Handymen How To Figure Out Your Hourly Rate
Handymen How To Figure Out Your Hourly Rate
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Knowing what to charge is the secret of success for small business people, and it certainly applies to independent handyman businesses. If you ask for the least amount of money possible and try to underbid all your competitors, you’ll end up working for cheapskates, working two or three times as many hours as other handymen, and frequently getting treated worse than you would if you charged more. People respect confidence, and one of the best ways to show your confidence as a handyman is to charge a fair fee.
On the other hand, charging a fair fee doesn’t mean you should take advantage of people. Bidding $150 an hour when other handymen in your area are charging $50 is going to cost you customers. Sure, there’s an off chance that someone may decide you’re the only person they want on their property and so you get the big bucks – and that has been know to happen – but generally, overcharging is going to cost you business. What you want is a competitive, fair rate that will let you take care of yourself and your family and your customers. Another penalty of undercharging is you’ll inevitably end up doing less-than-excellent work because you’re either exhausted or resentful at being broke or late for another job.
Besides making both you and your customers happy, another factor to consider when you set an hourly rate is where you’re going to be doing the work. City handymen make more than rural ones. If you have any particular skills that set you apart from other handymen, you can also charge more. Handymen do such a variety of jobs that its common to find some that have special expertise, like painting or carpentry. If you know you’re hands-down the best guy in town for a job, and your clients knows it too, you can probably get away with charging 10% more than the other handymen have bid on the job. Just be fair.
Overestimating how many hours you can actually work is probably the biggest mistake made when calculating an hourly rate. Charging $50 an hour when you’ve been making $15 sounds like you’ve struck it rich, but consider this: As a paid employee, you didn’t have to deal with taxes, or advertising, or accounting. You probably didn’t get paid for all the trips to the store for supplies, all the hours spent talking to clients before, after and during the work, and you probably didn’t get paid for all the driving time. Now that you’re solo, that $50 an hour is going to have to cover all those things and more. You’ll no longer get paid vacations as a small business owner, so if you want those two weeks off once a year, the money for that is going to have to be padded into that $50 an hour.
Let’s get specific about what you’ll need to charge. There are two parties we need to satifsy to find a good rate: You and your clients. We’ll start with your clients.
You need to find out what other handymen in your area are charging. You need to know hourly rates and get some examples of quotes they’e given for specific jobs – things like power-washing a driveway, fixing a sink drain or changing a light fixture for example. Try to get the hourly rates for at least three different handymen. Average the rates. That average rate is roughly what your prospective customers are willing to pay. Its OK to charge more if you know you can do a much better job than other handymen in your area. Charge less is you want to get more work faster.
You can ask the handymen (or handywomen… there are more and more of them) for their rates directly, or ask a few neighbors that have hired handymen, or call a property management firm. The property management firm (or a real estate broker) may be able to give you a truckload of info about handyman services in your area. Talking to a property management pro or a real estate broker might net you a job right away, and these people are considered the best kind of clients for handymen because they constantly need small jobs done. Get one of those folks to trust and like you and your business is well on its way.
To figure out what you need to charge (as opposed to what people are willing to pay), figure out what you need to earn each month after taxes to pay all the bills. Include unusual expenses like car maintenance, Christmas and winter heating bills. Add 10% to that amount for savings/breathing room. Now, look up the federal and state tax tables for whatever your magic number comes out to as an annual income. Finally, add how much it will cost to run your business for a year. Normal business expenses would include a phone, your truck, your licenses and insurance, and all the tools you need.
Divide that annual income requirement by 12. That’s what you need to earn per month. Assuming you can fill 30 hours of billable work per week, that means you’ll be working 120 hours a month. So divide your magic monthly number by 120. That’s what you need to charge per hour. I also strongly encourage you to round that number up. Some clients don’t pay. Some jobs cost more and take longer than you thought. Things rarely work out exactly as planned.
Pam Neely writes about starting a handyman business and how to grow an existing handyman business.
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