I want to offer a different perspective on pricing handyman jobs than what you’ll usually see floating around the internet. You’ll probably find that most people (possibly even yourself) aim to come up with their pricing based on what the competition is charging. They want to know what others are charging so they have something to go off of. Some people even base their pricing solely off of this logic.
There’s a big problem with this though. By pricing your jobs based on what others are charging, you’re doing yourself and your business a huge disservice. No two handyman businesses are the same. Every business has different goals and different overhead costs, etc. The pricing for one guy could easily be completely different than the pricing for another. Another way to look at it is–the pricing that makes ones business profitable might make another business go broke.
Are you starting to see that there is a problem here?
Let me give you an example.
Imagine that we have two different handyman businesses in the exact same area. One is owned by a guy named Tom and the other is owned by a guy named Frank.
Tom has been running his handyman business pretty lean from the beginning. He bought and paid for his truck in cash (it’s an older truck), He doesn’t carry any debt in the businesses and lives within his means. He only needs a modest salary to get everything he wants out of life. Tom’s target hourly rate is $50 per hour. If he meets that goal on every job, he does just fine. Of course he prices every job flat rate but he aims to make $50 per hour after it’s all said and done.
Now on to Frank. Frank just started his handyman business and takes great pride in having a brand new work truck, high end tools, etc. He even has a part time secretary to take calls. Since Frank just started, he doesn’t have a whole lot of experience pricing handyman jobs. He kinda looks to the competition to figure out what his pricing should be. After all, he wants to make sure if a customer is getting multiple bids that his is right there in that same price range.
Now imagine what would happen if Frank priced jobs the same way Tom does. Frank has much more overhead than Tom’s business and therefore needs to charge more for his services. He’d be out of business if he tried to price jobs based on his competition (Tom).
The point I’m trying to make here is that you need to price jobs based on your goals and your business. No two businesses are the same and neither should their pricing be. You need to spend the time and really think what your target hourly rate needs to be to meet the goals of your business and your life. Once you come up with an hourly rate that works for you. Price your jobs based on that rate. I’m not saying to start pricing jobs by the hour. You can still price jobs flat rate but do it based on a target hourly rate.
If you know that a job takes you 2 hours to complete every time (or close to it), and your target hourly rate is $75, then you can price that job at $150 knowing that you will be profitable. Stop thinking about what the other guys in your area are charging. It’s pretty much irrelevant to your business. Once you know what you need to charge, stick to that. There will occasionally be customers that don’t want to pay your rates but that’s not a bad thing. That just means you can move on to the jobs that will make you the most profit. Why do jobs that won’t help you meet the goals of your business?
One of the reasons theworks for any business is that it calculates jobs by time. Once you know your target hourly rate, you enter that in the settings and the prices are calculated based on that hourly rate. If you ever want or need to raise your prices, simply update your hourly rate and you’ve got new pricing across the board.
I want to encourage you not to think about what others are charging for jobs, but think about what you need to charge for your business to succeed and meet it’s goals.