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Calculating your Hourly Rate

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  • Calculating your Hourly Rate

    Whether you charge by a flat rate, upfront pricing, menu pricing or by the hour, there is one fundamental truth. That is: everything launches from you hourly rate, job costs and desired profit.

    In my experience, I’ve seen plenty of ways to calculate that hourly rate.

    Here’s my question: What is the FORMULA you used to calculate YOUR break-even hourly rate before adjusting for profit? What your rate is doesn’t matter – How did you get there?
    Last edited by Pete M; 04-03-2008, 06:28 PM.
    Pete
    Drain Biz
    Articles, Videos, Industry News

  • #2
    Re: Calculating your Hourly Rate

    I figured what I want to work per hour, then benefits, then a fair profit. My family and I lived comfortably from my hourly wage when I worked for someone. I knew what my old company charged for hourly, flat, parts etc.

    Ask me a year from now if it worked...

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    • #3
      Re: Calculating your Hourly Rate

      Its a super-complex top-secret formula. I could tell you, but then I'd have to kill you.
      Water Heater Reviews & Water Heater Information

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      • #4
        Re: Calculating your Hourly Rate

        It`s by how much I take to the bank every friday "vs" how much I took out all week to get there
        http://www.all-clear-sewer.com/

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        • #5
          Re: Calculating your Hourly Rate

          best advice your going to get out of us is TALK TO YOUR ACCOUNTANT, ps you didn't hear this from me.

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          • #6
            Re: Calculating your Hourly Rate

            Understanding your expenses/profit versus hourly rate always seems to be one of the arguments for going flat-rate. The truth of the matter is whether you are T&M or flat-rate you need to understand what your cost of sales are and what profit you are looking for. I spent my first year in business (1981) with spread sheets tracking all of my costs against all of my income. After the first year, I made adjustments as needed but I never went off of a set formula.

            Mark
            "Somewhere a Village is Missing Twelve Idiots!" - Casey Anthony

            I never lost a cent on the jobs I didn't get!

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            • #7
              Re: Calculating your Hourly Rate

              I used Numbers Cruncher. It figures in the profit automatically. Then I ignored it and charged what I thought I could get away with. Frankly, if I charged what I need to run a successful business, I wouldn't have a business at all.

              But as to the flat rate thing - it's working. I had some resistance on a job this morning (namely, "I'm not going to pay $300 to have three faucets repaired. I'll just call another plumber!"), and the wife's cooler head prevailed and I did the job anyway.

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              • #8
                Re: Calculating your Hourly Rate

                count the mercs in the garage and if more than one double it

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                • #9
                  Re: Calculating your Hourly Rate

                  Originally posted by deanorod View Post
                  count the mercs in the garage and if more than one double it
                  That is discrimination. I never do that kind of thing, but I know some who do.
                  Water Heater Reviews & Water Heater Information

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                  • #10
                    Re: Calculating your Hourly Rate

                    To many variables...there are entire books on this alone. Check one out

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                    • #11
                      Re: Calculating your Hourly Rate

                      I have this dark board on my office wall and it has all these numbers on it with dollar signs.

                      Tony

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