| The Breakroom > The Water Cooler |
| Charging for your time |
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| Dan Rowe:
Bernard, Thanks for that perspective. I found it very helpful. Dan |
| sparky961:
Hey guys, I haven't chimed in here in a while due to the business/busy-ness of life, but this one peaked my interest. My current view on this is that as long as you're enjoying the work and you have full time paid employment then it might be acceptable to cover the true costs and only break even (material, supplies, electricity, machine & tool wear, consumables, etc). It would be impossible to get an accurate figure, but if you are any good with spreadsheets then some reasonable ballpark estimates can quickly yield a reasonable hourly rate for a project given that you have a pretty good idea how much time it will take. Simply put, add up all of the costs then divide by number of hours. You may want to calculate material separately, but you get the general idea hopefully. On the flip side, if you're looking to make a profit then the whole thing changes. Get ready to put together a much more complex spreadsheet and make some pretty big assumptions until you have enough data from past experience to fill in the gaps. It would be much better if you were able to compare to someone else successful. The biggest difference between the two is accountability. If you're making a profit then you're much more likely to dip into that profit to make a person happy when something goes wrong. If you're just breaking even and the "customer" knows this, you're unlikely to be expected to lose money on the deal. Different price levels imply varying degrees of expectations from the customer. If they know you're charging a premium they will expect a premium product and complain when the slightest thing is wrong. Conversely, if they know they're getting a steal of a deal they have very little to complain about. "Really, what did you EXPECT for that price? Did you not do your homework and see how much MORE everyone else would charge??" Obviously somewhere in the middle is where you want to be and everyone goes home happy at the end of the day. :) To give some perspective on this side of the globe, you can't get much done that involves any sort of machinery or specialty for less than $60/hr CAD (about 38 British Pounds at today's rate). -Sparky |
| NickG:
Chris, so much advice here I can't really add anything other than it'd be useful for others when it's finished to know what you did charge and whether both parties thought it was worth it! Nick |
| Lew_Merrick_PE:
A number of years ago I worked a project with a very fine machinist who had retired from Freightliner. His house was paid for. His tools were paid for. His pension and benefits made him independent to the point where he only took on work that interested him. He thought I was nuts. He was perfectly happy charging $20/hour for his expertise and time. What I pointed out to his was that this price was unfair to those were were trying to earn a living while acquiring tools and growing a business. At the time in question, a new Bridgeport #2 turret mill with the 44 inch x-axis travel was a $15,000 proposition. Add in tooling and maintenance over the (US government required) 7-year amortization of cost and assume 1700 billing hours/year and you have an hourly cost burden running in the $8/hour range. At the time in question, the total taxes paid on self-employment income ran in the 45% range (they are currently about 32%). That meant that the post-tax & post-cost net ran (about) $3/hour for a $20/hour billing rate! (Minimum wage at the time in question ran in the $6-$6.50 range.) Yes, I understand that a retiree may only be looking for entertainment that does not cost him anything. That is all well and good. But the flip side is, What would he have done if, as an apprentice or journeyman, he had to compete with such retiree's? That is the symmetric morality question that has disappeared from the discussion. Non-Sequitor: In the U.S. today a Prime Federal Contractor is allowed to bill the taxpayers up to (just short of) $1300/hour for every person they have working on a Federal Prime Contract. If the work is to be done in a zone of active hostilities, that billing rate increases to something close to $5200/hour. (I know the exact figures for 2005-2007, and they have increased twice since then.) |
| sparky961:
I think you hit on exactly what I was trying to point out in my long-winded way. The thing is that there is lots of work out there that this person would not have been interested in, and those that need to make money often need to take on work that doesn't interest them. Ok, sometimes they even need to do work that outright sucks! Trust me because I am not yet in the category of people that doesn't need to make money. :) I don't believe that the few people out there willing to work below the going rate have the capacity to take business away from larger shops. There is a staggering amount of work to be done out there. -Sparky --- Quote from: Lew_Merrick_PE on July 27, 2012, 11:41:27 AM ---His house was paid for. His tools were paid for. His pension and benefits made him independent to the point where he only took on work that interested him. <snip> --- End quote --- |
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