You guys have been great in the past with helping me I hoipe you can do it again. I have a small carpentry/remodeling business in pittsburgh pa with 1 employee. I have found my rate is too low to make ends meet any ideas on what to charge to cover all the overhead and some profit. also any ideas on estimating books would be appreciated. thanks ahead of time
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I did like this, I did it like that, I did it with a wiffleball bat.
Edited 3/9/2006 3:16 pm ET by dustinf
Look at Dustin- helpin' his local competitors even.............
Bob
The Home Depots are already over flowing with help.
I did like this, I did it like that, I did it with a wiffleball bat.
The Home Depots are already over flowing with help.
Most of them being the "contractors" who followed your advice in the past? ;)
Bob
I'm eliminating the competition one lot attendant at a time.I did like this, I did it like that, I did it with a wiffleball bat.
Shouldn't help be in quotes?
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Now that I've been in business for fifteen years one of the big things I've learned is not to quote an hourly rate, but quote for the job and extras are extras, not charged at an hourly rate but at a charge for the work. Quoting an hourly rate, in my opinion, conjures up all sorts of weird reactions from people, i.e. they have no clue what it really costs to do anything in this world where every consumer good is made overseas by someone making a buck-a-day!
My two cents....
FYI, I'm a small, one-person company, no employees (maybe that's why I make money, ha!) and specializing in higher-end kitchens and baths and giving lots of tlc to my clients.
Bob
<<Now that I've been in business for fifteen years one of the big things I've learned is not to quote an hourly rate, but quote for the job and extras are extras, not charged at an hourly rate but at a charge for the work. Quoting an hourly rate, in my opinion, conjures up all sorts of weird reactions from people, i.e. they have no clue what it really costs to do anything in this world where every consumer good is made overseas by someone making a buck-a-day!>>While I do agree with your overall message how can you know what to charge for the job if you don't know what you hourly rate is. What you charge for the work is going to be your hourly rate times the number of hours the job is going to take you plus your material and sub costs (which have been marked up for net profit.That said we avoid doing T&M work like the plague since we don't want to really ever divulge our hourly rate to our customers.
Hey John,
I know what I want to make in a week, and I usually do jobs that last at least a few weeks, if not months, so I estimate based on that. Materials extra. If I have a lot of work the price will likely go up, if less then I'll be more inclined to work for somewhat less profit. My rates are market driven. This evening seems I am close to winning a big job (for me) with some good profit tied into it and I'm feeling a bit on the cocky side. This time next year, who knows? Kind of the exciting part about being self-employed that many employed people might shudder at I think!
Keep in mind that the type of business I am, the kind of client I want and tend to work for doesn't involve competitive bidding. I sell myself, my reputation, my work and my knowledge. It takes time to develop this way of doing business and certainly requires finding the customers that have the resources to pay for the services I provide, and this proves challenging at times!
Hope this makes some sense and doesn't sound too almighty!
Bob
Whether you figure your rate hourly daily weekly or monthly what you charge for a project is based on how much time it takes you. I guess I'm not getting your point. I still think you need to know your billing rate and know and understand it well to make any money in this business.You say you know what you want to make in a week. Just how did you go about figuring what that amount of $$$$ is? Don't you then say hey this job is going to take 7 weeks and multiply that weekly rate by 7? Or are you basing your pricing on something else altogether?
Well, that question of how much a business figures its hourly rate is is kind of like asking for the recipe for its secret sauce. I'm not trying to be coy here but just point out that it is so dependent on where you are developmentally, and geographically,with your business. For example, when you are newly in business you might base what you charge on what you made working as an employee in the same trade. After awhile you (hopefully!)learn that your old hourly rate has nothing to do what you should be charging as a business person as you have overhead and want to make a profit (that's what businesses do to offset the risks of being in business).
You have to figure out how much you have to use as an hourly basis for yourself by using a combo of experience, "checking around"--seeing what others charge and so forth. I know a range of what I will work for and have a minimum for doing consultation on projects for people. It really comes from doing your business for some time.
Ahh, I don't know Vintage, I think I've got to disagree with some of what you're saying. For instance when you say:
"For example, when you are newly in business you might base what you charge on what you made working as an employee in the same trade." If somebody new in the business follows that advice then they aren't really in the "Business" at all. All they done is create themselves a temporary job that will sooner than latter land them in the poor house. You are not really "in Business" unless you are covering the overhead costs that a real genuine authentic business generates.
And I don't think asking how a business figures it hourly daily weekly rate to be "like asking for the recipe for its secret sauce". There are in my mind only two real real valid methodologies for pricing and they are both formulaic enough that they certainly can be described. I would say I'm putting in my 2¢ here but it seems some others have already done that for me. I'm the guy who wrote the paper that DustinF referred to in his post (Markup: Comparing the Traditional Volume Based Markup
vs. a Capacity Based Markup Methodology) and the PILAO Excel Spreadsheet that Ben76 referred to. Without getting in to all of the rigamarole here again tonight I think the paper explains the dish and the spreadsheet is a recipe and it's no secret.
I do however think you are 100% correct when you say "....as a business person as you have overhead and want to make a profit (that's what businesses do to offset the risks of being in business)." but you don't have to wait until "After awhile you (hopefully!)learn that your old hourly rate" should be. You can figure out and understand it and get it right off the bat.
The checking around to see what others are charging part I think can be disastrous in that it the people who tell you what they are charging might be just as lost about what rate to charge as you are and what they are charging has no real relationship to what your real costs of doing business are anyway. The PILAO Excel Spreadsheet give you a real working formula for figuring out just what your (minimum) rate should be.
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Hi Jerrald!
I appreciate the ideas you have! I guess I'm operating less with formulas and relying more on experience. When I "check around" I don't mean I'm going around asking people their rate......I operate more subtley than that, you gain this knowledge by "seeing" what other successfull businesses are charging. One doesn't always find this out directly, but often indirectly over time, know what I mean?
I will look into that website you link in your post.
Vintage "...One doesn't always find this out directly, but often indirectly over time, know what I mean?" Well I do know what you mean. I know exactly what you mean. I spent at least a decade at one point in my life wandering around before finding out really what I needed to charge and how I needed to figure it out. My head is in fact dented from running into walls and then beating myself in the head with a bat for being so niave for so long. So if there's anything I can do for a guy like Bronco and to save baseball bats from abuse like that too I put in my 2¢.
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Jerrald,
Read your post again. I think I always have an aversion to formulaic models when doing old house remodelling/renovations when things are always changing and one never knows "what lies beneath", know what I mean?
Would like to hear your thoughts on this!
Vintage "Jerrald,
Read your post again. I think I always have an aversion to formulaic models when doing old house remodelling/renovations when things are always changing and one never knows "what lies beneath", know what I mean?"
Well I do understand that too but what you are talking about is different from figuring out the hourly, daily, weekly, rate, you need to charge. Figuring out the rate is pretty formulaic but figuring out the actual labor hours your project will take while part formulaic is also an art.
But that's a whole different subject. While they are intimately related, estimating the amount or labor and materials is different from figuring our just how much that labor is worth per hour per day or per week.
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Jerrald,
It was late last night......I know exactly what you are saying, thanks for pointing that out!
V.S.
Vintage,
You won't go wrong listening to Jerrald.
He is the go to man for the 'how-to's' of the financial side of business around here.
I have learned more from him in the past year than in the previous 40 years I've been working and studying.
Think long and critically before you decide to disagree with him.
His PILAO worksheet is a very good way to figure out what your hourly "nut" is, and you don't have to do anything except look at a few old bills and plug in the numbers. If you can and want to charge more, that's great. It just tells you what you must charge to be a successful business.
"I sell myself, my reputation, my work and my knowledge. It takes time to develop this way of doing business and certainly requires finding the customers that have the resources to pay for the services I provide, and this proves challenging at times!"
That is the Brass Ring we are all trying to grab.SamT
Hey, I'm not going to disagree with Jerrald.......looking at message #19, last night late, spent from the week, all I could see were the words Bat, Beat, Dented, Abuse.....for some reason I started thinking about Joe Pesci in "Casino" and the end scene where Nicki and Dominick meet their fate .....LOL!
I've probably been working alone (was reading that thread last night until my eyes were blood shot) so long my methodology for estimating sounds pretty wacky to most!
I appreciate the tip and will give Jerrald a listen.
I'd second the "two cents" of VintageSeattle. Do not work by the hour. Figure the job and give your clients a turnkey price for materials and labor.
Marathon Construction
We work by the hour.
Edited 3/10/2006 4:53 pm ET by txlandlord
Bronco, I just know my buddy Bob Kovacs is probably gonna say something about me being in Ellen Rohr's pocket for pushing here books all the time but I really think you will probably benefit from reading How Much Should I Charge?: Pricing Basics for Making Money Doing What You Love and Where Did The Money Go?- Easy Accounting Basics for the Business Owner Who Hates Numbers and the PILAO Excel Spreadsheet works right along with the methodolgy she written about.
The thinking behind getting the right hourly rate down pat is also in the Taunton book by David Gerstel Running a Successful Construction Company in Chapter 5 on pgs 167 through 168.
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Bronco,
The short answer is that you're going to have to do a little local research. When I'm working on a project, I typically ask the homeowner about the other bids they've received. If you approach the subject the right way, most people will be forthright with you -- some homeowners have even just given me the other bids! Even if you fail to land a project, you can always call the clients and ask them how your number came in. This will give you a rough idea of how your bid stands in the open market.
With that said, I think it's literally impossible to determine "how much you *should* be charging". This is because there IS NO FORMULA for determing MARKET VALUE. Bear in mind that making a decision to spend $X on a project is, for the homeowner, a subjective -- not objective -- decision. Some people are willing to spend $1000 on a faucet -- other people couldn't care less.
Similarly, the amount of money (on an hourly basis) that you're willing to work for is subjective. Speaking for myself, if I were working for a great client on a fabulous house, I'd be willing to cut my rates just because I would really enjoy the experience. On the other hand, if some jerk wants me to clean out a cesspool on his property, I'm not exactly going to give him the bargain rate -- if I decide to bid on it at all!
Many times, you'll find that clients make their decision based on their general comfort with you as a contractor. They often base their decision on whether you appear to be knowledgable, professional, honest, etc. Within limits, many people are willing to pay a bit extra for your services if you make a better impression than your competitors.
So pay attention to the general range of bids in your area, but don't get caught up in building a 10-page spreadsheet to determine what you *should* be charging when there really is no such thing.
Market value has nothing to do with what you should charge. If market value is $20/hr, and you need $40 to survive, what is the point?I did like this, I did it like that, I did it with a wiffleball bat.
If market value is $20/hr, and you need $40 to survive, what is the point?
That IS my point. You can't just come up with a spreadsheet that says you "need" to charge $40 an hour and expect it to work in the real world. You need to respect the marketplace and recognize the fact that the going rate is not always logical.
Ragnar17 -"That IS my point. You can't just come up with a spreadsheet that says you "need" to charge $40 an hour and expect it to work in the real world. You need to respect the marketplace and recognize the fact that the going rate is not always logical."
Well obviously I disagree with that but I'm willing to listen to your arguements. Let's look at a hypothetical case. John Smithhas been working a 20$ per hour job and after taxes and what not he has been making ends meet paying the mortage and feeding his kids and feels that's a comfortable wage to live off of but ever since he was a kid he wanted to have his own carpentry businesss so he decides to go into business for himself.
He decides to use the PILAO Worksheet and after plugging in all his numbers it gives him a figure of $47.50 The wage and the numbers for his overhead that he plugged in give him:
A medical plan for himself and his family
Money for his truck payments as weel as it gas and maintainence
Office supplies
Pays for an accountant and lawyer.
Pays his business taxes
Pays for his phone celluar and business phone
Pays for his tools maintainence and replacement
Pays for his comuter internet connection and software
Pays for marketing expenses such as business cards and a few ads here and there
And pays for his liability insurance
(There are actually other costs to running a "real business" but we'll stick to the bare minimum for this example.)
But he looks at that number with his buddy Ragnar17 who's in the business and Ragnar17 says "listen I've done the loacl research and the market wont pay that! the market will only pay $35.00"
Just what does the guy do then? What's his next move?
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Well, why stop at $47.50? What does your spreadsheet say about him making $200 an hour?
Marketplace schmarketplace. ;)
If you don't charge $200/hr, how do you know it's impossible to get? Lawyers, and doctors ccharge that much, why can't we? Market your business properly and the sky is the limit.
The marketplace doesn't have anything to do with what you should charge. You should charge what you need, and let your work sell itself.
To quote Tom Maynard, "Working for nothing isn't getting any cheaper."Hug it out.
Dustin,
I agree with you up to a point, but would you seriously go out on a bathroom remodel bid and tell the potential clients that you'd undertake the project on a T&M basis at $200 hourly?
Why can doctors charge $200 an hour and we contractors apparently can't? I don't personally know any doctors, but I imagine that they "have" to charge a lot more because they have higher costs to cover (the cost of med school, the high cost of malpractice insurance, etc.). There are much more barriers to competition in becoming a doctor than there are to becoming a remodel contractor, and those barriers are reflected in the higher hourly rate that they need to charge to stay financially solvent.
Edited 3/12/2006 5:16 pm ET by Ragnar17
I wouldn't bid any job T&M.
I'd bid it at a set price, get it done effectively/efficiently, and make as much money as possible. Some days I've made $500/hr, other days I've made $10/hr.
Your hourly rate should be a minimum amount that you absolutely need to make, to take the job, not what you charge.
Hug it out.
Dustin,
You've seriously made $500 hourly on a project before? I'm very envious! What was the length of the project?
I'm kind of confused about two of the statements you've made, though. First, you said "Your hourly rate should be a minimum amount that you absolutely need to make, to take the job, not what you charge."
Then you said you'd go ahead and pad your bid if working for a rich doctor.
Which is your philosophy?
Me, I like charging what I consider is a "fair" amount. I know that's about 95% subjective, based on what *I* consider "fair". I don't like the idea of gouging people just because I have them over a barrel, or because they can afford it. Maybe it's just bad karma.
You've seriously made $500 hourly on a project before? I'm very envious! What was the length of the project?
Yes. 2 hours. That's my point. Hourly rate alone doesn't really mean anything. It's a minimum value assigned to one variable of an equation. It's your break even number.
I don't pad my bids for rich doctors. The point I was trying to make was that your bid should reflect the customer.
You are worth what someone is willing to pay for you. Hug it out.
I don't like the idea of gouging people just because I have them over a barrel, or because they can afford it. Maybe it's just bad karma.
If I offer a bid, and someone accepts it, how in the heck is that bending them over a barrel?
Hug it out.
Edited 3/12/2006 6:05 pm ET by dustinf
I price the same no matter who it is. Now I will make more money typically on a high end customer because they will want a better grade of material and my mark up percentage is the same. So I will make more on the material. But the labor is the same no matter who it is. I won't say I think it is wrong to do otherwise but I don't do it and feel better that way.
Everyone wants to compare what we do to doctors, lawyers etc. Most of them don't net that much either and they are generally poor business men. Some make good money but when you factor the hours, the education expenses, the business expenses it really isn't that lucrative unless you are in a high end specialty. Just like us.
For all the belly acheing that goes on about how much or how little we make a lot of folks sure hang around these trades. Must be the work satisfaction. Cause everybody is broke except Mike Smith. DanT
Hey man, I ain't broke either... but I'm not out of chances yet.
Last year I built a kitchen for a doctor. I looked his house up to see what the property was assessed at. It was over $10,000,000. You think I should charge him the same amount as someone who owns a $100,000 tract home?
It's a matter of putting ourselves in a position to charge as much as we can. Not to take advantage of people, but to get paid a premium wage for a premium product.Hug it out.
I do that as well.....when I get a promising call or email for some work, I look up the house on the county assessor's website and look at what the house is assessed at, how much was paid for it, square footage etc. It helps to figure out what caliber of client you are dealing with. One can also, if so inclined, check out loan info as well in the online public records.
Ragnar17 "Well, why stop at $47.50? What does your spreadsheet say about him making $200 an hour?
Marketplace schmarketplace. ;)"
Rags have you even looked and the spreadsheet? Do you understand how it works?
In the case of my hypothetical carpenter (msg#70759.27) if he honestly plugs in the real values for his costs what would possibly drive his figure as high as $200 per hour? Two things. He decided that instead of paying himself $20 per hour he's going to pay himself $172.50 per hour (not a very realistic or sensible scenario) or he decided that this new business of his instead of earning a 5% Net Profit he wants it to earn a 77% Net Profit (again not very realistic or sensible).
There's your marketplace drawing it's limits.
But it seems to me you've missed the point of what the spreadsheet does. To answer my own question I put forth in the hypothetical case if John Smith comes up with a figure that tells him he needs $47.5 per hour to make his business work then he needs $47.5 per hour to make his business work period! Or something has to give. He has essentially two choices. One, if all he gets in a particular market is $35.00 then that means he'll have to forget about the "business" earning any Net Profit (say goodbye to any thoughts of growth) and he'll have to work for only a $10 per hour wage. And he'll have to work twice the amount of hours to make ends meet.
The second choice he doesn't go into business in that line of work (which is what Bob has illustrated in his post).
My spreadsheet doesn't "see" the marketplace. It's purely a planning tool that when you honestly plug in all your figures for what you want to make and what your anticipated costs are it will then tell you what the bottom line figure you need to charge to achieve that is per hour (per day, or per week).
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Rags have you even looked and the spreadsheet? Do you understand how it works?
No, I just spent about 90 seconds looking at one of your links, and it looked like accounting, not marketing.
Did you look at post #29?
And don't call me Rags, Hayseed. ;)
Jerrald,
What to do about "the market"? I only do remodeling, so I don't know how well this would apply to new construction. But I have screwed myself a number of times, pricing what I think "the market" will bear, or what the "going rate" is.
Here is an example from a different business. (retail shoes). If a person has a limited vision of what "the Market" is, that person thinks a pair of shoes at Wal-Mart for $40 is what the market will bear. But Nike can sell running shoes for $120 a pair. But wait! Further up the chain is someone who has a special need foot problem. they will pay,(or a 3rd party, or insurance will pay) upwards of $300 or $400
So what constitutes "the market"?
i am not saying a person can operate in a vacuum, but what a contractor views as "the market' can be quite different from what a customer views "the market" to be. Without asking a number of questions of the customer, the contractor will never know what "the market" in the customers head will bear.
Another example from a contractor I've talked with. (incidentally about half of the self-employeds in my area that I have researched are at $25/hr). Anyway, this guy told me about doing a job in a kitchen. Seems the owner didn't measure her refrigerator space correctly when she bought her new stainless steel appliances, and there was a post in the way of getting her refrig in place. HO had apparently had a number of people look at it. Some said the post was structural, some said it was just decorative, but nobody wanted to touch it. The guy I talked to explained his reasoning why He didn't think it was structural, and how he would go about removing it.
HO said "go for it". He did, and for 4 hrs total work his bill was just shy of $400. HO gladly paid it, because "the market" was not an hourly rate, "the market" was HO wanting her refrig in the right place.
Bowz
HO said "go for it". He did, and for 4 hrs total work his bill was just shy of $400. HO gladly paid it, because "the market" was not an hourly rate, "the market" was HO wanting her refrig in the right place.
Bingo!
This discussion also reminds me of people who want to find "market value" for antique collectibles. "Hey, I just bought this Elvis record for $40 at a garage sale. What do you think it's worth?"
"About $40." ;)
Bowz- "What to do about "the market"? I only do remodeling, so I don't know how well this would apply to new construction. But I have screwed myself a number of times, pricing what I think "the market" will bear, or what the "going rate" is."
While there are for sure differences between remodeling and new construction I'm not sure exactly what you think are with respect to pricing based on what "the market will bear". One difference I see is that while in the case of a new home the consumer might have some valid statistical methods for determining the value of a new home (MLS listings etc.) there aren't any real valid tools for remodeling projects so who is to say just what the market value for a particular project is.
"So what constitutes "the market"?"
I don't know. In one sense the market can be as small as just one homeowner talking to another. Based on that I do think that a lot of neophyte contractors who don't really know what their numbers really are go out there and price their projects base on what they think "the market will bear" and they end up under-pricing the project so badly that they hurt not only themselves but other contractors in that homeowners then talk about the "great deal" they got from some idiot.
"Another example from a contractor I've talked with. (incidentally about half of the self-employeds in my area that I have researched are at $25/hr). Anyway, this guy told me about doing a job in a kitchen. Seems the owner didn't measure her refrigerator space correctly when she bought her new stainless steel appliances, and there was a post in the way of getting her refrig in place. HO had apparently had a number of people look at it. Some said the post was structural, some said it was just decorative, but nobody wanted to touch it. The guy I talked to explained his reasoning why He didn't think it was structural, and how he would go about removing it.
HO said "go for it". He did, and for 4 hrs total work his bill was just shy of $400. HO gladly paid it, because "the market" was not an hourly rate, "the market" was HO wanting her refrig in the right place."
That's a really great example.
I had my own epiphany like that years ago when I went to look at a stair job and the super on the project told me five other shops had been there and looked at the job and said it couldn't be done. I looked at the job (which was huge) and saw the only problem was the railing turns in two particular locations. Less than 2' of railing on job with maybe 250' or railing and four runs of stairs. We took the job and piled on a hefty premium for being able to accomplish those two turns and looking at the books on that job after we had completed it there were parts of it where we were earning $230 per hour back in a time where our standard rate was only $55. (msg#21655.10 in the Pricing for 'perceived value' topic).
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One difference I see is that while in the case of a new home the consumer might have some valid statistical methods for determining the value of a new home (MLS listings etc.) there aren't any real valid tools for remodeling projects so who is to say just what the market value for a particular project is.
Yes that is part of my thought. The other part of it was hearing about framing, or sheetrock etc, going for "X" amount per square foot. There would seem to be a much tighter cap on what could be made.
My first epiphany was a few years back, on a small job where on the last day I realized that I was going to land over $100/hr. As I am finishing up, I am thinking how much should I knock off the bill. (Feeling guilty) The homeowner walks up, says "we really appreciate you taking care of this, here is your check, we have to leave on vacation, so lock up when you finish."
Bowz
Jerrald,
And just to be clear, I never said the market won't bear more than $35. I said that the market is not always logical. That's why I question your premise. You're using a very mathematical approach to something that is literally unpredictable.
EDIT: After re-reading your last post, it seems that the two of us are talking about two different things. If I understand you correctly, you've saying that if John makes $20 an hour as an employee, he'll need to make $47.50 an hour as a business owner in order to have about the same amount of take-home pay at the end of the day(actual numbers are only illustrative, I assume).
If all you're trying to do is calculate a "conversion factor" of sorts between hourly rates as an employee and a business owner, then I've got no beef with that. Once you know the local/state/federal tax codes and John's personal financial situation, I'm sure your spreadsheet could calculate that very accurately indeed.
My point of contention is that the OP doesn't need a conversion factor. He's trying to figure out how much he can charge and still get work. That's a marketing question, not an accounting one.
Am I seeing things clearly now?
Edited 3/12/2006 1:17 am ET by Ragnar17
Ragnar-
You're right that the marketplace isn't always logical, and that just because a spreadsheet says you need to charge $67/hour, that doesn't mean you can charge that and get any work.
Hell- using Jerry's spreadsheet, I show that I'd need to bill out at $165/hour as a handyman, and I know the market won't pay that- that's why I don't work as a handyman here. The point of using the spreadsheet is to determine what you "have to" charge in order to legitimately be in business at the salary you desire- whether it can be charged is a different story. However, using Jerry's example of a guy who's making $20/hour as an employee, I'd be surprised if he couldn't charge the rate that the spreadsheet ends up giving him- that would mean that there are no legitimate businesses operating in the area (including his previous employer).
What the spreadsheet does is prevent the old "I'm gonna give myself a $5/hour raise and charge people $25/hour" mentality that so many newly self-employed guys get into because they don't understand the costs of being in business.
Bob
What the spreadsheet does is prevent the old "I'm gonna give myself a $5/hour raise and charge people $25/hour" mentality that so many newly self-employed guys get into because they don't understand the costs of being in business.
Bob,
I guess it was just obvious to me that I would have to cover business costs when I made the decision to go self-employed. But I suppose the spreadsheet helps people see the whole picture and avoid any unpleasant surprises.
I guess it was just obvious to me that I would have to cover business costs when I made the decision to go self-employed.
Well, you're in the small minority then, because most of the startup contractors I talk to have no clue what it costs to run a business, and aren't even aware of 1/2 of the items they'll need to cover- yet alone the costs of those items.
Bob
Well, you're in the small minority then, because most of the startup contractors I talk to have no clue what it costs to run a business, and aren't even aware of 1/2 of the items they'll need to cover- yet alone the costs of those items.
I don't consider myself a better businessman than the average contractor -- I just made sure I asked a lot of questions before I took the plunge. Maybe a lot of people don't, and that's why so many new businesses fail.
Hourly rates will kill you. Quote by the job, figuring what a full days labor will be. If you quote hourly and you perform a job that takes six hours, you will lose two hours of income for that day. Quote the job for a full days wages and come out ahead.
"Hourly rates will kill you. Quote by the job, figuring what a full days labor will be. If you quote hourly and you perform a job that takes six hours, you will lose two hours of income for that day. Quote the job for a full days wages and come out ahead."
Yup. Why pull the truck out of the driveway unless you are going to make a days wage?
Obviously, you need to charge enough to cover your expenses. Tools, the truck, fuel, liability insurance... etc.
Then you need to figure out what you want to make per year. Don't forget your benefits like health insurance and some type of retirement fund.
Eventually, you will arrive at an "hourly rate".
It seems that if you want to make an amount equal to $40 an hour as an employee, you better be charging at least $80 an hour.
If you can do two small jobs in a day, then charge an amount equal to at least 4 hours for each of them.
If the job is 5 or more hours of estimated time, then charge for the whole day. There may be circumstances when this will not be possible, and only you will know when that happens.
Some call it flat rate pricing.
If you do bathrooms, and an "average" one always seems to take a week, then that becomes the price for all similar jobs. Experience will allow you to fine tune the price.
An hourly rate just gives the customer a leverage point to get you to lower the price of your labor. The customers don't see the tools and skills needed to do the job, they just see Bob at $20 and Bill at $50.