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Discussion Starter · #1 ·
I'm doing some projections figuring estimated revenue, overhead, and profit and want your opinion on billable hours.

I am figuring all my job cost(labor), overhead, and profit into my hourly rate. I won't get into all the reasons I feel that will work best for me.

Starting out in remodeling/custom carpentry, is 1700 a realistic number to expect for billable hours. I charge from the time I leave to time I get home. I hope to bust my butt and do more like 2400+ (6 day weeks) which I currently do and use the extra 700 for growth. But for now I'm just trying to figure safe but realistic minimums. I feel good about staying busy, main thing that could hold me up would be winter weather/rainy days if I only have outdoor work.

What has your experience been? What would you expect if the work is there as an average for the first three years?
 

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Discussion Starter · #4 ·
For me that figure would be wishful thinking.
At my day job I put in 2,470 hours over the last year with no Saturdays, then add in Saturday/evening work and I probably worked closer to 2700-2800. To bad this house I remodeled was such a money pit. I do realize that with my day job I go in rain or shine at 7:00 whether its dark or not. Not realistic with remodeling work that is contingent on so many factors. Plus the work has to be there...
 

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At my day job I put in 2,470 hours over the last year with no Saturdays, then add in Saturday/evening work and I probably worked closer to 2700-2800. To bad this house I remodeled was such a money pit. I do realize that with my day job I go in rain or shine at 7:00 whether its dark or not. Not realistic with remodeling work that is contingent on so many factors. Plus the work has to be there...
Yeah, for me it's wishful thinking because I have a lot of different customers so there's more windshield time (which I don't charge for) and more trips to the hardware store and more initial meet-ups/bids. Sounds to me like you work bigger jobs (most do) so staying productive enough to put in 1700 hours seems reasonable.
 

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How long have you been doing the handyman work?
I ask because as I age, and as the economy has changed so much, I am finding I am getting a lot of calls for minor handyman type work. Most of it is for repeat customers that I have done a larger project for and because of that I almost give away my time on these jobs.
I do want to keep these customers and the lighter work but don't want to give away my time. I seem to have a hard time charging my normal rate for these jobs but I do need to cover my overhead and still make a profit.
I'm not asking what you charge but how you charge. Do you have a service call charge than a hourly rate?
Thanks for any insight
Bill T
 

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Your billable hours will be greatly determined by the average length of your projects.
On service call work, we do well to get 5 hours a day actually on site.
Long term projects we can get at least 7.
We have different rates calculated for each type job, as well as charging service call fees for any project 4 hours or less.

You say you charge from the time you leave your house until you get home. Do you mean you charge T&M, and show this time, or do you charge an hourly rate that includes the non billable time?
 

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Discussion Starter · #8 ·
You say you charge from the time you leave your house until you get home. Do you mean you charge T&M, and show this time, or do you charge an hourly rate that includes the non billable time?
I charge an hourly rate and show the time. When I figure my overhead/profit and figure an hourly rate I am at the top of the pay scale for carpentry in my area already so if I took the approach to figure driving time, non billable hours, etc it would price me out of good jobs if I were working for T&M and showed the customer my hourly rate. It is easier for me and the customer if I charge for all my time and they see an hourly rate that is lower.

Most plumbers/electricians/hvac are $10-15/hr higher than me and likely price non billable hours into their rate like you say. But for whatever reason, around here that is not how carpenters roll so I have to at least make it look like I'm not running to far ahead of the pack.

I have even considered adding an invoice line for fuel so that it doesn't come out of my hourly rate figure during commute. Either that or I may charge a higher price for the first hour on smaller jobs to cover. Either way, when I invoice I don't list the number of hours I worked. I just have a labor total.

I'm no seasoned expert. I'm figuring all this stuff out...
 

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I charge an hourly rate and show the time. When I figure my overhead/profit and figure an hourly rate I am at the top of the pay scale for carpentry in my area already so if I took the approach to figure driving time, non billable hours, etc it would price me out of good jobs if I were working for T&M and showed the customer my hourly rate. It is easier for me and the customer if I charge for all my time and they see an hourly rate that is lower.

Most plumbers/electricians/hvac are $10-15/hr higher than me and likely price non billable hours into their rate like you say. But for whatever reason, around here that is not how carpenters roll so I have to at least make it look like I'm not running to far ahead of the pack.

I have even considered adding an invoice line for fuel so that it doesn't come out of my hourly rate figure during commute. Either that or I may charge a higher price for the first hour on smaller jobs to cover. Either way, when I invoice I don't list the number of hours I worked. I just have a labor total.

I'm no seasoned expert. I'm figuring all this stuff out...
Whenever possible quote by the measurement - square feet lineal ffeet etc. 1.00 a square foot is a deal. 100 an hour and youre a con man. Even though thats what it takes to make 50k a year.
 

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Discussion Starter · #10 ·
Whenever possible quote by the measurement - square feet lineal ffeet etc. 1.00 a square foot is a deal. 100 an hour and youre a con man. Even though thats what it takes to make 50k a year.
That's the advice that I'm getting a lot. "Bid or use fixed pricing if at all possible." It can be near impossible in some remodeling situations but I keep hearing that I should pad it really well and give a fixed price anyway.

Now I need to get my game on and come up with a sales pitch on why giving a fixed price is the best bet. I think I could definitely come up with some advantages for the customer...

-They don't have to worry about if I'm milking the job.
-They know what the final cost is going to be up front.
....
 

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I'm doing some projections figuring estimated revenue, overhead, and profit and want your opinion on billable hours.

I am figuring all my job cost(labor), overhead, and profit into my hourly rate. I won't get into all the reasons I feel that will work best for me.

Starting out in remodeling/custom carpentry, is 1700 a realistic number to expect for billable hours. I charge from the time I leave to time I get home. I hope to bust my butt and do more like 2400+ (6 day weeks) which I currently do and use the extra 700 for growth. But for now I'm just trying to figure safe but realistic minimums. I feel good about staying busy, main thing that could hold me up would be winter weather/rainy days if I only have outdoor work.

What has your experience been? What would you expect if the work is there as an average for the first three years?
Reasonable but I bet mine is a little lower if it was just me.

Don't forget about ordering, receiver material, warranty work, paper work, writing quotes (that's a big one), accounting, billing, payroll.
 

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Perhaps your area is different than mine---But I just don't do T&M--unless it's for a regular customer or in and out service work.

Most folks want a price for the completed job---T&M is like asking for the customer to write you a blank check---I just can't sell a customer a job without a bottom line price.

I know you didn't want to hear that---bidding is the part of this work that will make you or break you----and comes at a huge cost---blow a few bids and you will understand what I mean.
 

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Perhaps your area is different than mine---But I just don't do T&M--unless it's for a regular customer or in and out service work.

Most folks want a price for the completed job---T&M is like asking for the customer to write you a blank check---I just can't sell a customer a job without a bottom line price.

I know you didn't want to hear that---bidding is the part of this work that will make you or break you----and comes at a huge cost---blow a few bids and you will understand what I mean.
Depends Mike, you could still bill a fixed block of hours in flat rate...you just may work more of less than you bill....but it's still billed hours.
 

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Discussion Starter · #14 ·
Perhaps your area is different than mine---But I just don't do T&M--unless it's for a regular customer or in and out service work.

Most folks want a price for the completed job---T&M is like asking for the customer to write you a blank check---I just can't sell a customer a job without a bottom line price.

I know you didn't want to hear that---bidding is the part of this work that will make you or break you----and comes at a huge cost---blow a few bids and you will understand what I mean.
Just to clarify, I am just starting out. In case anyone is under the impression that I've been on my own for years.

I could see that in time as I am referred to more people who don't know me personally that they wouldn't necessarily want to go out on a limb and trust in something so open ended.

However, currently I have a reputation as being a super hard worker and I don't think that anyone who would hire me would be worried about leaving it open ended, they would be worried about why my hourly rate is so high. Keep in mind I live in amish country, somehow their presence has held down what people expect carpenters to charge. Most wouldn't like it, but would expect that the going rate for a plumber/electrician here is $60/65/hr but you talk about a carpenter charging $45/hr and that's just ridiculous. All the more reason to model a company under fixed pricing. Besides, why work so hard to have the knowledge/ability to work faster and more efficiently if your are creating a ceiling over yourself for possible income earning. If I work twice as fast I should make twice as much.

It is still beneficial for me to have a realistic expectation of billable hours per year. But I'm definitely realizing that I need to work on figuring out how I'm going to sell my customers on a fixed price even if they want T&M. I can get by on T&M with some growth and 8-10% profit at the end of the year but I won't have anything special as far as personal income, and definitely not the kind of company growth I want.

If the local market will only bear $xx/hr I have to adapt my business model somehow to make up for it.

Thanks for all the good advice. :thumbup:
 

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I think you will have no trouble selling a complete job---as opposed to time and materials----

PM some of the regulars here for details on estimating and writing a contract and scope of work---there is just to much theoretical BS in the pricing threads here--

You need someone to walk you through your first few bids---
 

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Discussion Starter · #16 ·
I think you will have no trouble selling a complete job---as opposed to time and materials----

PM some of the regulars here for details on estimating and writing a contract and scope of work---there is just to much theoretical BS in the pricing threads here--

You need someone to walk you through your first few bids---
Thanks Mike. I was actually thinking of doing just what you're suggesting. I've pretty well got my overhead/profit/wages dialed in so that I know what I need to charge for 1700 Hrs/yr. I agree about the theoretical BS. Even though I like the book "Markup and Profit" that so many base their pricing off of I think it could be disastrous at the same time for some people (me).

The plan is to quit my full time job early spring. In the mean time I'm trying to get all my accounting/invoicing/billing/contracts set up and ready to go. I'll PM you.
 

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You have made some good friends here that will be glad to help you out.

As you know,there are many ways to do the job---this applies to selling and writing contracts----you need to cherry pick the different methods and create one that works for you---

I worked for a guy once that always picked the best customers---

I asked him how he did it---his answer," It's the furniture. People will borrow money for a big house or fancy car----But you see a house filled with high quality furniture? They have cash. People don't borrow money to buy furniture."

Funny,but I find that it's true.
 

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If you're working fast, the money goes in your pocket under a fixed price, under T&M it's going into your customer's pocket.

The faster you are, the more sense it makes to go straight fixed price.

Driving time can be a killer. A lot of times I'll plan out what supplies / materials I'll need for the next day (that I'm not having delivered) and pick them up on the way in the morning. Since it's a trip to pick up materials, people who don't want to pay for your travel time view it as fair to pay for this time. The other big issue is how much you do in your shop vs on site, saving set up time. A lot of people hate paying time when you're not on site.
 

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Discussion Starter · #20 ·
I'm all about speed, efficiency, and learning better methods. The nice thing is that with fixed pricing I know I can still look my customer in the eye and sell "value." I know all the guys in business around here. A lot of them are good carpenters but getting old and unmotivated.

Just as an example without real numbers, if they know they have to charge $50/hr to stay in business and do, while I charge $80/hr(which I could never get T&M) and get twice as much done. I'm giving the customer value, and creating a more profitable business that will grow, thus expanding in tools/equipment, thus allowing me to give my customers a better product under a wider range of circumstances. There is nothing shady about that and that excites me.
 
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