For the last 5 years as a maintenance electrician I grossed between 70k to 80k annually. I also had great benefits on top of that. I worked approx 60 hours a week.
I feel that a personal income of 100k or more would make it worthwhile for me to be in business and this is what I'm shooting for. I would also like the company's net profit to be 10% or more.
I'm a one man shop and was charging $40 per hour for residential service work. By the time I figured in unbilled hours and overhead I was making a lot less per hour than I could make working for someone else.
I also got plenty of complaints about charging $40 per hour. People thought I was making a killing.
I switched from T&M to flat rate pricing and increased my hourly rate to $100 per hour and I'm going to try to raise it to around $130 per hour.
I believe it can be done but I need to become better at marketing and selling.
In some areas contractors are getting over $200 per hour and have plenty of work.
They're prices are 2 to 3 times higher than some of the other contractors in their area.
They must be very good at selling.
Some people would call these contractors overchargers or crooks. I call them good businessmen who know their costs and charge what they need to charge to make their desired profit. They don't care what everyone else is charging. This is the way it should be.
I quit estimating new houses for GC's. I couldn't get jobs because I was too high.
When I lowered my price to get the job I didn't make any money.
I'm concentrating on service & repair work dealing directly with the customer.
The overhead costs are high for this type of work but the profits are better and I collect my money daily instead 3 months later.
You have to account for unbilled hours into your labor rate. If you're working 3,000 hours annually and you're billing the customers for 1,500 hours at $40 per hour that puts you down to $20 per hour.
Take the overhead out of that and whats left?
You might as well flip burgers for a living.
I've heard that in the service business most contractors operate at 50% to 60% efficiency. I've heard that acheiving 60% is hard to do.
60% of 3,000 hours is 1,800 billable hours.
[This message has been edited by A-Line (edited 01-29-2005).]