having a real problem establishing a consistant hourly rate to charge customers.
when I worked alone it was easy. I knew how much I wanted to make an hour and charged it. that was in the days of doing side jobs. But now I have a partner, one full time junior carpenter, and perhaps a second within a couple weeks coming back from leave. As well as a couple part time guys – helper and labourer types. I have to think about overhead and profit as well as labour burden costs.
the thing I’m having trouble with is whether to charge a flat rate averaged between the different positions, or charge per postition. I find that I have been doing both depending on the job, and I feel that I am all over the map, and I don’t like it.
I have trouble figuring out if customers prefer to see one rate or several different rates based on position.
Replies
We try to only quote work as a lump sum. This minimizes the item by item nit picking that can occure and eliminates the questions of "you charge that much, I don't make near that much at my job".
That being said we also do small jobs and charge by the hour. An example was yesterday where we had a client that had windows with adjustable but unusual counter weights. We had to call the manufacture and stand there and have them guide us through it. That is skilled in my book and is $50 and hour.
I have broken in down into 2 rates. $50 an hour for skilled help and $35 an hour for helpers. If a helper is doing something skilled like installing a faucet for someone then it is $50. DanT
I know the lump some does avoid that kind of thing, also I like how it gets rid of the clock watching. But I'm dealing with too much variety and not enough experience yet at pricing jobs to trust myself at this point. I did a 3 day job a few months back that I lost a few bucks because I lump summed and got it wrong. that sucked.
problem is all my years working I never considered to track or really pay attention how long stuff took to do. And now I find that it also depends who you have on task that also makes a big difference. View Image View Image
Please explain how being on the phone with a manufacturer, because you don't know how to do the job, can be called "skilled" work that you feel is chargable for $50/hr.
If you don't know how to do it, you are not by definition skilled in the work.
IMHO, you just overcharged the customer for your learning curve.
The windows in question were an unusual hybrid that has a mechanism made only by this manufacture. They are uncommon and to repair take a person who has worked on a variety of different mechanical applications in the past or someone who has worked for the manufacture or someone who has installed these windows before and had a mechanical failure they had to repair. I had the former on my staff.
We looked over the window issues, contacted the manufacture, gave them the model numbers and info off the windows. They in turn sent a special adjustment tool and a hand written and drawn instruction sheet. I have 4 (not including me) skilled workers and 2 helpers. If I send a helper who has never worked with mechanical objects or windows he would surely flounder unless all went perfectly. So I reasoned that sending a skilled person who has some mechanical background also would be the way to go.
Upon arriving, my skilled person took apart the window and found the tool and instructions did not match the situation. He called the manufacture, which sent him to various voice mail boxes so it took 3 calls from his company supplied cell phone. Once he finally got ahold of the person he needed he described the situation and was told he had the wrong tool and directions. He asked for a description of the adjustment and was told how to accomplish it. He then went to the company supplied truck and made up a simple tool and was able to enact the adjustment on the windows. Total job time? 2 Hours.
If I send a helper at the lower rate he is overwhelmed, doesn't have the phone to call and has no back ground to rely on to handle the repair. Say we luck out and he pulls it off in 3 hours. The client still loses $5 and the aggravation and fear that come with knowing the person working on your house has no clue what he is doing. A skilled person generally believes they can fix most issues.
The skilled worker on the other hand manages to fall back on previous experience and work through the problem. Skill does not always mean you have done that exact task before. It means you have related experience to relate back to in order to accomplish the task. If this were not true remodelers would never install a new product with somewhat different installation techniques as factory training for a bath tub faucet is a rare commodity. In the repair and remodeling business we are not blessed with assembly line type enviroments so we must rely on our background and skill to rise above the adversity. Hope this helps. DanT
Dan
I see your scenario with the window problem similar to that of taking your truck to a qualified mechanic.
If you had a transmission problem and the mechanic takes the tranny out of the truck and finds something wrong that even with his experience is something that he has never encountered, needs to call the manufacturer to get a clarification on then I'd assume I'm paying for a highly skilled worker that realized the problem and sought out the advice of someone a little more familiar with this particular problem, certainly wouldn't expect to pay less because the mechanic had to make that call either. Actually I'd expect I'd have to pay for that time to make the call.
But if I hired Jose down on the southeast side of town that has a nice shade tree and has worked on a few trannys in his day I do expect to get a break on the price but I don't expect him to recognize the problem, regardless of the complexity.
We hire professionals not because they have done exactly what we are asking but because they know how to evaluate the problem and with their accrued knowledge go about fixing/repairing said problem.
Doug
Yup! Can't know it all. We are always learning. But we know and understand the language to fix it. DanT
Edited 7/21/2007 3:45 pm ET by DanT
Wow! I'm surprised you would say something like that. I don't know what you work at but in the renovation field there is ALWAYS a huge(spelled humungous) learning curve and the customer ALWAYS pays for it. They pay for learning, coffee breaks, going to the bathroom, smoke breaks etc etc just like every other job. When an employee, anywhere, is having "a bad day" is he/she paid less? Of course not and rest assured some customer is paying for it.
I'm in the middle of a reno and the customer is also involved and he was in the process of trying to install a stove vent (range hood) which hung down in the centre of the room. Between him, me and the electrician we couldn't figure how this one was suspended with all the particular hardware that came with it.
There are thousands of products out there and we can't be expected to know how to quickly install them all, though we have the ability and problem solving skills. It's my abilities and problem solving skills is what I charge for
roger
Word.
I know I just got up from my afternoon nappy but I don't understand "word". Is it some local (seeing that I'm local) phrase a newcomer like me should be aware of:)
roger
I don't know the exact origin of this... but "word" is short for "word up" meaning "I agree with you", i.e. this guy is layin' down the WORD. Ten or more years ago there was a funk band called Cameo and they had a fairly big hit with a tune called Word, or Word Up, can't remember which.
Kinda the same as posting "What He Said".
I dunno Dave. It must be a Friday Harbour thing. You really should leave that small island for awhile. The English language has evolved abit since you left civilization;)
roger
Harbour? HARBOUR?? You, my good sir, need to shrug off those vestiges of colonial rule and express your inner independent self!
Seriously, tho... just stating what I think I might know... that "word" came from American pop culture at least ten years ago, maybe more. I daresay it's of African-American origin. Only aging hipsters such as Blodgett and myself still use it. That description semi-fits you, right Jim?
I didn't understand it either. Thujnk you were taking typing lessons from me.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I got it, ya old man. Us young 57 yo's know what's up.SamT
LOL, You mean you're fullaword?;)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Hmmmm. It must have been the same guy ( who obviously couldn't spell) named your place named my place Sidney:)
roger
speaking of islands......:)
Mussels and draft at Rumrunners. Twas a good afternoon..............
I don't know when you were there last but the new condo's right beside Rumrunners are selling for I think about a million each.............to start!
roger
Last summer. Couldn't afford one then. LOL.
I'm using two fixed rates. one for skilled builder and one for helpers/laborers.
I mark up the laborer more than the skilled because I am providing tools and equipment more for the laboroer so there is a higher overheaad there.
I know most guys are going to say figure a lumps sum bid, but still - you hve to arrive at that sum somehow....
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
yeah...I know I will hear the lump sum bid. which I do sometimes, but I've not priced jobs long enough to be accurate enough to risk losing money on lump sum somes.
for those situations I do find it easier to average the rates in my head to price the job, because I don't always know which guys at which rate may be doing a job. View Image View Image
This worksheet will give you accurate per man and average billing rates.
SamT
Thanks for the link Sam. I will look at it closely later tonight. View Image View Image
If you notice the name on the bottom of that worksheet, J Hayes, he is on breaktime frequently and about amonth or more there was a very informative debate about different ways to come up with informed hourly rates.
What I have always done was a flawed form of capacity mark up. You should talk to him or find those old threads, but being small, I take all my costs for the year( ins., bond, accounting/book keeping, cell service, health ins. crews yearly wages with burden, etc) and devide by the actual hours you estimate you will actually be working billable hours(i.e minus vacations, sick days, slacker days)
Don't forget tool and truck maitenance, internet access, PROFIT, the more you put in the more you"ll see what it actually costs to do business. I used to have this idea I had to keep my prices down to be competetive...but if I'm competing against other clowns who don't realise all it costs to do biz, we're all going down.
Any ways, solo operator figures All his yearly costs, comes up with 30,000. Decides he wants to make 100,000 ayear but with vacations, babies, etc., probably will pu in only 10 months a year(cn't work when there's fresh pow)
That's about 43 weeks a year times 40 hours equals 1720 into 130,000 equals 75 dollars an hour this guy needs to make.
Now if he can't justify that (or can't get any one to pay him that LOL) he ups his hours or lowers his expectations or he brings in crew that he can bill at a higher rate than tey cost, but it all comes down to knowing the cost of doing business...
If I wasn't taking up so much space already I'd wax elloquently about having 70 framers working for me with out ever really knowing what my real cost were...sounds pretty dumb, but I think its much more common than not...or maybe I just don't want to be the only guy at the party wearing the fools cap!
thanks ryder. more helpfull stuff to think about. View Image View Image