NJ,
this really isn't a simple question at all. For example, what is the markup on material? How do they bill? (time on job? travel? whole hours only? 1/2 hrs? if they run 5 min into the next hour, do they bill for it?)
for example:
one guy charges $100/hr with a 30% profit on his material. He bills in 1/2 hr increments and will "give" the customer an extra 5 mins. Doesn't bill for travel.
2nd guy charges $65/hr with a 50% profit on his material. Bills in 1 hr increments and doesn't 'give' the customer any extra time. Doesn't bill for travel either.
They both do a job that takes 2 hrs and 10 min on site. Total material cost(with tax) is $50.
1st guy charges 2hr X 100 = $200 for labor
$50/.7 = $71.43 for material
Total invoice $271.43
2nd guy charges 3hrx$65 =$195 for labor
50/0.5 = $100 for material
total invoice $295.00
Hourly rate is just a number to work with. He needs to determine whether he needs $110/hr (after material) or $122.5/hr (after taxes)
For the record, we are a contractor in Monmouth, Ocean and Middlesex counties. We are not the highest, we are not the lowest.
Residential service rates vary from flat rate of $300+/billable hour to T&M of $55/man/hr
(on particular guy I know of who is at $55/hr is famous for 2 for 1 (bill 2 hrs for every 1 worked - he usually bills about 12 or 13 hrs a day for each man - so he's really at about $80/hr he just would rather not tell his customers the truth.)
In addition, how many contractors have actually done a break even calculation? most guys do exactly what your friend is doing - ask around for the going rate. So we get stuck with this artificial rate (that I truly believe someone pulled out of a hat) for eternity.
good luck
