Rates!

So, you have a service that you know people want. But what do you charge for this service?

This has been one on the biggest challenges I have faced since starting this business. I have had a hard time establishing a rate that is both fair to the customer and profitable for me.

While I was working at my retail position a while back, I was making $8.50 per hour. When you are squeaking by on $8.50 per hour, it is easy to think that working for yourself and charging $20 per hour will be great. However, when all things are really considered, you realize that you really cannot exist as a real, and long term business by charging a customer only $20 per hour.

Before starting my business, I searched online for standard rates around the country for handyman businesses. I found that the standard rate was anywhere from $35 (low) to upwards of $65 per hour. At first this seemed like a really high rate. While I could envision charging $35 for the first hour, I couldn't see charging $35 for each hour of work thereafter. However, the longer I am at it, and the more I begin to see things, I am starting to see that $35 per hour is not an excessive rate at all. In fact, it is quite low when compared to the standard rates of most other service profession. For example: most lawn companies figure lawn estimates based on a rate of $50-$60 per hour. Mechanics charge at least $75 per hour for labor. Most plumbers in our area work at a rate of $100 or more per hour. With this in mind, the $35 an hour I charge per hour is not excessive. Not only is it not excessive, it is what is really necessary for me to charge in order to be able to stay in this business on a long term basis.

Someone reading this might be tempted to think that you could be very well off working as a handyman and charging $35 per hour. However, you need to consider these things: As a "handyman" you are specializing in the smaller projects. Therefore, it is likely that you will use a large portion of you time driving from one project to another. Not only this, you use time getting your tools out before a job and putting them away after a job. With this in mind, it is easy to see that you will not likely be able to bill a full 40 hours in a week. A more realistic number is probably closer to 35 or probably possibly even 30. Also, that $35 per hour has to be able to cover your down time (the time when business is slow) and any vacation time. In addition to this, that $35 per hour has to cover vehicle expenses, and all other business related expenses such as tools, insurance, phones, etc.) So with all things considered, $35 per hour is about as low as you can really afford to go to be able to exist as a real and long term business. If you are simply doing this work on the side, then $15 -$20 per hour can be good extra money. But if you are trying to establish yourself as a full-time business, you are going to have to charge more.

Now, $35 is a fair rate on my end, but the question is, do customers see it as a fair rate? To this I have had a mixed response. I have had a few customers not even ask what I charge. They just had me make the repair and give them a bill. These customers didn't seem surprised at all by the charge. However, I have had other potential customers ask in advance what my rate is, and I must admit that you could feel the awkward silence as I told them $35 per hour. Because of these few encounters, I have pretty much decided that I am going to stick with giving estimates for the job instead of stating an hourly charge. The same customer who balks at $35 per hour, thinks nothing of a $140 labor charge on an estimate for a job that could potentially take me less the four hours to complete.

Now, with this all said, I need to be honest and say that as of right now, my average hourly rate has been less than $35 per hours. Because of my inexperience, I have so far been underestimating labor time on my estimates. This mistakes drives my average down. However, as time progresses, I will hopefully get better at estimating labor in my jobs estimates.

Now, while $35 per hour is the average that I shoot for, I am certainly willing to budge from that when necessary. Let's be honest for a minute and face the fact that some work is better than no work. And as a new guy just starting out, it is better to take less per hour and have something than it is to ignorantly and pridefully refuse to work for less and have nothing. I am confident there will come a day in which I can pick which jobs to take and which to refuse. But for now, I need to take what is available. And if that means negotiation my rates to get job, then so be it. At the end of the day, I am much better off having painted at $10 per hours making something then simply staying home, being bored, and earning nothing.