What each installation job really costs a provider
How an internet or voice provider adds up equipment, technician time and travel for each installation, and checks installation fees against the costs.
By Achekam · · 5 min read · For Telecoms businesses in South Africa, Nigeria, Kenya
Ask a provider's operations manager what an installation costs and you will often get the price of the router. Ask the finance manager and you may get the installation fee charged to the customer. Neither is the answer. A real installation uses a device, a length of cable, connectors and a wall plate, a technician's morning, a vehicle's fuel and sometimes a second visit because the customer was out.
When the fee charged for installation is set without knowing that full cost, a provider can grow its subscriber base and lose money on every new connection without noticing. This article shows how to build up the cost of an installation, which costs to charge directly and which to share, and how to compare the result with what you charge.
What goes into one installation
AccountingTools defines job costing as accumulating the costs of materials, labour and overhead for a specific job. Its explanation of job costing is written with factories and builders in mind, but the three buckets fit a fibre or wireless installation well:
- Materials: the router or ONT if the customer keeps it, the drop cable, connectors, brackets, wall plates, and any mast or dish for a wireless link.
- Labour: the technician's hours on site and travelling, plus a second technician on jobs that need one.
- Overhead: the vehicle (fuel, maintenance and its share of insurance), tools, the dispatcher's time, and the cost of failed visits.
For a home fibre connection the job is small and repeated many times, so the useful figure is an average cost per installation of each type. For a business site build that runs for weeks, the job is large and unique. AccountingTools notes that for big projects in progress over many months, job costing is used to assign individual costs to each project, and that is how a multi-building office park connection should be treated.
Direct costs and shared costs
Not every cost can be traced to one address. AccountingTools explains that labour directly traceable to a job is charged to it as direct labour, while other labour is gathered in an overhead pool as indirect labour and allocated across jobs.
For a provider, that line usually falls like this:
| Cost | Direct to the job | Shared across jobs |
|---|---|---|
| Device and materials issued for the address | Yes | |
| Technician hours on the job card | Yes | |
| Travel to a single remote site | Yes | |
| Dispatcher and scheduling time | Yes | |
| Technician time waiting, training or in the depot | Yes | |
| Vehicle insurance and tracking | Yes | |
| Failed visits where the customer was absent | Yes |
Share the pooled costs by something sensible, such as the number of installations in the month or the technician hours booked. The method matters less than using the same one every month, so the figures can be compared.
Equipment issued from van stock
Equipment is usually the largest single cost, and the hardest to pin down if technicians draw from a pile in the van. With Achekam's Warehousing add-on, a business keeps stock locations on the server, including vans, with the quantity on hand at each. Making each installer's van its own location means you can see what each van holds and, after each count, what it used.
There is a limit to plan around: stock counts, wastage, transfers and opening quantities do not post to the general ledger in Achekam, and only till sales and till returns move the inventory account. So the quantities on the van tell you what was used, but moving the cost of that equipment out of inventory and into an installation cost account is a manual journal. Post it monthly, from the van counts and the job cards, and keep both as support. The van routine itself is covered in keeping track of equipment on installer vans.
Installer labour by department
Labour is the second large cost. If your installers sit in their own department in payroll, Achekam's payroll reports show cost, headcount and staff movements by month and by department, so the total cost of the installation team for the month comes straight from approved pay runs rather than a spreadsheet estimate.
That total is the starting point, not the answer. Split it between direct and indirect time using the job cards: hours booked to installations go to direct labour, the rest to the shared pool. If the same technicians also do fault repairs, their repair hours belong to support, not installation.
Comparing installation fees with installation costs
Keep the per-job detail on your job cards or a costing sheet, and let the ledger hold the totals. Each business has its own double-entry ledger with a standard chart of accounts, and accounts can be added, so set up the pair you need:
- Installation costs, split if useful into equipment, direct labour and vehicle costs, fed by your monthly journals.
- Installation fees, so the revenue from installations can be moved out of general sales by journal at month end and set beside those costs.
Then use a budget. A business can set a budget per account and period and compare it with actual figures from its ledger. Budget installation costs from the number of installations you expect, and look at actual against budget every month. AccountingTools advises that on long jobs the accumulated costs should be compared with the job budget regularly, so management is warned early if costs are running ahead. The same habit, applied to your monthly installation accounts and to each large business build, catches the problem while there is still time to act: renegotiate a device price, change the fee, or approach a business customer about a variation.
A monthly check in five steps
- Count the installations completed in the month, by type.
- Total equipment used, from van counts and job cards, and journal it to installation costs.
- Take the installation team's payroll cost and split it into direct and shared time.
- Add vehicle and other shared costs, and divide by installations to get an average cost per installation.
- Set that beside the average installation fee charged, and investigate any month where the gap moves.
When the installation is partly a first-month charge, the timing of the revenue matters too; billing the installation and the first part-month covers how to invoice it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
