At a Toolbox Live event in Glendale, a room full of contractors were asked how long payroll takes them each pay period. Hands went up. A lot of them said a full day. Some said more than that.
In a followup interview, Jessica Woodruff Smith said it doesn’t have to be that way.
"Payroll takes too long," said Smith, owner of Boxed For The Trades, a ServiceTitan Certified Provider that specializes in accounting integration. "People are making it complicated, so it takes too long."
Smith spends much of her work helping contractors untangle payroll systems they built years ago and never revisited. The fix she recommends most often isn't a bigger system. It's a simpler one, built inside ServiceTitan's Configurable Payroll and paired with Performance Pay.
How Payroll Gets Complicated in the First Place
Smith said most complicated payroll systems trace back to one habit: contractors design pay around how they've always done it, then force the software to replicate that, spreadsheets and all.
The instinct usually comes from a good place. Owners want to reward technicians for selling more or working more efficiently, so they build in tiers: hit this sales level, get this percentage; hit a higher level, get more. That means running reports on total sales before payroll can even be calculated.
Smith's first question with a new client at Boxed for the Trades isn't about the pay structure at all. It's about who runs payroll and how long it takes them.
If the answer is "the owner, because he's the only one who understands it," or "the accountant, and she can't take vacation because she's the only one who knows how," that's the sign the system needs to change.
Then she asks a more blunt version of the same question: What happens to payroll if that one person disappeared tomorrow?
A Baseline Plan Worth Starting From
Smith described the plan she recommends as a starting point for most contractors: every employee gets a base hourly rate, so pay doesn't disappear during a slow week. On top of that, whoever sells a job gets a percentage of it, and whoever does the work gets a percentage of it.
She keeps the percentage tied strictly to the job's revenue, not to a formula that subtracts materials, labor or equipment costs first.
"I just want them to sell $1,000 and get 5% of it and know $50 is what they’re getting," she said.
Dedicated salespeople who don't turn a wrench might work under a different structure entirely, with a larger percentage and no hourly base. But the underlying principle stays the same across roles: pay should trace back to a specific job, and an employee should be able to look at last week's job list and match it to last week's paycheck without help.
What Configurable Payroll Can and Can't Do
Configurable Payroll pays per job. It doesn't total up a technician's monthly sales and apply a tiered percentage, and it can't hold back a spiff until an employee crosses a sales threshold.
Smith described the logic as a straightforward if/then: sell a membership, get $20. There's no built-in way to make that $20 conditional on having sold 30 memberships first.
Her advice for anyone building a new plan: look at what the system can do before you design the plan, not after.
"Don't build your plan and then try to make the system work for your plan," she said. "Try to build your plan around as much as you can automate as possible."
For contractors who want stretch goals layered on top of per-job pay, Smith suggests a workaround that runs outside the system. She'll set a baseline for hitting expected thresholds, then handle bonuses separately on a monthly or quarterly basis by pulling reports and calculating manually.
A technician with an $80,000 revenue goal who reaches $120,000 gets a bonus on top of the automated per-job pay. That bonus isn't something Configurable Payroll calculates on its own, but the workaround allows some flexibility.
Questions to Ask Before You Build
Before touching Configurable Payroll for a ServiceTitan customer, Smith asks how a contractor pays now. Most of the time, it's a straight hourly rate with no performance component built in. From there, she works through a set of questions:
● Pay on total job revenue, or pay on sales specifically — meaning when the estimate is sold, not when the work is done?
● Should some employees get paid for selling and others for doing the work, or should some get paid for both?
● Are there specific items, like an air-quality upgrade or a tankless water heater, that deserve their own spiff separate from the general job percentage?
The goal isn't to land on the most elaborate plan a contractor can imagine. It's to find the simplest plan that still rewards the behavior they're trying to encourage.
Test the Plan Before You Launch It
Smith builds a calculator using a contractor's actual jobs from the previous month, comparing what employees were paid under the old system to what they would have earned under the proposed one. ServiceTitan can generate preview data while a plan is being built, and she pulls the actual job costing data from ServiceTitan and plugs the proposed pay into the labor column to see how gross margin holds up.
"It's a little convoluted and it's not exact, but it's a really good way to see, 'OK, this would be net better or net worse,'" she said.
In her experience, pay usually goes up under a simplified, per-job structure even when base hourly rates go down, since the percentage tied to revenue tends to outpace what a flat hourly wage was paying. That's the number contractors want to see before they commit to a new plan.
Track It After Launch
Once a plan is live, Smith recommends watching the job costing report inside ServiceTitan daily. The report includes Performance Pay, labor pay, labor burden and materials, all broken down by job, which makes it possible to catch a plan that's quietly eating into margin before it becomes a quarter-long problem.
"As long as that number trends the same or greater, you're doing great," she said, referring to gross margin.
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When to Make the Switch
Asked when the right time is to simplify a payroll system, Smith didn't hedge.
"Now, today, as soon as possible," she said. The only caveat: start a new plan at the beginning of a pay period, not in the middle of one.
The urgency isn't about chasing efficiency for its own sake. It's about the same risk she raises at the start of every client conversation — the contractor whose entire payroll process lives in one person's head, and what happens to that business the day that person isn't there.
Performance Pay isn't only a payroll question. Smith pointed to retention as one of the biggest reasons contractors reconsider how they pay technicians in the first place.
"How your technicians are being paid is one of the top reasons they stay or they leave," she said. "Then you get into culture and how you treat them, but pay is a big factor in why people stay or why people leave."
With the skilled trades workforce already stretched thin, she said more contractors are recognizing that an hourly wage alone isn't enough to keep people. Performance Pay, built simply enough that a technician can explain their own paycheck, is becoming part of how contractors compete for talent, not just how they compensate for work already done.
Her advice to anyone building that kind of plan comes back to the same standard she started with: people shouldn't need a college degree to understand their pay stub.
