Thanks, I appreciate that. This thread has opened my eyes a bit as to where I should be.

Amg,

about a year ago went full time on my own. So I just dealt with the same thing you are dealing with.

The subbing rate of $40/hr is high enough to pay your bills and low enough where busy company's will hire you a lot. I charge a lil differently I have a lower subbing rate but charge from when I leave my house. This helps me a lot.

The rate you charge doing your own jobs. Should have a few factors. And one of the things is the products your selling. If you are selling lower end products with no mark up then you need a higher rate. But if you are selling higher end products you can keep your rate a little lower. The second factor is how busy you are now. If your working 50 hour weeks raise your rate. If you only busy 10 hours a week don't raise your rates.

Everything Bruce just said ignore. Sorry bro, but you gotta charge the correct amount to stay in business. I HOPE you aren't charging people $40/hr being you are in my area

Not much business in the above posts. Here's a little bit to consider:

Your hourly rate depends on your overhead (you can calculate it) plus how much profit you need to stay afloat. Add up your regular expenses for everything you can think of. Add your needed profit. Divide by the number of billable hours you have. Here's where it gets tricky. There are about 2000 hours per year in a 40 hour work week, so you might think billing $100 per hour will make you 200 grand in labor and you will be drowning in cash.

Note that something called a Labor Utilization Rate or similar is an indication of how much of the time you are actually on the job. If you work 50 hours this week, you will not actually be productive for all 50. An employee has a chance to be more productive if he does not have to manage bids, customer contact, product procurement, billing, and on and on.

When I had a stereo/video repair shop, we were happy when we had a 50-55% utilization rate. Techs had a certain amount of phone time, parts ordering time, looking up stuff in the service manual, and so on. These all take time away from just getting the work done.

A one man show is frankly the least productive plan of all. So much time in research, paperwork, bidding, procurement, taking out the garbage/recycling cardboard... I expect 25% would not be entirely out of the question. It's why a one man show is often a 50-70 hour per week deal to get anything done or turn a decent profit.

If you charge $80/hour and think you have just killed the fatted calf, your 25% utilization rate means you are actually making $20/hour.

Some guys are enamored with a showroom and my opinion is that it is totally unneeded. People just want to know what you recommend nowadays. A showroom takes incredible amounts of money to break even on. Have a small office in your home and a storage unit for stuff if needed.

I'm a one man shop and was curious so looked at my billable hours for the last 4 years and it averaged out to 19.5hrs billable a week.

My best over the last 4 years was an average of 22.85 billable hours per week in 2013 and worst was an average of 17 billable hours per week in 2014.

I'm busy all the time and work 50-60 hours a week so my utilization rate seems to average about 35-36%... this is better than I thought but really backs up Tom's advice on what you might expect.

I'm in California and have been charging $125hr since 2012 and had been billing $95hr prior to that since starting business in 2006.

Yup, I get all that. And the reaching out is exactly the right thing to do. Regardless, it doesnt change that he is charging to little. Easy fix though now that he knows: charge more.

Even after having been self employed since 2004, I guess I'm a slow learner. I'm still amazed at how long it takes to get all the extra crap done. You think you're going to go to a job and actually be productive for 7 or 8 hours. Suddenly it's 12:00 and all you've done is moved parts around, answered phone calls, made phone calls, answered emails, answered numerous questions, ordered more product or parts you realized you forgot....

This the way I look at it. I charge $75 hour per hour per guy. If my guys cost me $30 per guy per hour . I am making $165 per hour. For me and 2 guys on a job. Plus the equipment. So when the client gets a $22k bid from the big companies for outdoor speakers, I'm at 19k the client uses me. I get the in with designer on the job and get 5 more jobs. Plus that designer finds out three of his other clients are my clients . And those clients swear by me . Or I could drop dollars while picking up dimes. And worry about 2k on the first job and not get the other 100k in work. I found low price and great work works for me.

This is a pretty good list of all the things that get in the way of billable hours.

When I first charged for installs, after years building and maintaining retail A/V stores, I'd sum up all the needed steps with reasonable times. My first estimates were about 50% of what it really took to do the work. Now I'm finally adding in some of the time it takes to source and design, but I'm still not up to charging for all the time the projects take. This thread has been a pretty good wake-up call.

Gotta go.

How are you guys costing you 30 bucks an hour?
Are you paying them $8-$10 minimum wage?

From a gross labor point of view, if he's paying them $30 an hour, his cost for labor is $30 per hour. Of course, there's insurance and all sort of overhead, but the original statement isn't very detailed.

Ok, so that's like me billing $1000/hr and issuing automatic $915 discount?

Mario, I'm saying if he's paying his guys $30, his cost of labor is $30. There's no discount involved, so I am just baffled by your post.

It sounds like your earlier post means that if his cost of labor is $30 per hour, then he must be paying them eight to ten bucks per hour. If that's not what you meant, could you splain it to me what you mean?

Cost of labor = Employee hourly pay + Workman's comp + Tax liability + Liability insurance + vacation/sick pay + healthcare + having to pay employee for time not billable to the client.

Unless of course someone has "subcontractors" and using them like employees. Pretty common but playing with fire IMO.

Exactly what I meant.

+1