If your customer's are willing to pay, then good for you! Raise the bar!!!

What I want to know is why is it always lawyers that labor rates get compared to? There are a lot of crap lawyers out there billing high rates for doing as little as talking to you on the phone. We drive to customers houses and keep their TVs running. And we all know how big an emergency tv is. How many customers call their attorney on Saturday if they get a speeding ticket? But God forbid the golf channel goes out on Saturday, and our cellphones not blow up.

i tell my clients that we do have hourly rates for time and materials work, but that they do not apply in fixed priced quotes as they might think:

- some things we do exceptionally well and efficiently. Given that our prices for a given unit of work are somewhat guided by market rates, our hourly rates would appear very high for this work, while in fact the customer is actually getting a great deal

- in other areas, we are not quite as developed. Again, since we use market rates to guide pricing, calculating our hourly rates here would give the improper impression that the customer was getting a better deal than is perhaps the case

This thread blew up and I'm planning to read more when not on my phone, but wanted to chime in. I'm very curious how your accountant helped you come up with That rate as it is CRAZY high. The best Crestron programmers tha do nothing but program are less.

I can't figure out how he/she would justify that high of a rate. Sure if your booked out 2 years then raising your rate will limit your client base down to the most profitable clients, but I doubt that's the case. If this is to justify time spent in office and running the business, perhaps you need to work on your efficiencies. If this is because you're not making enough money, it's sure to back fire and you should focus on making more sales IMO.

If this is because cost of goods, parts and materials has one up, that should be passed on to the client for each item.

Im really baffled how you come up with this hourly figure. 

I'm guessing because there is equal resentment for attorneys and "the cable guys".

TV emergency. You aren't kidding! I love the "I can't watch TV" 911 emergency texts and calls. Right up there with "nothing works" and "it never worked". Mmm hmm sure...

We are in the same area and I am not seeing his rates as crazy high. Even when I was in LA they are a little higher than there, but not by much.

More power to you if you can run a profitable business in this day and age. Keep it up!!

I agree. But working for a large firm with overhead versus a one-man shop that works out of his garage are two different things. Even then, our area is about, if not the most expensive place to live in the country. 3PM is in a more expensive market as well, but not as much as ours. 

I also agree that establishing a rate that supports your business and prepares you for buisness growth is worth while. Especially if he's SO busy that those rates are there to help keep the pipeline under control. However, I don't think that's the case. 

I'm not saying he shouldn't charge that much, just that it seems high and I'd like to know how he and his accountant were able to come up with this number. I'd also hate to see him slowly push himself out of business.

On the other hand, the clients that are willing to pay that are probably worth working for and so are their referrals. In which case, if he can build the business on that he will most likely have a solid profitable company. 


I agree with Ed completely. I'm curious what your company profit precentage is and what the rate/salary is that you pay yourself. I don't expect you to tell us, but it would be interesting to know.

If you have 2-3 hours of admin time for each hour of billable time, I think you have an efficiency problem. Okay not a problem, but room for improvement. UNLESS you can stay plenty busy charging $165/hour, if so, then your methods are good. If you find yourself scraping for work, you may want to look at improving your office/admin efficiencies so that you can bring your labor rate down. 

I've been at $95hr since starting 6 years ago and am still online at the end of another long 17hr day.  I've had solid work booked out 8-12 weeks for 6+ months and several projects reaching out over the next 2+ years.

Have been considering bumping my rate to $100-$115hr... don't really have anything to base the new figure on other than trying to weed out some business and work less while keeping similar revenue.

I don't think that raising my rates 10-20% would scare off too many of my target clients.

I quickly skimmed through the posts in this thread and wanted to add that my labor rate is always very visible in my proposals even on jobs that aren't T&M.  I think it's important for customers (or potential customers) to know what you charger per hour so they can know what to expect for changes and future service. 

Even for fixed bid/proposals I always include a paragraph that states the total labor charge and that it's comprised of X amount of hours at the standard labor rate of $95hr. 

Bottom line on this....you charge exactly what you're worth. Ferrari charges what they're worth, Hyundai charges what they're worth. 3pedal charges 165.00 per hour, some guys charge 65.00 per hour.

I don't understand how somebody on the forum can say you're charging too much? Is a ferarri overpriced? Or do you get exactly what you pay for?

Youre making very broad assumptions.  You don't know what his costs are,  and you don't know the quality of work. Im certain that the level of service you get for $165 per hr, is considerably better than the guy charging $65.00

At $65.00 hr, technician doesn't answer the phone on the weekend for a service call,  at $165. He does.

In my opinion, if you're not into triple digit labor charges per man, you're breaking even or treading  water.

A billionaire once told me, price doesn't matter, it's the perceived value that matters.

+1

Remember I am new to the big company thing, in LA we were a small shop. There were 6 of us when I left there... Big or small the overhead has to be covered and there needs to be profit.

+1.....

absolutly!!

Great thread, I enjoyed reading. $165/hr does seem high however without seeing all the factors and metrics you and your accountant took into consideration it's just a number.

I work for a shop that charges $50-65 per hour because that's pretty much all our location and clientele will support at this time, but I will say we have big problems with these numbers! Once you go down the path of working for less for a long period of time, it can be a very hard rut to get out of.

Brad

I am in a very expensive area as well. The cost of running a business will vary greatly on your location. Our rates are $120/hr and have only had on instance where a client said anything. He was comparing our price against Best Buy. In response to him saying we were considerably higher then bust Buy, I just jokingly said, "It's going to be even more expensive when you call us to come and fix your system once they are done." He laughed at the comment. We did the job the next week.

Most customers in our area look at the rate and say sounds fair or something similar. I am sure if I was in a different region that my rates would be priced way too high. If 3PM can close the deals with his rate, and it is helping him stay profitable, what is the issue? I can understand if he was in your market and you thought it was giving the industry a bad name, a) he is most likely not in your market and b) wouldn't the quality of his work determine if he was giving a good or bad name, not what he charges?