Recently struck out on my own after years with a GC. In the months prior to leaving I was running some projections to determine a hourly labor rate for myself when estimating. This came down to combination of variable:
(projected salary + annual overhead) / annual billable hours
I was amazed to see how high my annual overhead was (17,500 – 19,000) as a one man operation. It included cell phone, internet, truck insurance, liability insurance, health insurance, truck maintenance and repairs, my storage shed, tool maintenance and repair, etc…. In the end depending on the billable annual hours it translated to $8 – $10 an hour by itself.
I’d like to pay myself $35/hr plus this overhead fee, around $45/hr. But this has been a little hard to swallow when doing bids. I just have a feeling that my number is high and unfortunately most of these jobs I have to do myself because they can’t be put in the hands of my helper (who is smart but not educated in any plumbing or electrical).
Any other one man operations out there have advice?
What do you charge hourly for typical handyman jobs (I am located in MD but would like to national numbers as well)?
Is there a typical annual overhead out there for small one man outfits? I know there are too many variable out there to standardize this but if anyone else could share there numbers I would greatly appreciate it.
Am I being to conservative in pricing labor?
Replies
Bump.
You might have seen this thread but if not this may help. I work for a GC too, but try to do as much on the side as I can. I am near you and also feel that much over 35 or 45 dollars an hour turns people off. I am even smaller than you, and try to get 25 an hour for me.
Webby
Edited 7/26/2009 8:36 am ET by webby
Ooops, forgot to post the link to the thread I was talking about, but Cargin got it.
http://forums.taunton.com/tp-breaktime/messages?msg=104492.1
Sorry.Webby
It's good that you have studied your own situation, and your own overhead costs. Too many times, we see posts asking what a person should be charging per hour, without any supporting information.
Unfortunately, your costs are only one piece of the puzzle. Another significant piece is your competition.
And in this economy, your competition might be fierce. Don't forget that there are thousands of laid-off factory workers who are HUNGRY. And many of them are already in the business that you want to enter.
And they are advertising for free on Craig's List, for as little as $10 per hour.
Here's another point -- and you might have already thought this through. For a one-man operation, there is a significant difference between billable hours, and total hours spent.
One of the things that you can do to differentiate yourself from the laid-off guys, is meet with the customer to talk about their needs, to talk about your quality, honesty, and cleanliness. Show them a folio of photos of your work. That's how you sell the jobs. It also consumes lots of time. LOTS.
Time that you can't bill for.
Good luck.
cwc-
I am basically a one man operation too. I don't do very much handyman work, so my experience is based on renovation/remodeling...
My advice- know the numbers!
I'd like to pay myself $35/hr plus this overhead fee, around $45/hr. But this has been a little hard to swallow when doing bids. I just have a feeling that my number is high
Force yourself to forget this mentality! Do not fall into the trap of low balling work because the competition does. Know what you need to make to cover your overhead and your wage and make a profit. Charge accordingly.
I know guys all around me who still charge $25 and $30 an hour cause, "that is what the market will bear." I used to follow that mentality, until I realized I was going broke and couldn't even pay the bills. Now, I charge double what these guys do and still manage to get work.
Also, you mentioned electrical and plumbing work- I don't know of an electrician who charges less than $50, and my plumber charges $85 for retail service work.
One other thing-
Do an advanced search here for PILAO worksheet in the biz folder. Lots of good reading about knowing your numbers. Also check out Ellen Rorh's books.
Good luck.
I am an one man band in MD as well. About 6 years ago I started off charging $50 an hour, thought "holeymoley, that is a high". 3 years later I went to $75 an hour and that still isn''t enough. You'll be surprised how much the extra overhead goes into the handyman gig. Actually, my rates slide for larger chunks of time - $250 for 4 hours, $450 for the day. Driving seems to be my biggest overhead expense- truck repairs and diesel...
Bottom line, if you don't charge enough to stay in business and make a profit, it doesn't matter. As someone mentioned, there are a lots of hungry fella's out there willing to work for $10 and hour, and plenty of people willing to hire them. You have to be in an entirely different universe than these people. After 6 years, I work almost entirely off of repeat customers and word of mouth referrals. People hire me because they know I will do the job right, not cause I will do it cheap.
Ditto.
Good post.
My billing still seems high to me, after 20 years, but, those are the costs to do it right, and people keep calling....
Like Buck once said -" I can't afford me"...Remodeling Contractor just on the other side of the Glass City
Thanks for all the Feedback everyone.
My mind knows the business side (in theory) and agrees with all of you. I just needed the additional support from the community here to get the confidence to charge appropriately.
Problem is my exisiting customer base is made up of people who I did side work for for years and didn't charge much because it was just extra money and I wanted to help them. Thats over now...
I appreciate all the advice.
I'll probably take some poo for this from the number purists -
But,
I like to stick to the numbers as much as I can, BUT, a remod/reno/service/handy business is more fluid than a merchant oriented business.
There are some situations that may need alittle massaging ( like getting your existing customers onboard to the new way without blowing them out of the water). I have been known to cut some slack here and there - never to actually lose money - and there are some ways that I have found to do it better.
>If there is some kind of adjustment - the original full price is always billed with a notation of the discount and a reason for it.- then they are aware of what they got vs. what they paid, and why.
>I generally try to reduce the billed time and not the rate - don't want to set the precident of negotiable rates.
>I never reduce a price at the request of the customer without a reduce in the scope.
This one ought to really get some people goin'...
> I will work for free before I will charge and lose money.
.02 ...Remodeling Contractor just on the other side of the Glass City
cwc09
Here are a couple of discussions that may interest you.
There is alot of reading here.
Not being very Profitable by Willie Wonka
http://forums.taunton.com/tp-breaktime/messages?msg=104492.1
How do you speed up estimating?
http://forums.taunton.com/tp-breaktime/messages?msg=96046.1
Mike Smith on Materials markup Days /year and markup on T&M
http://forums.taunton.com/tp-breaktime/messages?msg=107892.63
Materials Markup
http://forums.taunton.com/tp-breaktime/messages?msg=107892.1
Job Costing and Estimates
http://forums.taunton.com/tp-breaktime/messages?msg=117568.1
Anderson Estimating software
http://www.superbuild.com/pricing.aspx?partner=andersen&CC=rem
Simple Excel worksheet
http://forums.taunton.com/tp-breaktime/messages?msg=120723.1
Craftsman site License
http://craftsman-book.com/products/index.php?main_page=cbc_product_software_info&cPath=39&products_id=387
Rich
Don't forget the tasty tax deduction that $ 19 000 represents.