cost.

Keep in mind: each tier up should meaningfully increase their take-home, because you want crossing each threshold to feel like an event, something they notice in their paycheck and start chasing again next month. Do not make the tiers so small that the technician can not feel the difference.

Communicate the thresholds clearly. Print them. Post them. Run them through TeamBuyIn. The biggest killer of any performance pay plan is confusion. If a technician has to spend mental energy figuring out why their check came out the way it did, the motivational effect disappears entirely. The math needs to be simple enough that they can run it in their head in the truck between jobs.

Communicating these tiers clearly is essential. Instead of tracking them in spreadsheets, explore how TeamBuyIn automates tiered commissions and user volume milestones.

Step 4: Building a Callback Policy That Protects Your Margins

A commission structure without a callback policy will destroy your margins faster than almost any other mistake you can make. Here is why: if a technician gets paid a percentage of every ticket they generate, and there is no consequence for callbacks, you have accidentally incentivized speed over quality. The faster they close a job and move to the next one, the more they earn, regardless of whether the work was done right.

Callbacks cost you your billable rate for the hours it takes to go back and fix the problem, plus fuel, plus the hit to customer trust. On a job that takes two hours to revisit, at a $150 billable rate, you are eating $300 in recovered costs before you even think about the relationship damage.

The most common and effective callback policy works like this: track each technician's callback percentage over a rolling 90-day period. If their callback rate stays below a defined threshold (typically two to four percent), they remain fully eligible for their commission. If it crosses that threshold, they become ineligible for their commission bump for a defined amount of time until their callback issue is corrected.

Some shops eliminate commission from the specific job that generated the callback. Others charge minimum wage to the tech to go back out and fix the mistake. The key is making sure your callback policy is legally compliant in your jurisdiction. Also, make sure the policy is written, communicated upfront, and applied consistently.

TeamBuyIn Tip: Be fair. Sometimes, callbacks happen for reasons outside a technician's control. A customer who changes their mind, a part that fails from a manufacturer defect, a scope change that creates new problems. Your policy needs to distinguish between a callback caused by technician error and one caused by something else entirely. Penalizing a technician for a callback that was not their fault will damage trust faster than almost anything else.

TeamBuyIn tracks callback rates and manages job approvals automatically through native Housecall Pro and Jobber integrations.

Step 5: Review Bonuses and Additional Compensation

Once the base structure is running, there are two additional compensation levers worth building in.

Review bonuses: Pay your technicians a flat dollar amount for every five-star review you can attribute to them. The range most shops use is $15 to $50 per review. The exact number matters less than the consistency. Pick an amount you can sustain, communicate it clearly, and pay it reliably. Reviews compound over time and drive inbound leads. A technician who is actively generating reviews is contributing to the marketing engine of your business, and they deserve to share in what that creates.

Base wage increases tied to performance: This is where a performance pay plan becomes a career path instead of just a pay structure. Define the revenue thresholds at which a technician's base hourly wage increases. When a technician demonstrates over six months that they are consistently generating above a defined revenue level, their base goes up. This gives your top performers a reason to stay and gives everyone else a concrete number to work toward.

What Pay Cycle to Pay Plumbers With

Weekly pay keeps the behavioral loop tight. A technician who closes a strong job on Tuesday and sees it in their check on Friday is actively connecting their effort to their earnings in real time. That connection is what drives the behaviors you want. They book the next call. They recommend the repair. They ask for the review. Because they know exactly what those actions are worth to their paycheck, and they are not waiting three weeks to find out.

Monthly pay cycles break that loop almost entirely. By the time a technician sees the result of a great week from four weeks ago, the moment is gone. The job is a memory. The commission feels disconnected from anything they did, and the motivational effect of performance pay quietly disappears.

Bi-weekly is workable. Weekly is better. If your payroll process makes weekly feel impossible, look at what it would take to fix that before you assume it cannot be done. The behavioral difference is real and it compounds over time.

How to Make Sure Your Plumbing Performance Pay Plan Works

The shops that roll out performance pay and actually stick with it share a few things in common. They did the math before they made any promises. They built their flat rate pricebook before they set a commission rate. They defined their revenue thresholds before anyone's first paycheck under the new plan. And they communicated all of it clearly, in writing, before a single technician started earning under the new structure.

Performance pay fails most often when shops skip steps. They set a commission rate before they know their burden rate, which means they are guessing at whether the math works. They launch without a callback policy, which means fast and sloppy work gets rewarded the same as fast and quality work. They pay monthly instead of weekly, which means the behavioral connection between effort and earnings gets lost entirely.

The five steps in this article are in order for a reason. Your burden rate drives your billable rate. Your billable rate makes your flat rate pricebook possible. Your pricebook makes your commission structure simple. Your revenue thresholds make your commission structure motivating. Your callback policy makes the whole thing sustainable. And your payout cycle determines whether your technicians actually feel the plan working in real time.

When all of that is in place and your best plumber is generating $80,000 to $100,000 a month in revenue, keeping your labor cost under 20 percent while paying them over $100,000 a year is not only possible, it is exactly what the math produces. That is a technician who has no reason to leave, every reason to perform, and a clear picture of what their career at your shop is worth.

That is what performance pay is supposed to do. Now go build it.

Ready to Build a Performance Pay Plan for Your Plumbing Shop?
TeamBuyIn connects directly to Housecall Pro and Jobber to calculate tier thresholds, manage callbacks, and show your plumbers their earnings in real time.

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Frequently Asked Questions About Plumbing Performance Pay

What percentage should I start with for plumbing commissions?

Three percent on every ticket is the right starting point for most shops. It is low enough that your labor cost stays healthy at average production levels, and high enough that a technician can feel it in their paycheck week over week. From there, your revenue thresholds do the work of increasing earnings as production increases.

How do I set my revenue thresholds?

Work backwards from a 20 percent labor cost target. Calculate what your technician costs you per month at their base hourly rate and guaranteed hours. The first threshold should sit above the revenue level where that base cost alone brings you to 20 percent. From there, each additional tier should create a meaningful jump in take-home pay that the technician can actually feel.

What happens if a technician has a slow month and does not hit any thresholds?

Their base hourly wage is guaranteed regardless of production. That is the safety net. The base commission at three percent still applies to every ticket they generate. The thresholds only affect the additional rate increase on top of that. A slow month still pays. It just does not pay as well as a great month, which is the point.

How do I handle callbacks under a commission structure?

Track callback percentage over a rolling 90-day window. Set a threshold, typically two to four percent, above which commission eligibility is affected. Make sure your policy is written, communicated before anyone starts earning commission, and applied consistently. Be fair about callbacks that are outside the technician's control. The policy exists to protect quality, not to punish people for things they did not cause.

Should I pay commission on materials?

Most plumbing shops do not commission materials separately. The revenue threshold model already captures the full ticket value including materials, so the technician earns their percentage on the whole job. If you want to incentivize upselling specific high-margin materials, a flat spiff per unit sold is a cleaner mechanism than adjusting the commission rate.

When should I increase a technician's base wage?

When they have demonstrated, over at least six months, that they are consistently generating revenue above a defined threshold. Base wage increases should be tied to sustained performance, not to tenure or to a single strong month. Define the number upfront so they know exactly what they are working toward.