I am starting a new business and I'm having a hard time finding the hourly rate I should charge. I've worked primarily industrial and commercial projects, so usually the people I worked for paid very well. The issue I'm running into is that I see most people are charging in the $50/hour range, and I can't understand how that money can support the business. I was making in the $50 dollar range working for somebody else (benefits included). So here is my question. These people saying they are charging $50/per hour, are they hacks, or are they nickel and diming the customer for materials, truck charge, insurance...etc? If I factor my cost; Truck, insurance, gas, tools, phone, and general maintenance (to name a few), I get to the mid $30s not counting insurance and before Uncle Sam takes his cut. This is taking into account that I'm working from my garage..... How on earth are these people throwing out a $50/hour bid and keeping people employed???
This calculator has been posted here before and it is a very useful tool for finding your cost of doing business. Remember not to forget anything and be realistic about your billable hours.
I am charging $52 per hour and I mark up material. I live in an inexpensive area in Southern Illinois. I see that you are in Houston. I am quite sure that you cannot make a decent living charging that where you are. You will have to charge more and compete on quality and service. If you have guys charging $50/hour in your area, you cannot compete on price if you are going to make a living.
Another thing to keep in mind is that if you are doing small residential jobs and service call type stuff, you are not going to get 40 billable hours in a week very often. You will have a lot of uncompensated time. I've been on my own 19 months and so far , I can tell you that it has not been worth it. The only thing that keeps me hanging on is the fact that I am building a customer base and hope the future will get better. In addition, my three main competitors are in their 70's. They can't keep going forever. The other thing is that there are not any good jobs to be had. I just can't see me working for someone else again.
Sounds like you are putting some thought into this. Good for you! Ultimately you will have to do the math and figure out what works for you.
I am charging $52 per hour and I mark up material. I live in an inexpensive area in Southern Illinois. I see that you are in Houston. I am quite sure that you cannot make a decent living charging that where you are. You will have to charge more and compete on quality and service. If you have guys charging $50/hour in your area, you cannot compete on price if you are going to make a living.
Another thing to keep in mind is that if you are doing small residential jobs and service call type stuff, you are not going to get 40 billable hours in a week very often. You will have a lot of uncompensated time. I've been on my own 19 months and so far , I can tell you that it has not been worth it. The only thing that keeps me hanging on is the fact that I am building a customer base and hope the future will get better. In addition, my three main competitors are in their 70's. They can't keep going forever. The other thing is that there are not any good jobs to be had. I just can't see me working for someone else again.
Sounds like you are putting some thought into this. Good for you! Ultimately you will have to do the math and figure out what works for you.
Also, let me add, I work for myself. I don't plan on ever having employees. It is a totally different situation when you have to make payroll every week and pay all of the other associated costs.
Only you are going to know what to charge. If $50 an hour isn't enough for you to keep the business going from month to month, how about going double that rate? Would $100.00 be too much? You need to figure out what your overhead is and how much money you want to pay yourself and how much profit you'd like to make. Then of course someone else will undercut you and get the job based on price and then where will you be? What if the truck breaks?
Well that's exactly my point. If the truck breaks when I'm only getting in the $20s for my product, then I definately wont' have enough to fix it. The site that the kind Mr. Sparkle pointed me to shows me at $71 an hour to remain in a 25% profitable situation. So I guess I'll start in that neighborhood.
Here's another question. I have to hire an apprentice....do I charge for his hours as well?
Get a cost calculator. Find your over head. Their is a guy here that has a cost calculator that is great and he has a flat rate program. You can get a demo on the program and try it. He has a website, electricalflatrate.com. The companies that are charging low labor rates probably have the employee base to spread the cost out over. Small companies don't have that. The more employees the lower your hourly rate can be. But I'm sure they are higher more like @$90. Remember service is less hours worked then non service. Service 1200 hrs non service 2000hrs a year.
I guess its ok to know what others charge for certain work but you have to use your own judgement and formula with that one. I know of many here that dont think their work is worth as much as it really is when you compare other trade pricing structure.
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