Hi there… I have a home remodeling company and have been in business for three years…wanted to know what the average labor rate people are charging..I am in the Northwest Indiana area.
Edited 2/22/2005 8:38 pm ET by wefixwell
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Replies
Not that I can help you with the answer you are looking for to your question ( I'm in NY CT) but I'm wondering why are you asking?
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It seems that by asking the question, you are doing something that should not be a part of your pricing system - comparing yourself to others.
Always compete with yourself. Calculate your needs to live and put by for the future, your overhead, and add work from there.
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I don't know about Indiana, but many of the states have a website that provides hourly rates and salaries for a wide variety of skills.
I've found the one here in Oregon to pretty accurate for the building trades. The numbers are developed from actual payroll numbers and are broken down by county and city/town. (The numbers appear to be legit and don't reflect the workforce of illegals found in some areas of the state).
The rate you pay your employees is your call, but to hire and keep good employees that meet your needs, market pressure will dictate your baseline to a large degree.
Residential construction remains pretty strong in my area, so keeping good, reliable employees means providing them with an adequate carrot.
Thanks for the suggestions...the reason why I was asking is I have several trades people on a job I am finding out what there labor rates were and was shocked!!! I realize I should charge what is good for myself and my company...I just felt I was really out of touch!!!
The reason I asked why you were asking "what the average labor rate people are charging" is because (like Piffen) I think its a real bad and even dangerous idea to set you labor rate based on what others are charging.
This goes right to the topic I started here last week
What Should Determine Your Hourly Rate?
I was re-reading an article today online and while its from Reeves Journal a Plumbing Heating and Cooling trade magazine I think it's apropos to any contractor regardless of the trade. The article is What Should and Should Not Determine Your Hourly Rates. You can click to read the whole article but to summarize and comment on what the writer Tom Grandy wrote:
Things that SHOULD NOT determine your hourly rate:
Competition - You shouldn't set your rate on what your competition is charging.
What you "think" the customer will pay -You should charge based on what you think or feel you customer is willing and/or able to pay
What you "feel" like charging - Charging that way ignores what your real costs of doing business are
What would you like to charge? - Charging what you would like to charge once again ignores what you NEED to charge to stay in business
Things that SHOULD determine your hourly rate:
Your "real" cost of doing business -
What salary do you want/need to earn?
Benefits you want or need to offer your employees
Desired Profit Margins
Any thoughts?
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Wefix, you should know what the competition is charging. In the negotiating process, knowledge is power.
Were you high or low?
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Blue, the way I read wefixwell's message "the reason why I was asking is I have several trades people on a job I am finding out what there labor rates were and was shocked!!!" was not that he found out what the competition he was bidding against was charging but that he found out what the other trades he was working with on a job were charging. I could be wrong though, you never call tell in these forums. While I think learning an knowing what your competition is charging for similar projects is helpful knowing the hourly rate I think can be really misleading. The hourly rate for a contractor using a Capacity Based Markup (aka PROOF, Indexed or Labor Allocated) will have a dramatically higher hourly rate than a contractor using a Traditional Estimated Total Volume Based Markup. (see msg#54579.3 to see what I am talking about).
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Jerrald, I would never argue that you don't need to know and understand your own rates, but it helps a lot to know and understand the competition. For instance, in my business, we have a framer that charges x amount per square foot and runs about 100 men. When you go to one of the builders that use him, it's pointless to try to do the jobs for x+ anything, because you will be wasting your time.
Knowing the competitions rate will help you save your time.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Blue - "Jerrald, I would never argue that you don't need to know and understand your own rates, but it helps a lot to know and understand the competition. For instance, in my business, we have a framer that charges x amount per square foot and runs about 100 men. When you go to one of the builders that use him, it's pointless to try to do the jobs for x+ anything, because you will be wasting your time. "
I wouldn't argue with what you said there at all but that is distinctly different from comparing labor billing rates. You can compare Unit Costs (in your case your comparing Cost per SF) but comparing Labor Billing Rates (the hourly charge rate) unless you know what markup method they used to come up with those rates the comparisons are skewed and misleading.
I have a contractor friend in the next town who if we were to bid the exact same jobs we would come up with a price within a few dollars of each other, essentially the same price. However if you asked him what he charges per hour for one of his guys vs. what we charge our charge per hour would be something like 33% to 42% higher. His markup on Labor is lower than ours so his hourly labor rate is dramatically lower than ours.
Our project prices end up being the same or close to the same because he places a higher markup on materials since he uses the Traditional Estimated Total Volume Based Markup and counts on selling materials to help cover his over head. He probably markups materials 33% to 67% where we'll only markup materials 8% to 12%.
See what I am getting at?
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Im located in Central Indiana and our hourly rate is $61 per hour. We are a remodeling contractor.Im guessing your rate is much lower than that? FYI "Case Handyman Services" is charging $78 per hour in this area and it is all T&M and they are doing well, it would appear.
Justin Tischer
Vertigo Construction Corp.
I really appreciate all the feedback......What I was saying before...I was working on a job with other contractors that I didn't hire and we got to talking about labor rates on different trades....I would never set my labor to match other contractors...but like it was mentioned before it is nice knowing what the competion charges and your in the ball park.....