Trade Business Glossary

Accounts receivableA/R#: Money customers owe you for work already invoiced. A/R is earned but not in the bank, so a shop can be profitable on paper and still short on cash. Review it weekly by age (0-30, 31-60, 61-90, over 90 days).Read the guide · Related: Days sales outstanding, Payment terms
AI receptionist#: Software that answers a business's phone with a natural voice, asks the caller questions, and can book appointments or take messages. For trade shops it covers after-hours, overflow and lunch-hour calls. A good one says when it does not know instead of guessing. Compare answering service.Read the guide · Related: Answering service, Customer service representative, Phone menu
Answering service#: A company of live operators who answer your calls when you cannot, usually taking messages or following a script you give them. Whether they can book directly into your schedule depends on the service and your setup.Read the guide · Related: AI receptionist, On-call rotation
Arrival window#: The time range you promise the customer the tech will arrive, such as 8 to 10am. Shorter windows are easier for customers but harder for dispatch; an on-the-way text helps either way.Read the guide · Related: No-show, Dispatch board, Capacity planning
Average ticket#: Total revenue divided by the number of invoiced jobs over the same period. Example: $48,000 from 120 jobs is a $400 average ticket. Track it per tech and per job type, because a few big replacements can hide many small, low-value calls.Read the guide · Related: Close rate, Gross margin, Customer lifetime value
Billable hours#: The hours a tech spends on work that a customer pays for, as opposed to drive time, shop time, training and callbacks. Pricing that assumes every paid hour is billable will come out too low.Read the guide · Related: Technician utilization, Burdened labor rate, Overhead
Booking rate#: The share of calls from real potential customers that end with a booked job. Formula: booked calls divided by bookable calls, times 100 (leave out wrong numbers, vendors and existing-job questions). Raising it books more work from the marketing you already pay for.Read the guide · Related: Customer service representative, Close rate, Lead source
Burdened labor rate#: What an hour of a tech's time really costs the shop: base wage plus payroll taxes, workers' comp, benefits, paid time off and other employer costs. Example: if the burden adds 35%, a $30 an hour wage really costs $40.50 an hour. Use the burdened rate, not the wage, in job costing.Read the guide · Related: Job costing, Billable hours
Callback rate#: The share of completed jobs that need a return visit because something was not fixed or failed again. Formula: callbacks divided by completed jobs, times 100. Callbacks are usually unpaid, so they come straight out of margin. See also warranty callback.Read the guide · Related: Warranty callback, First-time fix rate
Capacity planning#: Working out how many jobs your crew can really run in a day or week, after drive time, breaks and emergencies, and booking to that number. It tells you when to hold slots for emergencies and when to hire.Read the guide · Related: Technician utilization, Arrival window
Certified payroll#: The weekly payroll report contractors and subcontractors must submit on federal and federally assisted construction contracts covered by the Davis-Bacon and Related Acts, with a signed Statement of Compliance confirming each worker got at least the required prevailing wage and fringe benefits. The US Department of Labor's Form WH-347 is optional; the weekly payroll information is not. Many state prevailing-wage programs have their own reporting rules.Related: Prevailing wage
Change order#: A written, priced change to the agreed scope of a job, signed by the customer before the extra work starts. Example: rotten subfloor found after tear-out. Signed change orders prevent billing disputes at the end of a project.Read the guide · Related: Progress billing, E-signature, Time and materials
Close rate#: The share of estimates or sales opportunities that turn into sold jobs. Formula: estimates sold divided by estimates given, times 100. Measure it by tech and by job type, and count dollars as well as jobs.Read the guide · Related: Booking rate, Good, better, best, Estimate follow-up
Commission plan#: Written rules for paying techs or salespeople a share of what they sell or produce, for example a percentage of the job's revenue or gross margin. Pay on margin, not just revenue, if you want techs to protect profit.Read the guide · Related: Spiff, Gross margin
Cost per leadCPL#: Marketing spend for a channel divided by the leads it produced in the same period. Example: $1,500 spent for 30 leads is $50 per lead. Compare it with your booking rate and average ticket, since cheap leads that never book cost more.Read the guide · Related: Lead source, Customer lifetime value
CRMCustomer relationship management#: Software that keeps every customer's contact details, history, conversations, estimates and jobs in one record. In the trades, CRM is usually part of field service management software.Read the guide · Related: Field service management, Data migration
Customer financing#: Letting customers pay for a bigger job over time through a lending partner, while the shop is paid up front by the lender. It can make a replacement affordable for a customer who cannot pay at once.Read the guide · Related: Good, better, best, Deposit
Customer lifetime valueCLV, LTV#: The total gross profit you expect from a customer over all their future jobs, not just the first one. It tells you how much you can afford to spend to win and keep a customer, and why memberships and good service pay off.Read the guide · Related: Membership plan, Average ticket, Cost per lead
Customer service representativeCSR#: The person who answers the phone, books jobs, handles reschedules and keeps customers informed. In a trade shop, the CSR's booking rate is one of the biggest drivers of revenue.Read the guide · Related: Booking rate, AI receptionist, Answering service
Data migration#: Moving customers, jobs, equipment, price books and history from one software system to another. Doing a dry run, checking the rows, and keeping the old system until the new one is proven avoids losing data.Read the guide · Related: CRM, Field service management
Days sales outstandingDSO#: The average number of days it takes to collect payment after a sale. Formula: accounts receivable divided by revenue for the period, times the days in the period. Example: $30,000 owed on $90,000 of monthly revenue over 30 days is a DSO of 10 days.Read the guide · Related: Accounts receivable, Payment terms
Deposit#: Money collected up front, usually at signing, to secure the job and cover materials. How much to ask depends on the job size, material cost and any limits your state sets for home improvement contracts, so check your state's rules.Read the guide · Related: Progress billing, Payment terms
Diagnostic fee#: A charge for finding the cause of a problem, such as troubleshooting a furnace or tracing a short, before any repair is priced. It pays for the tech's skill and time even if the customer does not buy the repair.Related: Trip charge, Flat-rate pricing
Dispatch board#: The screen where the office sees every tech's day and assigns jobs, usually by dragging a job onto a tech in a day, week or map view. A good board shows who is free, who is running late and where each truck is. See route optimization.Read the guide · Related: Route optimization, Capacity planning, Arrival window
E-signatureElectronic signature#: Signing an estimate, contract or change order on a phone, tablet or computer instead of on paper. It records who signed and when, so the job can start on the spot.Read the guide · Related: Change order, Deposit
Estimate follow-up#: Contacting a customer after sending an estimate they have not yet approved, usually by text, email or call on a set schedule (for example day 2, day 7, day 14). A customer who has not answered may simply have forgotten, so a polite nudge is worth sending.Read the guide · Related: Close rate, Good, better, best
Field service managementFSM#: Software and methods for running work done at the customer's location: taking calls, scheduling, dispatching techs, estimating, invoicing and getting paid. FSM software puts the office and the trucks on the same job record.Read the guide · Related: CRM, Dispatch board, Work order
First-time fix rateFTFR#: The share of jobs finished on the first visit, with no second trip for parts, a missed diagnosis or a supervisor. Formula: jobs fixed on the first visit divided by all jobs, times 100. Well-stocked trucks, good call notes and trained techs push it up; every return trip is unpaid drive time.Read the guide · Related: Callback rate, Truck stock, Technician utilization
Flat-rate pricing#: Charging a set, published price per task (for example, replace a toilet fill valve) no matter how long it takes. The customer knows the price before work starts, and the shop carries the risk of a slow job. Flat rates are usually built from labor time, parts, overhead and target margin and kept in a price book.Read the guide · Related: Time and materials, Price book, Markup
Good, better, best#: Presenting a customer with three priced options for the same problem, from a basic fix to a premium solution, instead of one take-it-or-leave-it price. It lets the customer choose between options instead of answering yes or no.Read the guide · Related: Close rate, Price book, Customer financing
Google Business ProfileGBP, formerly Google My Business#: Google's free listing that controls how a business appears on Google Maps and Search: hours, phone, website, service area, photos and reviews. Service businesses that visit customers are eligible; online-only businesses are not. Verified profiles can reply to reviews and post updates.Read the guide · Related: Review request, Local Services Ads, Service area
Google Verified badge#: The single badge Google now shows for Local Services Ads advertisers who have passed its screening and verification process. Google moved to one badge for all advertisers and ended the money-back guarantee that came with the older Google Guarantee badge, honoring reimbursement requests only for services booked before December 7, 2025. Google says the change does not affect ad ranking.Read the guide · Related: Local Services Ads, Google Business Profile
Gross margin#: Revenue minus direct job costs (labor, parts, materials, subs), as a share of revenue. Formula: (price minus direct cost) divided by price, times 100. Example: a $1,000 job with $600 direct cost has a 40% gross margin. It is not the same as markup.Read the guide · Related: Markup, Net profit margin, Job costing
Inspection#: A check by the building department's inspector that permitted work meets code, often at rough-in and at final. Scheduling it promptly and being ready when the inspector arrives keeps jobs from stalling.Read the guide · Related: Permit
Job costing#: Tracking the real cost of each job (labor hours at the burdened rate, parts, materials, subs and drive time) and comparing it with what you charged. It shows which job types, techs and customers actually make money.Read the guide · Related: Gross margin, Burdened labor rate, Overhead
Lead source#: Where a customer first heard of you or contacted you: Google search, an ad, a referral, a truck wrap, a repeat customer. Recording it on every new job tells you which marketing is working.Read the guide · Related: Cost per lead, Booking rate
Load calculationManual J#: Working out how much heating and cooling a building needs, room by room, from its size, insulation, windows, orientation and climate. ACCA's Manual J is the ANSI-recognized standard for residential load calculations and, according to ACCA, a proper calculation is required by national building codes and most state and local jurisdictions. Sizing from the old unit's tonnage instead can lead to the wrong size system.Read the guide · Related: Good, better, best
Local Services AdsLSA#: Google's ads for local service businesses that appear in Google Search when people look for services in areas you choose. Leads come in as calls or messages, and Google says you only pay when a customer gets in touch from your ad, not per click. Advertisers must pass Google's screening and verification. See Google Verified.Read the guide · Related: Google Verified badge, Cost per lead, Google Business Profile
Lockout/tagoutLOTO#: Procedures that shut off and lock or tag equipment so hazardous energy (electrical, mechanical, gas and others) cannot be released or the equipment cannot start while someone is working on it. OSHA's general industry standard is 29 CFR 1910.147, The Control of Hazardous Energy.Read the guide · Related: Safety checklist
Markup#: The amount added on top of cost, as a share of cost. Formula: (price minus cost) divided by cost, times 100. Example: a $600 cost sold at $1,000 is a 67% markup but only a 40% gross margin; mixing the two up underprices jobs.Read the guide · Related: Gross margin, Flat-rate pricing
Membership planMaintenance plan, service agreement#: A recurring plan where the customer pays monthly or yearly for scheduled maintenance visits and perks such as priority booking or a discount on repairs. Memberships give the shop predictable revenue and fill slow seasons with tune-ups.Read the guide · Related: Customer lifetime value, Capacity planning
Net profit margin#: What is left after every cost, direct job costs and overhead, as a share of revenue. Formula: net profit divided by revenue, times 100. A shop can have healthy gross margins and still a thin net margin if overhead is high.Read the guide · Related: Gross margin, Overhead
No-show#: A booked appointment where the customer is not there or cancels at the door. Reminder texts, clear arrival windows and an on-the-way message cut them down.Read the guide · Related: Arrival window, Trip charge
On-call rotation#: A schedule that sets which tech takes after-hours emergency calls on which nights or weekends, usually with an agreed on-call pay or emergency rate. A fair, published rotation keeps techs from burning out.Read the guide · Related: Phone menu, Answering service
Overhead#: Costs of running the business that are not tied to a single job: rent, office staff, insurance, software, marketing, trucks sitting in the yard. Overhead is usually spread across jobs as a cost per billable hour or a share of revenue when setting prices.Read the guide · Related: Net profit margin, Billable hours, Job costing
Payment terms#: When and how an invoice must be paid, written on the estimate or contract and the invoice. Examples: due on completion, Net 30 (due 30 days after the invoice date), or a deposit with the balance on completion.Read the guide · Related: Accounts receivable, Deposit, Days sales outstanding
Permit#: Written approval from the local building department to do regulated work, such as a water heater replacement, panel upgrade or reroof. Requirements vary by city and county, so check locally. Working without a required permit can mean fines and redoing work.Read the guide · Related: Inspection
Phone menuIVR, auto attendant#: The recorded options a caller hears, such as press 1 for an emergency, press 2 to book service. A short menu can send real emergencies straight to the on-call tech; a long one loses callers.Read the guide · Related: On-call rotation, AI receptionist
Prevailing wage#: The minimum hourly wage and fringe benefits that must be paid to laborers and mechanics on covered public works. Under the federal Davis-Bacon Act, it applies to federal construction, alteration or repair contracts over $2,000, with rates set by the US Department of Labor for each locality and trade. Many states have their own prevailing-wage laws for state and local public work.Related: Certified payroll
Price bookPricebook#: The shop's master list of services, tasks, parts and their prices, often with descriptions and photos. Techs quote from it so every customer gets the same price for the same work. It needs regular updates when supplier costs change.Read the guide · Related: Flat-rate pricing, Good, better, best, Markup
Progress billingStaged invoicing, draw schedule#: Invoicing a larger job in stages as work is completed (for example deposit, rough-in, finish) instead of one bill at the end. It keeps cash coming in during long projects. See also retainage.Read the guide · Related: Deposit, Retainage, Change order
Purchase orderPO#: A document a business sends to a supplier to order specific items at agreed prices. Tying each PO to a job number makes job costing accurate. Commercial customers may also issue you a PO that must appear on your invoice.Related: Truck stock, Job costing
RetainageRetention#: A share of each progress payment that the customer or general contractor holds back until the work is finished and accepted, as a guard against unfinished or faulty work. The percentage and release terms are set by the contract and, in some places, by state law, so read them before you bid.Related: Progress billing, Payment terms, Accounts receivable
Review request#: Asking a happy customer to leave a review, ideally right after the job with a direct link. Google lets businesses share a review link or QR code, but offering discounts or gifts in exchange for reviews is prohibited under its policies.Read the guide · Related: Google Business Profile
Ride-along#: A new tech, or a manager, spends a day in the truck with an experienced tech to learn the work and the shop's way of doing it. Structured ride-alongs with a checklist train faster than shadowing alone.Read the guide · Related: Safety checklist, First-time fix rate
Roofing squareSquare#: A roofing unit equal to 100 square feet of roof area. Divide roof area by 100 to get squares; a 2,500 square foot roof is 25 squares. Order a little more than the measured squares to cover waste, which rises with hips, valleys and cut-up roofs.Read the guide · Related: Job costing
Route optimization#: Ordering and assigning a day's jobs to cut total driving time while keeping arrival windows and skill needs. Less driving means more billable hours per tech per day.Read the guide · Related: Dispatch board, Technician utilization
Safety checklist#: A short list of checks a tech completes before starting work, such as gas leak check, test before touch or ladder set-up. Making it the first step on the job, not optional paperwork, is what makes it work.Read the guide · Related: Lockout/tagout, Ride-along
Service area#: The towns, ZIP codes or radius where you take work. Set it on purpose: long drives eat billable time. Your Google Business Profile can show a service area instead of a street address.Related: Trip charge, Google Business Profile
Spiff#: A small one-time bonus paid to a tech or CSR for a specific sale or action, such as selling a membership or generating a lead the sales team closes. Spiffs work best when the rules are written down and paid quickly.Read the guide · Related: Commission plan, Membership plan
Subcontractor bid#: A price from a sub (electrician, plumber, drywall, tile) for their part of a larger job, requested against the same scope so bids can be compared fairly. The awarded bid becomes part of the general contractor's estimate and budget.Read the guide · Related: Change order, Job costing
Tap to Pay#: Taking a contactless card, phone or watch payment directly on a smartphone, with no separate card reader. Apple's Tap to Pay on iPhone works through supported payment apps. For field techs it means getting paid on the spot.Read the guide · Related: Payment terms, Deposit
Technician utilization#: The share of a tech's paid hours that are billable. Formula: billable hours divided by paid hours, times 100. Low utilization often points to scheduling gaps, long drives or too many return trips.Read the guide · Related: Billable hours, Capacity planning, Route optimization
Time and materialsT&M#: Billing the customer for the hours worked at an hourly rate plus the materials used, usually with a markup on materials. It suits jobs with unknown scope, like remodel surprises or troubleshooting. The customer carries the risk of a slow job, which is why many service customers prefer a fixed price.Read the guide · Related: Flat-rate pricing, Markup, Change order
Trip chargeService call fee#: A flat fee for sending a tech to the customer, covering drive time and truck cost. Some shops credit it toward the repair if the customer goes ahead. Tell the customer when they book, not at the door.Read the guide · Related: Diagnostic fee, Service area
Truck stockVan stock#: The parts and materials carried on each service vehicle so techs can finish common jobs without a supply-house run. A standard stock list per truck, restocked after each job, raises first-time fix rate.Read the guide · Related: First-time fix rate, Purchase order
Warranty callback#: A return visit to fix or redo work the shop already did, at no charge, under its labor warranty or a manufacturer warranty. Track the cause of each one so you can fix the root problem. See callback rate.Read the guide · Related: Callback rate, First-time fix rate
Work order#: The record of a job: customer, address, what is wrong or what is to be done, who is assigned, and what was done, used, and charged. In field service software, the work order is the job record techs open on their phones.Related: Field service management, Dispatch board

The trade business glossary.

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See it on your own shop.