You Should Be Charging Double Your Hourly Rate
That got your attention, I’m sure!
I am also sure that, if you are charging out your time based on an hourly rate, then you are being ripped off by your own customers!
I was talking to a contractor the other day, and he said he was charging some customers $45 per hour.
I think he is short-changing himself big time. You see, he told me that if a random customer wanted a bit of gardening done, he would tell the customer he could do the work on a do-and-charge basis. In other words, if the job went for 2 hours, he would invoice the customer $90.
This is crazy!
For a start, he could ask the customer what needs to be done. A bit of weeding, some hedge trimming and a quick mow. He should estimate this will take 2 hours, then give the customer a fixed price of say $190.
Very quickly the whole job takes on a different meaning as follows:
- You earn $190 instead of $90, you are in front!
- The customer refers you to her friend and says you do a great job. They might say you were a bit price-y, but they will always justify this by saying you did a great job!
- When you were charging $45 per hour, the customer would most probably tell their friends you are cheap – then those people’s expectation is for you to be cheap for them.
- You are judged on your performance, not on your time!This is critical, as you can test the market by putting your FIXED price up with new customers and see “how much the market can bear”! You will find that maybe there is a ceiling price of say $300 that people will baulk at for a job that may take 2 and a bit hours.
- Another important point is…you own equipment that might have cost you $3,000 or more to purchase. You need to factor in a “hiring fee”for this machinery (ie. mowers, petrol garden hedgers, whipper-snippers, vacuum blowers etc). If the customer were to do the job on their own they would need to hire this equipment… So there would a fee attached to hiring this equipment!!!
What do you think? Leave a comment below…