What Can You Learn From Handyman Services?

duckdown

Have you heard of handymanmatters? I thought our business was alone in terms of not marking up material costs but I recently learned that they have a similar practice.

They charge $35 as a fixed fee for jobs. Likewise, they purchase all of the supplies needed for a job at local retailers such as Home Depot and Lowes. They provide the customer with the actual receipts. They charge fixed 1/2 hour of time to pick up supplies.

Is this an emerging trend? Do you think many contractors will see the wisdom in this model or will stick with worked for them in the past?

silvertree

They are making it somewhere. Their business model must be based on something else like a straight labor bid that includes the overhead and profit.
You don't have to mark up materials, but then you need all your costs included in labor, which you then mark up to cover everything plus whatever you want for growing your business and income.

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Vote for Pedro
Kitchen, bath, St Paul remodeling
Minneapolis Remodel Blog
203K Loan Consultant Minnesota

Brock

They have been in my market for about 5 years. They DO charge for estimates. Their advertising budget has to be about 20k per month. High volume, ex-con carpenters on payroll.

Mike Finley

See the wisdom in it?

You might need to consider that Handyman services are just a niche of the home improvement industry. The handyman model doesn't dictate the business practices of the many and varied other niches of our industry such as home builders, remodeling companies, sunroom installers, roofers, window companies, insulation companies, electicians... etc.

I'm starting to get the feeling that you are more handyman then home theater installer which would make sense why you are so fixated on the issues of mark up which I've found most handymen are.

I suspect you are either new to the home improvements industry or at least new to running your own business in this industry. That being the case you probably aren't aware of the evolution of the handyman model over the last 10-15 years. It you do some research it will help you understand more about what you consider to be such a revolutionary all incompassing business model of non-mark up.

I'd think with some perspective you would begin to understand that customers in the handyman arena are being influenced by the handymen that service those customers. Most of them are not very accomplished in business. Most of them are not doing much more than creating a paycheck for themselves. Most have no employees, most have no insurance, don't pull permits. A lot of them are part-time. When you start to understand the forces and influences, the people that make up the niche and their motivations you will gain perspective on why it functions the way it does. That doesn't mean that handyman are all hacks or are all unprofessional or don't deliver a good product to their customers, but the facts are the facts of what the majority of handymen are. The franchise handyman services are a direct by-product of trying to fill the niche that is created in the handyman industry by all the guys I just described. They have acknowledge the weaknesses in these individuals and have moved to create a model that addresses these issues and uses them as selling points to avoid the unknown entity of the handyman and try to create a "sure thing".

When you get that understanding the next step should be to understand what works for somebody who's average job ticket is a 3-6 hour job with a dollar amount under $500 doesn't necessarily dictate what or how a $20,000-$150,000 home improvement company should function.

If you reply to this with something along the lines of you've done plenty of more expensive handyman jobs it will just show you don't have a very good handle on the handyman business. There are exceptions to every rule and there are jobs that fall out of the normal or average job. But those aren't the norm and just because they come close to bridging the gap between a handyman business and a full fledge remodeling company it doesn't mean the two translate equally back and forth.

Part of the reason why you get so much resistance to your continual posting of the virtues of no mark up is that you keep posting prefacing them in regard to contractors. If you properly define them in regard to handymen services you'll probably start getting a different conversation.

silvertree

A couple more things, Handyman Matters as a franchise charges 6% of gross sales and 1% for marketing and require franchisees to spend ( this is a guess) 10% for advertising.
So without an office there's 17% over and above wages. Plus what the owners need, plus phone, insurance, supplies, computer ect.
Starts to add up, doesn't it.

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Vote for Pedro
Kitchen, bath, St Paul remodeling
Minneapolis Remodel Blog
203K Loan Consultant Minnesota

Winchester

Some jobs I don't mark-up materials. If I'm working with a customer who is very picky about prices and materials, etc. I just tell them my (loaded) labour rate. Then just charge materials straight up. Some people like the idea.

I don't think this would be smart doing a large renovation, and definitely not a large project.

Also, when I am marking up materials, it gives me incentive to find suppliers that will offer me a good price. Many times, the prices I can find are cheaper for the customer even after my mark-up.

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Ryan

DetailHandyman

What jobs are they charging $35 for?
According to my research of HM and others such as Mr. Handyman, their "get us to the door" charge is up to $200 flat fee and the hourly rates I've seen equally as high.

What exactly is the wisdom in this model? Sounds like you are taking one companies method and using it to justify your opinion. I think that regardless of how many "examples" you cite, you'll have a hard time convincing most on this forum that marking up materials is wrong.

For that matter, I'm not really sure why you keep trying to push the "no mark up" viewpoint. If it works for you, great...keep at it. But, I see little value in you flogging this dead horse.

FTR, I do mark up materials.


And Mike Finley: as a professional, insurance carrying, full-time handyman, I do agree with your assessment of the apples/oranges of the handyman biz vs. other larger segments of the HI industry.

Tiger

A half hour at the company hourly rate could be considered an enormous markup. "Excuse me while I go to the store for a 3-way switch or a P-trap", which an electrician or plumber would carry in the van...and may have a 20% markup. Every good business has a way to make a profit. Boasting that you don't mark up materials is just a marketing gimmick IMO. Everyone needs to make the money somewhere in their business.

Mike Finley

This reminds me a time way back we were working for a customer which I considered to be a pretty decent customer. The project was using above average materials and products in price range and there was never a quibble in anything I quoted them from the first estimate through to a 1/2 doz change orders. Everything we do is fixed price and we don't break out labor vs materials.

They wanted some extra work done by our electrician and I simply asked the electrician to consult with them and handle it outside of our job between themselves.

A few days later Toward the end of our job the electrician was back on our job site doing the extra work for the customer when suddenly there was a huge screaming and yelling match going on between the customer and the electrician. (99% of it from the customer)

Get this -- the electrician had to make a change to some materials due to the customers change of the scope of work they were doing, the electrician was getting an okay for a verbal change order by telling them they would need to run to the electrical store to get the new switches and that they didn't mark up the switches but they charge x amount an hour for running to get them.

The customer was going freak'n nuts over this hourly charge for parts running -- his basic reason was the electrician shouldn't be charging them for his time for switches -- I guess he thought they should have every switch made in the world on his truck?

Regardless, the interesting moral to the story was the electrician a non-mark up material guy, he believed in getting his money by charging hours for everything and doing everything by the hour.

Had he simply quoted the guy X amount of dollars for the job and then when it changed simply quoted him an additional add on charge for the new switches with enough money in it to cover his cost and more profit there would have been no problem.

The problem was the customer had no problem paying a flat $300 for the work and would have had no problem paying $350 total including the change, but once the electrician sold the customer on hourly + materials with no mark up, the customer was counting every minute and analyzing every dollar spent because he could do it very easily. 3 hours x $100 an hour = $300. Now you are going to run to the store on my time and I have to pay you for it? No way.

It's not a matter of was the customer right or wrong in regard to the switch, the example shows the potential pit fall of once you get into this full disclosure deal how it can blow up on you so easily under the right circumstances. Or maybe the wrong circumstances or the wrong type cutsomer is more accurate.

I know for us I avoid hourly anything, especially change orders. Fixed prices that contain your time materials and mark up cause way less hassle and avoid run ins with those problem customers who now want to hold a stop watch over everything you do.

silvertree

Been down this road.
Tell the customer it will take 5 days, and it takes 8, they might say "A little harder than you thought,eh"?
Tell them 5 and do it in 4, and they want 20% off.
Now I say, "Might be 4 or 5 days", but don't worry, the price is fixed.

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Vote for Pedro
Kitchen, bath, St Paul remodeling
Minneapolis Remodel Blog
203K Loan Consultant Minnesota

Mellison

We also manage properties so we do alot of "handy Man" type work.
I always tell my customers the same thing: "While we do handy man type projects we do NOT charge handy man prices. This means we charge no differenty than our contracting rates. And yes we do mark up materials. If it is a plumbing or electrical repair we mark up our vendors cost by at least 20%.

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"Enjoy Every Sandwich" Warren Zevon

Brock

We never mark up materials. We actually use that as 1 of our marketing tools. All we are concerned about is getting our labor fees. Everything is rolled in to the fee we charge or the "estimate of time" to do the job if you will.

duckdown

So, there are a few of us that never mark up materials. I wonder why others aren't seeing that this is a better approach?

Mike Finley

F'in retard is all I got to say. This has moved beyond absurd.

Mellison

Very Strange!!!!!!

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"Enjoy Every Sandwich" Warren Zevon

Mike Finley

I don't know what's going on, but I suspect on the other end of the internet is either this




or this

will575

His other threads were absurd, all lumped together...WOW!

Why is one person so intent on convincing everyone else that a low to no profit business model is what we all MUST do?

Remember the one about how somehow if we mark up material we are like some of the scumbags on wall street? Amazing.

I'll ask the question again: Will your suppliers tell you what they pay for what they sell you?

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skyhook

No, so I round it off to 100%, and that is my mark up.

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Mellison

We must be being messed with. I am done with this "no mark up" topic( for now).

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"Enjoy Every Sandwich" Warren Zevon

Brock

Ofcourse everything is marked up. Call it smoke and mirrors if you want. It might be easier if you look at it this way. We will just pull dollar amounts out of the air for the sake of this point.

Lets say you set a toilet for a customer. You charge $35.00 to set the toilet plus parts. Lets say the parts cost you $100 and you bill $150.00 for parts. You write the invoice for $185.00. You pocket $85.00.

Lets say the no markup guy sets a toilet for a customer. He tells the customer he will do the job for $85.00 and tells the customer he will pick up all the parts and bill the customer exactly what he pays for the parts. After the job is done he bills the customer for $185.00. He puts $85.00 of that in his pocket and his customer has a warm and fuzzy feeling that they didn't pay the installer a middleman fee for parts. Just a different way of doing business. Plus the customer has no idea what the first guy is going to hit him for on parts, but he has priced toilets and is willing to select the guy that charges $85.00 to do the job because he knows he is not going to take it in the shorts on the parts.

Hope that clears things up a bit.