Another Question Hourly Rate Vs. Fixed!

Txbassboy

I have learned alot from reading the posts here. I learned about tracking and figuring my over head and so on to figure out the bottom dollar. My business would be considered a handyman business I guess. I'm the guy to call when the job is to small for bigger company's or when there are multiple things to do. We don't do any new construction at all so I have no pricing to quickly figure costs. OK the question finally.....If you track your cost and figure out what you have to make a day wouldn't it make sense to charge hourly rates? Or do you figure the hourly rate and multiply it by the time you think it will take to do the job and turn that in as your contract price? Obviously this won't work for every company but I'd like to hear again the pro's and cons of pricing escpecially if your a 1-3 man company like mine.

I guess I'm really trying to convice my self to charge hourly rates with a service call fee. I am so sick of running looser calls for someone to find out what something will cost. My company is mostly based on multiple customers per week. With the exception of one investment company that we rehab for.

mahlere

the answer depends...

say you did your math and determined you need $600/day/man to cover costs and make the profit you want.

$600/8 = $75/hr

Can you bill $75/hr in your area? Can you bill travel time in your area?

If you can not bill travel time, then you have to recalculate.

Let's say you can bill an average of 5 hrs a day (the other 3 being travel, getting supplies, etc)

$600/5 = $120/hr

Can you bill $120/hr T&M and get it?

Or, lets say you do an average of 2 jobs/day, Can you get a $100 trip charge then bill $80/hr for all your time?

$600- (2 * $100 -trip charges) = $400 / 5hrs = $80/hr

In the end, how is the best way to get that $600/day?

If you need $600/day and the T&M rates above are out of your markets ballpark, then you might want to look at fixed pricing.

POOLMANinCT

always flat rate for repairs.. when I was younger, I do hourly...
after a couple jobs like the following I changed my tune...
under ground plumbing repair.. generally its a fitting attached to the steel wall bulkhead. break & hammer deck/concrete... expose & replace fitting... something I have done at least a 100 times.. takes me about 2hrs tops.. now
at the time the rate for service was 75 pr hr... I asked myself should I really be doing underground plumbing repairs for $150... clearly
no.. now that job is a flat 600.. still sells, excuded are other failures in the line.. they are additional..

to sell flat rate you must put a value on the job, clearly I own my saws & breakers, 2 hrs of my time.. so where is the value? the value is in the restoration of a 45k swimming pool....
go flat rate, define your work scope, and sell the sizzle not just the steak.

ray

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......Less with the jaw & More with the paw.....

Txbassboy

Hmmm....I'll think about it. May not apply to my line of work.

Mike Finley

To figure this out simply look to the leaders doing what you are doing. How are the most successful companies locally or nationally who do what you do, pricing it?

If you consider yourself a handyman compnay, it's pretty simple since there are national handyman companies to research. Just look to them, look to the ones that are successful and emulate what they do.

You don't really ever have to reinvent the wheel. Pretty much everything anyone wants to do has been done before.

POOLMANinCT

I've always read "well to pay for this & make this much I have to charge X per hr"

so the guy charges X for hr, give him credit for his diligence, what is overlooked by most, is that the equation is to figure the minimum you can charge. it is not an equation to figure how much you will charge....
give yourself a raise!!!
ray

__________________
......Less with the jaw & More with the paw.....

tinner666

Some of my work is fixed price. Some, hourly, port to port. It varies.

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Frank Slate Roof Repairs, Richmond, Va.

Txbassboy

It looks like (IMHO) that the more trade specific contractors are fixed price where guys like me who do alot of different work or alot of small jobs tend to price hourly?! Thanks for the input.

Gordo

Let me try to help. Search this forum for how to price your business (there is plenty here). One other suggestion, when going into the unknown (like major wood rot) price it by the hour so you do not lose your shirt. Once you develop some repetitive experience with jobs, you will get better at pricing fixed jobs.

So, give fixed prices where possible. T&M charges when dealing with the fuzzy unknowns.

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Looks like some pros were here.

AirPro

I agree on this being a trade based topic. I charge flat rate for any service or repair, but I price changeouts based on whether the customer wants x,y, or z brand equipment, what level of efficiency they want, add on's......equipment location, etc.

fez-head

We charge both ways but are leaning more toward flat rate pricing these days - except on commercial work (to many variables to consider).

We are also enforcing the $30 service fee that gets credited back if we do the work (not on commercial work). Getting 3 estimates is ridicules for small handyman work and most seem to understand. But then again if we where not so well known and trusted it would probably be a different story.