# need help with hourly rates v.s. bid/estimate pricing



## jmbasile2 (Jun 12, 2013)

Hi everyone, 1st post here on great site. My background is 20 years contractor/remodeling and need to figure out why people are so fixated on hourly rates of contractors. I do price my self out of a good amount of work when I am asked about hourly rates. Can I please hear of some good suggestion on how to handle objections. I am starting a handyman division because the big jobs(additions, bigger ticket projects) don't come my way anymore. Any suggestions on service charges, 1st hour, hourly rates, bid/fixed price? I need to get back to making money again.
Thanks for your thoughts
Joe


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## Spencer (Jul 6, 2005)

Go to the business section. On the upper right hand corner underneath the pages there is a "search this forum" tool. Go to advanced options. There is a drop down menu underneath the search word box. Search in "thread title only". Do searched using words like bid, fixed, estimate, pricing, quote, hourly, etc. You will find more information than you can handle.


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## jmbasile2 (Jun 12, 2013)

Thank You


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## CarpenterSFO (Dec 12, 2012)

I have better luck searching in C.T. with google: "site:contractortalk.com hourly rate" for example.


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## huggytree (Nov 3, 2013)

on any job under $1,000 I don't come and give a bid

of those under $1,000 jobs I try to have a flat rate price on as many jobs as possible (replace Water softener,water heater, garbage disposal, etc)

many times I get homeowner that don't even know what is wrong or cant describe it properly....for those cases I charge $60 trip and my normal hourly rate...minimum 1 hour....and on those small jobs I typically jack up parts 200-300% to try to make some cash....I consider those small jobs filler...I make a bit, but not much when you consider all the driving around I have to do

at first when people hear your hourly rate they will almost hang up on you...but after a few years your customers will all be repeat and referrals...so hourly rate wont matter as much...I often get customers that don't even ask

I don't give out my hourly rate unless I have to...I try to fit people into a flat rate task

if a homeowners first question is how much an hour do you charge I pretty much write them off...some times I refuse to give it out and say no thanks to the job...some times I say im not the cheapest, so please call someone else.....im rude about it....I figure most are other plumbers shopping my price....ive never gotten 1 job from someone whos first question was my hourly rate...so why not be rude...its kinda a rude/ignorant question in my opinion


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## EthanB (Sep 28, 2011)

Repair work has been a great lead generator for me so I try to fit some in when I can. I used to be able to get about 4-5 days of repairs in a month and I have had almost 50% of those customers call me for larger projects. I only say that to explain why I wasn't very aggressive with my trip costs for repair work.

I charged an hourly rate of $xx with a half day minimum. Every hour after that was at the regular rate including additional day trips. I had an additional hour trip charge if the customer was more than 30 minutes away but I generally waived that for anything under 45 minutes.

My hourly rate for repairs was about 30% higher than my estimating rate as I always had time in on phone calls and picking up stuff at the hardware store. Any extra store trips were on the clock. I didn't mark up materials as this is one of the first areas cheapskates look to argue.

You can make money if you bill the way I've outlined but it's more headache and most likely less income than if you were just staying on-site. I'm sure I would have tweaked the numbers if I was really trying to do it as a profit center. In the end, it allowed me to fill in some holes and, during the summer, was pretty great that I could make a decent amount of money and be home at 1pm to get my daughter and hit the beach. The total amount of referral and repeat customers I got from doing good repair work for reasonable(not cheap) prices has been staggering. I just signed a $96k contract last week from a customer that hired me to install baby gates for $200, three years ago.


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## pcplumber (Oct 12, 2008)

*I find no customers want to pay an hourly rate.*

While others claim to be successful when charging hourly rates I find that virtually no customers want to pay an hourly rate with this exception:

Your hourly rate has to be less than the hourly rate the customer earns or earned in the past (40 years ago).

Customers who earn(ed) $15 to maybe even $50 per hour think only about the hourly rate they earned and they REFUSE to think that the hourly rate you charge includes the things it cost to run your business. 

Sometimes, when I'm in an angry mood customers will ask my hourly rate and I quote $20 per hour. Customers still tell me they can't believe I charge THAT MUCH!

I also have a very serious problem when charging an hourly rate for emergency services during the evenings, Sundays, and holidays. I quote $130 to $160 to go on a service call during the middle of the night and about 80% of the customers think that price is outrageous. So, for about every 10 customers that call about 2 will agree to be serviced, but collecting the money is another serious problem. About 50% of the customers cancel when I am about a block away from their home and they refuse to pay for the time I traveled.

I had a serious argument with a customer this morning regarding my hourly charge of $95 to repair her furnace. I quoted $650 to install a circuit board on the furnace. It took me 6-1/2 hours to diagnose the furnace, get the board and install it. The board cost $195 so I made only $450 for 6-1/2 hours and I had a helper. The board was totally different than the original and it took a long time to read the wiring diagram and to install the wires.

The customer was furious and didn't want to pay because she thought that a $450 profit, or $450 / 6-1/2 hours = $69 per hour was outrageous. I told her that my minimum charge was actually $95 and she called me a crook and said she would never call my company again. I thanked her!

I told her that she should be grateful because she wanted her heat on immediately, because I worked on her furnace without going to other jobs and because I was honest and didn't try to sell her a new furnace.

But, good service, a low hourly rate and honesty doesn't always win over the customer. I don't know how many more days of this crap I can take from disrespectful and ignorant customers.


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## Big Shoe (Jun 16, 2008)

huggytree said:


> if a homeowners first question is how much an hour do you charge I pretty much write them off...some times I refuse to give it out and say no thanks to the job...some times I say im not the cheapest, so please call someone else.....im rude about it. ive never gotten 1 job from someone whos first question was my hourly rate...so why not be rude...its kinda a rude/ignorant question in my opinion


This is soooo true. :cowboy:


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## TRMolnar (Mar 19, 2012)

What I don't understand is why we're ( the trades men and women ) seem to be the only people that have this problem. 

I'd bet no one asks why heating oil is so expensive or why their dentist charges $165 per hour. Of that an iPad is like $1000....They'll whine about those prices but they still understand that it is the cost and usually not negotiable. 

We need to start implementing that industry wide. There is no reason for us to change our prices.


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## ArtisanRemod (Dec 25, 2012)

I have seen this issue, but a little education can go a long way. If you can give them a quick rundown of overhead, etc, sometimes that helps someone who has never owned a business. 20 years ago I thought my Dad was crazy for taking his car to a shop that charged $40/hr. At the time I had no idea of the costs associated, I needed to be educated about them.


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## huggytree (Nov 3, 2013)

most customers know a tradesman is $100+ an hour...just like an auto mechanic

a good customer knows this and doesn't flinch at my rate

the really good ones don't even ask..they say come on over


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## Unlimited LLC (Jan 14, 2014)

I had a contract with a well known brand of shoes doing installs. I took my rate (figure you're take home number) added 36% income tax, 12% for any payouts to uninsured subs, materials added 15% minimum. I added in for comp and liability but don't recall the percentage. 
I had a 4 hour minimum for site inspections or call ins. OT per person over 8. This covers costs but does not include profit for the company. I now add 15%-30% for growth and operating costs ( licensing, etc.)
I used union rates for comparison.


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## MarkJames (Nov 25, 2012)

What a great, concise review in this short thread so far. :thumbup: :thumbup:

100% agreed on trying to stay away from the hourly number. Then everybody is counting minutes, or client thinks they're empowered to make apples-to-apples comparisons with other guys....suddenly all work is equal except for price. Wrong. Focus on the job and what you'll do to solve it, then name your fair price.


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## EthanB (Sep 28, 2011)

He's talking about handyman work. How is he supposed to do that without an hourly rate? I'd bill for half a day and fix 5-6 things sometimes. I wouldn't estimate anything less than a day project. I WOULD occasionally offer an educated guess on time for something like installing a basic storm door. If you bid blind on a storm door I can almost guarantee that you will show up and find the wrong size storm door waiting for you with a front door that needs a jamb extension for the storm to even clear to entry handle.


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## pcplumber (Oct 12, 2008)

*Commercial is different!*



Unlimited LLC said:


> I had a contract with a well known brand of shoes doing installs. I took my rate (figure you're take home number) added 36% income tax, 12% for any payouts to uninsured subs, materials added 15% minimum. I added in for comp and liability but don't recall the percentage.
> I had a 4 hour minimum for site inspections or call ins. OT per person over 8. This covers costs but does not include profit for the company. I now add 15%-30% for growth and operating costs ( licensing, etc.)
> I used union rates for comparison.


The way commercial accounts think is an entirely different world and they don't argue like a homeowner. The most important thing a business thinks about is they worry about the amount of time their business could be down and the price they pay is less significant.


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## Ohio painter (Dec 4, 2011)

These threads always make good reading, in regards to the op' s question, when I am asked if I charge by the hour my answer is always no, I price the job. I then try to explain that hourly rates are not in the best interest of the customer. 

Hourly rate jobs do not create an incentive to be fast and efficient. 

I would expect that handyman type work would be more like service call type work where one would have an initial first hour rate, or perhaps set pricing for certain types of jobs. Bigger jobs could then be estimated and priced separately. 

I think those trades where you show up and change a breaker, fix the faucet, repair the furnace just can't win, people will always break down your price into the number of hours you were at their home. 

An old timer electrician I know says "you don't pay me for what I do, you pay me for what I know"


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## [email protected] (Jan 3, 2014)

Ohio painter said:


> An old timer electrician I know says *"you don't pay me for what I do, you pay me for what I know"*


This x10. Again, and again, and again.


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