Another viewpoint to consider is not charging by the hour, but by the day.

Jobs take either a third, a half or a full day to complete.
This way helps cover the loading, traveling, unpacking, orientation, etc.

"...that will take a 2 man crew a half a day, $xxx"

Just be clear, at least to yourself, how many hours a day is.

I agree.
Within that 'labor rate' whether its the owner or a couple of employees is the understanding of the quality of the 'laborers'.
The laborers are going to know how to get things done in the amount of time expected for the task, get it done neatly, not cause damage to the surroundings while doing so, etc....
I just finished a project that I bid against 3 other companies. I was second highest bid. At the end, among other things the client said how happy he was that I did not have to open any walls to get things done because all of the other companies said they would have to, at his repair expense.
So, was the labor rate too high in that scenario. No, because he wound up without a repair expense and saved him time on not having to have people come in for estimates/repairs.
If the labor rate was 165.00/hr to go somewhere and do a ripout of someones landscaping then I would say yeah, too high, but with custom a/v there is experience and knowledge that is not even thought about that goes with that 'labor' charge.
Having said that, I just lost two bids because I was too high, and I am ok with that because the old saying usually holds true, "you get what you pay for"...

This is where I've been heading, half day of full day. However my labor rates aren't as high as yours, the larger shops in the area here are around $130. I'm working without a showroom, my rates do reflect that.

I've been Seeing a lot of lightning damage recently, mainly through satellite and cable it seems. My rate for coming in and diagnosing the system is a bit higher.

In this town you would get laughed out of people's houses if you quoted $165.00/hr/man. You may want to fire your accountant. In many cases, they don't know our industry and are spewing the generics found in their college texts. Many accountants will also tell you that you should make a 5% net which is also laughable for our industry unless you're doing 8 or 9 figures/yearly. Listen to their advice and THEN do what makes sense.

With that said, how many hours do you work a week? If it is 8, you may want to adjust these rates downward (keeping your bills and overhead in mind) to see if you are now working a 20-40 hour week. Find the happy medium where you are working enough to pay your bills. Don't be the cheap guy as that guy always goes out of business or lives in his car. I'm sure that you can find the middle ground where you're not losing QUALITY jobs and you've got the quality of life that you deserve.

Good luck...

I agree with what everyone else has said. $165 is astronomically high, and you'd better be PERFECT for that price. People will pay, but you're going to have to give them a damn good reason. The Picasso of A/V. :P

Others have already said what I was going to say earlier in the thread. You need to look at how many hours you're billing versus total hours. You also need to look at your expenses and try to find out why you need to bill so much to cover them.

The most important question though is how much do you want to pay yourself at the end of the year?

We have found that when we give a line item proposal, the only item whose price gets questioned is the TV, so we found the cure that works every time. If we bid a system upwards of 30K, we pad the labor and programming a bit and then tell the customer "You know that 50" Sammy TV you saw cheaper at BB. , guess what, you can have it for free. " Works every time, stops the price negotiation on the spot. Not like we were making a cent on the TV anyway.

I sometimes wonder if we forget this is an open forum. Shouldn't some of these discussions be on IP? Especially ones dealing with pricing strategies and profit shuffling and such?

You realize you didn't write this anonymously. Your company name is in your profile and your competitors are watching. Not smart.

All who are crying about the $165 rate - have you ever done a "cost of doing business" survey for your company? Most probably not. Most know the high and low rates for our industry and, based on that, grab a seat of the pants figure and call it good. Then you work as many hours as you possibly can to make ends meet.

This guy has an accountant who knows his fixed and variable costs, and knows how many actual billable hours are available out of a 40 or whatever hour week (efficiency ratio). Like 3P says, it is simple math at that point. $165 is the right number for him because he has done his homework.

That being said, a lot of clients won't pay that. Your job will be to sell yourself to stay busy, bundle your labor into full bids, or hope clients don't ask.

The trouble is, a one man shop has 100% of the administration burden. He will necessarily have a higher hourly rate than a shop with several employees. While an owner may only have 30-50% of his total hours on the job, the hired hands can be 60% efficient or more depending on the internal processes of the company. This will allow the administrative costs to be spread among several workers, and the hourly rate can be less.

If more of us were businessmen and not just sharp techs...

I have not seen Brendon ask for hourly rate advice in this post.
I know how busy Brendon is.

Who are you to tell him he's billing too high?


To all others that said that your local market would not support that rate, I hear you and I'm in the same boat.

To Brendon, good for your brother.

Great for you, not good! I don't even charge that for programming. My bids do have a project management cost built in though to cover administrative stuff (15% of labor). Install, service and programming all have different rates. Service calls are billed at a minimum of 2 hours (plus travel which is a discounted rate). I really haven't had any complaints about our rates other than from people who are shopping us against Best Buy. But I definitely couldn't charge $165/hr for day to day stuff. Possibly for programming and perhaps IT work.

|  Service calls are billed at a minimum of 2 hours (plus travel which is a discounted rate).

Rob, why is your travel time discounted?
Doesn't it cost you more to travel than to be on-site working?
Employees cost the same, driving or working, but while traveling there are additional costs such as fuel, truck W&T, etc.

I don't think his rates are out of line. One of our clients shared his quote with us from one of the well respected national home theater firms. They have a very detailed labor breakdown and spell out all the costs from designs, drawings, programming, install, etc. Their lowest rate was $125/hr for general labor stuff and their highest $360/hr for design/ drawing. Programming was $200/hr. If you are a one man show or small organization doing it all, $165/hr is not bad if you average everything out.

It might sound bad for someone who wants to get a TV hung on the wall. But for programming, design, etc. it isn't. Probably wouldn't matter to this client but maybe for others if it were broken down like this other company did it may be more palatable. Just make sure it works out to $165/hr in the end so you get the money you need to make a decent living.

The problem with multiple hourly rates shown on a proposal or invoice for a one man show performing smaller jobs is the perception the client has when said one man is on site pulling wire (laborer rate), trim/install (installer rate), calibrating (calibration rate) and programming (programming rate). Does he go out to his truck between each aspect, change clothes and then come back in worth more per hour? The client doesn't think so, it's the same guy. A fixed rate seems easier to grasp in his case. But I agree I wouldn't necessarily spell out 165 per hour unless you are certain the client will perceive you being worthy of that rate...just quote a total installation fee.

Perhaps he is a fast worker, gets twice as much done as any other installer. That makes the labour rate cheap.
Instead of telling the customer $165.00 per hour perhaps you should have said xxx dollars to get the job done, guaranteed fixed price.