For: equipment dealers and installation managers
The decision: Does the quoted installation price cover the work and the subcontractor’s scope?
60-second answer: Estimate labor, travel, freight, access, equipment and other direct costs separately. Agree site-readiness assumptions and change authorization, then compare actual job costs with the estimate.
A per-unit rate becomes useful when everyone knows what work and site conditions it includes.
Define the work before applying a rate
List delivery, unloading, movement into position, assembly, mounting, commissioning, packaging removal and customer handover. Mark each as included, excluded or supplied by another party. Identify any specialist work and required site approvals. A subcontract should connect the scope, responsible party and evidence of completion.
For in-house labor, estimate paid person-hours by task and multiply by the dealer’s loaded hourly cost. Two installers working four hours represent eight person-hours. Use the subcontractor’s quoted fee for work they own; do not add in-house hours for the same work unless both costs genuinely apply.
| Cost line | Input | Review before quoting |
|---|---|---|
| Crew labor | Person-hours × loaded cost per hour | Includes planned travel or it is costed separately |
| Subcontract work | Accepted scope-specific fee | No duplicate labor for the same task |
| Transport and access | Freight, vehicle, lift or specialist access costs | Separate pass-through charges and dealer cost |
| Site and completion | Approved preparation, consumables and disposal | Identify work by other trades |
| Contingency and margin | Explicit estimate allowance and target contribution | Show the assumptions; do not hide missing scope |
Turn the estimate into an operating record
Name the site-readiness conditions: delivery access, approved layout, completed electrical or structural work and availability of the receiving contact. Define how changed conditions are reported and who can approve cost or schedule changes. Avoid letting an installer’s arrival become an undocumented acceptance of unfinished site work.
The commercial agreement should also address qualifications, insurance, responsibility, payment and handover. Worker classification and legal obligations depend on the actual relationship and jurisdiction; using the word “subcontractor” does not resolve them. Have the appropriate professional review those terms when needed.
If costs are C and the target contribution margin is m, a planning price is C ÷ (1 − m), with m below 100%. Margin differs from a markup on cost. This calculation does not guarantee profit: identify which overhead, selling costs and contingencies are included. After completion, compare estimated and actual hours, travel, return visits and approved changes.
Records to pull
Pull completed-job time records, loaded labor costs, subcontract quotes, freight and access invoices, site surveys, change orders and customer credits. Keep the estimate and actuals on the same cost basis.
Questions to resolve
- Which work and conditions are included in each rate?
- Who authorizes extra work before it is performed?
- What completion evidence triggers customer acceptance and subcontract payment?
What to do this week
- Cost one upcoming job with separate labor and access lines.
- Close scope gaps with the subcontractor and buyer.
- Review one completed job for estimate-to-actual variances.
Related FEX resources
FEX editorial analysis: the operating framework above is a recommendation, not a manufacturer specification or an industry benchmark.
Editorial update, October 7, 2026: Removed an unverified crew-shortage case and universal subcontract rules. Cost formulas are FEX planning methods, not industry rate benchmarks.
