Hi I'm still pretty new as a contractor and have started to think that maybe what I charge per man hour might be low. What do y'all Charge per man hour? Does $35 sound to low or does it sound about right?
Zach_bailey
Where do you get the 2.5? With your 2.5 I'd need to be charging 50 instead of 35. Sorry for picking your brains but I'm just trying to be as profitable as possible especially seeing as I'm working up a quote for some sub work witch could turn into a very large amount of sub work from the same people.
35/hr. is too low. My guess is that most contractors are probably between 50-75 per man hour not including service jobs. Contractors who rely on smaller service jobs are probably in the 75-100 per man hour. I could be wrong.
What you have to understand is you are not an employee. Otherwise 35/hr. might be ok. You are going to spend many hours running your business, estimating, picking up supplies etc. that are not billable hours. You also have to factor in overhead and profit for your business. Who pay's for you health care vacation time holidays, retirement etc.? When you start to look long term (at least a year) you will realize what your charging is not enough.
Hope this helps. There are many good threads here discussing this topic.
What you have to understand is you are not an employee. Otherwise 35/hr. might be ok. You are going to spend many hours running your business, estimating, picking up supplies etc. that are not billable hours. You also have to factor in overhead and profit for your business. Who pay's for you health care vacation time holidays, retirement etc.? When you start to look long term (at least a year) you will realize what your charging is not enough.
Hope this helps. There are many good threads here discussing this topic.
planet you from, boy?"My lead costs me $39 per hour. In my neck of the woods $50-$55 for sub work is the most your gonna get. I use sub work to fill the schedule and HO's to make real money. Funny part is the builders I work for don't do remodeling. They are a decent chunk of the HO jobs I get.
Keep in mind whatever rate you set is not gonna go up much, ask me how I know. IMO anything under $45 I would just go work for someone. Not sure where you are located though. Also, don't be afraid to do the first job to show your skills. Just make sure they know that's the intro rate.
Keep in mind whatever rate you set is not gonna go up much, ask me how I know. IMO anything under $45 I would just go work for someone. Not sure where you are located though. Also, don't be afraid to do the first job to show your skills. Just make sure they know that's the intro rate.
Way to low, your a wage earner and will be out of business, so don't give them a warranty you won't be around to keep.
It doesn't matter what part of the country you are from, these variables are pretty much the same, with a slight percentage up or down.
1) Your phone, internet, website & communications
2) Your vehicle, gas, insurance, replacement cost, wear and tear, etc.
3) Business license, registry, insurance
4) Tool replacement, consumables on those tools, new tools, etc.
5) Office expenses, accounting, bookkeeping, etc.
6) Banking, credit card, etc.
7) Marketing, Advertising, etc.
I'm as about as lean as one can be and these things run $21.75 per hour. Based on 30 billable hours a week.
So if you like to make $13.25 an hour go ahead. One or two whoops of the pen or key board and your done.
I never compete with the low per hour guys, they are all in the mind set of racing to the bottom. These same guys can't compete with some one who is rationale with what it takes, etc.
At your rate, you should be quite busy, double your rate and see if you stay busy, if you do, then you been losing twice your money.
Add in worker comp to those numbers too. You can't do it all and will need help. One f up and your done.
It doesn't matter what part of the country you are from, these variables are pretty much the same, with a slight percentage up or down.
1) Your phone, internet, website & communications
2) Your vehicle, gas, insurance, replacement cost, wear and tear, etc.
3) Business license, registry, insurance
4) Tool replacement, consumables on those tools, new tools, etc.
5) Office expenses, accounting, bookkeeping, etc.
6) Banking, credit card, etc.
7) Marketing, Advertising, etc.
I'm as about as lean as one can be and these things run $21.75 per hour. Based on 30 billable hours a week.
So if you like to make $13.25 an hour go ahead. One or two whoops of the pen or key board and your done.
I never compete with the low per hour guys, they are all in the mind set of racing to the bottom. These same guys can't compete with some one who is rationale with what it takes, etc.
At your rate, you should be quite busy, double your rate and see if you stay busy, if you do, then you been losing twice your money.
Add in worker comp to those numbers too. You can't do it all and will need help. One f up and your done.
I dont charge a lot more than 35 for my guys, but i mark up every job expense including in house labor and my time a minimum of 18% if its cost plus, goes up from there. If i was a one man show that would have to be a lot higher, and i charge quite a bit more for my time. Have to start somewhere though, i charged less than 35 when i started.
If you plan on paying everything from your hourly rate, you gotta figure your annual overhead and expenses, what you want to pay yourself, how much you want for a bonus, and leave money in the company every year to build operating capitol, figure how many hours you figure to work and divide.
My hourly rate for my guys and myself is just figured to pay wages, burden, trucks, tools ect... and maybe make a little profit. Mark up covers the rest.
If you plan on paying everything from your hourly rate, you gotta figure your annual overhead and expenses, what you want to pay yourself, how much you want for a bonus, and leave money in the company every year to build operating capitol, figure how many hours you figure to work and divide.
My hourly rate for my guys and myself is just figured to pay wages, burden, trucks, tools ect... and maybe make a little profit. Mark up covers the rest.
I charge more for me being on the job. My guys are a seperate rate, if we are both on the job I still get my rate and thier rate. That is how you make money.
I know exactly where you are coming from. I started at 25 bucks an hour and scraped and scrounge for every dime.
You need to get out of the mindset that you couldn't afford to pay your rates, so how can you expect a customer to.
This is for residential HO work. Sub work can be profitable but to be really profitable you need a crew and make it in volume. The problem with that is if your crew isn't fast enough you start losing money really fast.
If it is just you, figure what you need and go from there. In sub work, many times you will only be able to get wages, especially starting out. However, there is a point where you are either a real subcontractor or you are only a glorified employee. I've been there. The steady work seems good, but you starve.
I know exactly where you are coming from. I started at 25 bucks an hour and scraped and scrounge for every dime.
You need to get out of the mindset that you couldn't afford to pay your rates, so how can you expect a customer to.
This is for residential HO work. Sub work can be profitable but to be really profitable you need a crew and make it in volume. The problem with that is if your crew isn't fast enough you start losing money really fast.
If it is just you, figure what you need and go from there. In sub work, many times you will only be able to get wages, especially starting out. However, there is a point where you are either a real subcontractor or you are only a glorified employee. I've been there. The steady work seems good, but you starve.
Here is a story that happened to me three months ago to keep in mind. I got a call from a company opening a business in town. They had a finished space rented and needed a few things completed to get it ready. We talked on the phone about what I do and schedule. He called me back the next day and said he would like me to do the work and that he would be in town in a few weeks and we would meet on sight and take care of the paper work.
Fast forward to the meeting. He said he had talked to another contractor in the area before me, but once we talked he knew he wanted me to do the work. I happened to see his notes. He had my name and hourly rate as well as the other guys whose rate was significantly lower at $35.
Two things are important about this.
-When the other guy sees the work being done it wold be easy for him to assume I was working for less and start questioning if he should charge $30
-I didn't here the other conversation so who know what was said. What I do know is that he said $35. People could interpret that number to mean not professional.
Fast forward to the meeting. He said he had talked to another contractor in the area before me, but once we talked he knew he wanted me to do the work. I happened to see his notes. He had my name and hourly rate as well as the other guys whose rate was significantly lower at $35.
Two things are important about this.
-When the other guy sees the work being done it wold be easy for him to assume I was working for less and start questioning if he should charge $30
-I didn't here the other conversation so who know what was said. What I do know is that he said $35. People could interpret that number to mean not professional.
I can't see any human being on this planet charging one penny less that $95 per hour for anything. When you call an appliance repairman he charges $95 to tell your that the electric plug fell out of the receptacle.
The telephone company charges $240 to come to come and identify a phone line location that takes two minutes.
Our auto mechanics have no bones with making it clear that they charge $155 per hour and we have to pay $120 for their estimate and take our vehicles to them.
The true price for services anywhere should be no less $150+ per hour and I believe that the correct price is $280 per hour so you can live a decent lifestyle and so you don't have to pinch pennies to keep your business books in the green when you go through the swings in leads, sales and profit.
8 x $35 = $240 per day. Most of my experienced employees earn $55 to $75 per hour and then I have to pay all the other costs. If you can work for $35, bring your own truck and tools you can come work for me and I will pay you $45 per hour and make out better than a bandit.
The telephone company charges $240 to come to come and identify a phone line location that takes two minutes.
Our auto mechanics have no bones with making it clear that they charge $155 per hour and we have to pay $120 for their estimate and take our vehicles to them.
The true price for services anywhere should be no less $150+ per hour and I believe that the correct price is $280 per hour so you can live a decent lifestyle and so you don't have to pinch pennies to keep your business books in the green when you go through the swings in leads, sales and profit.
8 x $35 = $240 per day. Most of my experienced employees earn $55 to $75 per hour and then I have to pay all the other costs. If you can work for $35, bring your own truck and tools you can come work for me and I will pay you $45 per hour and make out better than a bandit.
My top guys earn a base of $35 per hour.
With taxes, insurances and other costs, I need to add 38% on top of that making our true labor costs $48.30 an hour.
Now I need to make money for myself and the business. I take that labor cost and divide it by .5 leaving me with a man hour rate of $96.60 and a 50% margin.
My employees, the insurance companies and the tax man are all paid on time and there is money left over for me and the company.
For subcontractors, I negotiate a rate with them and add the same 50% margin.
With taxes, insurances and other costs, I need to add 38% on top of that making our true labor costs $48.30 an hour.
Now I need to make money for myself and the business. I take that labor cost and divide it by .5 leaving me with a man hour rate of $96.60 and a 50% margin.
My employees, the insurance companies and the tax man are all paid on time and there is money left over for me and the company.
For subcontractors, I negotiate a rate with them and add the same 50% margin.
That's why I have some crew driving 2-3 hours one way daily. Most my work is downtown SF. If you looked at home prices anywhere in the Bay Area, you would need a hot rate to make ends meet. Our big work is sold out through mid 2017. TI is busy, need more staff to keep up. Talks about raising our margins....
This question is so variable it's hard to answer. You need to take some time to examine your business and come up with your actual overhead costs. What does it ACTUALLY cost you to work for one man hour?
Can you pull your records from last year and see how many hours you worked and how much $ you spent on labor, material, and overhead, etc? I know that sounds a lot simpler than it really is, but hopefully you can derive a simple estimating method for how much your overhead is as a percentage of your costs - both labor and material.
Let's say you determine that your overhead cost is roughly 20% of everything you do - every estimate for every job from then on should be (in VERY simple terms) Raw Cost + 20% overhead + XX% Margin. Overhead IS a cost, not something you need to absorb into your margin.
Of course your FIXED Cost overhead (such as website, building lease cost, etc) as a percentage of total revenue will change depending on how much revenue you have in any given year. Hopefully you can get a good feeling for what you project to be your average revenue that is a safe bet for determining this percentage.
If you can truly dissect your business and become an expert at your own costs, you will be in a much better position to estimate hourly rates and truly estimate what a job will cost you. With this, you can feel much more secure in your numbers when you are pricing jobs or unit prices.
Can you pull your records from last year and see how many hours you worked and how much $ you spent on labor, material, and overhead, etc? I know that sounds a lot simpler than it really is, but hopefully you can derive a simple estimating method for how much your overhead is as a percentage of your costs - both labor and material.
Let's say you determine that your overhead cost is roughly 20% of everything you do - every estimate for every job from then on should be (in VERY simple terms) Raw Cost + 20% overhead + XX% Margin. Overhead IS a cost, not something you need to absorb into your margin.
Of course your FIXED Cost overhead (such as website, building lease cost, etc) as a percentage of total revenue will change depending on how much revenue you have in any given year. Hopefully you can get a good feeling for what you project to be your average revenue that is a safe bet for determining this percentage.
If you can truly dissect your business and become an expert at your own costs, you will be in a much better position to estimate hourly rates and truly estimate what a job will cost you. With this, you can feel much more secure in your numbers when you are pricing jobs or unit prices.
Y'all make alot of sence in all the different ways you figure out what to charge. I've been doing alot of math and trying to figure out witch way will be most profitable yet still make it where I can get the work. I really do appreciate y'all for chiming in on this. I think this will probably be much simpler to figure once I've got a few years in business as this is my first year doing thing the right way and not the under the table cash way.
Another fine discussion on business.
In the late 90s one of the major hvac co $175 for tech to come out and knock on door, then it's t&m minimum 1hr. Go figure. Baltimore area. I should call around and find the current rate, my guess is $300 area, lol.
As a locksmith in the early 90s we were charging $45/hr and could have been getting more. Urban areas do have higher costs for everything, how much to have a tow truck hookup these days?
In the late 90s one of the major hvac co $175 for tech to come out and knock on door, then it's t&m minimum 1hr. Go figure. Baltimore area. I should call around and find the current rate, my guess is $300 area, lol.
As a locksmith in the early 90s we were charging $45/hr and could have been getting more. Urban areas do have higher costs for everything, how much to have a tow truck hookup these days?
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