I’ve noticed that more and more commercial clients are asking for hourly rates for service. I charge 65 per hour with a 3 hour minimum. Price includes first guy (me), truck, tools, etc.
Wondering if you guys have an hourly rate established and how they compare.
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Replies
View ImageAt the risk of sounding redundant about billing rates (but I guess a little redundancy regarding something like this can't hurt) you might want to check out Ellen Rohr's How Much Should I Charge?: Pricing Basics for Making Money Doing What You Love. It will explain hows and whys of setting up a billing rate for your services based on the billable hours your company will generate.
In addition to that if you want a computational tool that will help you actually compute your rate you should probably download my Capacity Based Markup Worksheet (aka the " PILAO" Worksheet). It's an Excel workbook that after entering your cost for Fixed and Variable Overhead items and how much you want to take out of your company's operation as the owner will help you generate billing rates for you and your various employees.
As for comparing billing rates I always tend to discourage that. Most of the time people asking that are just shortcutting the process of figuring out their rate based on their own real world costs and they're not really doing themselves any favors in do so. How can anyone possibly pick a comparative rate without really knowing just what where that other company's bases their operation and just what their actual costs really are.
What method did you use to come up with a rate of $65 per hour?
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....And there is also a web site called YourCostCenter.com that is the same kind of tool as my Capacity Based Markup Worksheet but their home page page is a pretty neat little calculator that will tell you instantly what a miscalculation of your labor rate can cost you per year in lost revenue.
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And there is a good short article there too by Irv Chasen called Science, not art, and certainly not guessing that addresses the concept of applying overhead to labor only and not to to sum of of labor materials and subs combined.
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