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.
However, 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 business. 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 we’re aiming for here 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. Handyman work can fall into so many different jobs – if you have exceptional carpentry skills, but are still calling yourself a handyman, a job that would use or stretch those carpentry skills should maybe be quoted a little higher if you know you’re the best person for the job in your town. Just be fair.
There’s one last thing that handymen and independent contractors always underestimate when they’re first starting out: how many hours they can actually work. Charging $50 an hour after you’ve been making $15 sounds like you’ve struck it rich, but consider this: You didn’t have to do the accounting, marketing or tax preparation for your old employer for free. 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’ve got your own business, 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. Suddenly, that $50 an hour seems like it has to go a long way.
Let’s get to the nuts and bolts of figuring out 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 putting in a mailbox, or fixing a fence, or painting a bedroom for example. Try to get the hourly rates for at least three different handymen. Average the rates. You could start out charging that average, or a bit lower than it if you want to get a lot of work fast and build up a clientele.
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, and add 10% more if you want to have a cushion in case your business gets slow. 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. This may or may not include the cost for health insurance, the cost for an office outside of your house, and the cost for all the tools you’ll need to do your work.
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 the hourly rate you’ll need to earn. I also strongly encourage you to round that number up because some clients don’t pay, and there are expenses you haven’t thought of yet.
Pam Neely writes about how to start a handyman business and how to grow an existing handyman business.
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