Welcome to my October 2012 monthly report!
This marks the end of my 11th month in business as a handyman. It’s been a wild ride and I can’t believe I’m approaching the one year mark.
If you are new to the blog, I write these monthly reports each month to basically let you know how my business is going. I include a detailed analysis of my income for the month including which marketing strategies paid off. I also offer my insights on events and lessons that I learned.
I write these monthly reports so I can give insight to a new business owners or people considering starting their own business.
My goal is not to boast about my income, but to use it as an indicator of how I’m doing.
October was a great month and business was steady all month. In fact, at one point I was booked out for two weeks! This was a really good feeling because it allowed me to turn down a lot of jobs I didn’t want to deal with. It also gave me the ability to test higher pricing without worrying about whether or not I’d be able to pay the bills.
Since I didn’t need anymore business, I was able to demand a higher rate from some customers and test their reaction. The great thing about this was that most customers went for it. Some didn’t, but I’m probably better off without them anyway.
My new hourly rate
In my last monthly report, I talked about testing a higher rate of $50/hour. This is a $10 jump from the $40/hour I have been charging for the previous months.
The results from the testing went pretty well and I definitely plan to increase my hourly rate. However, I’m considering increasing my rate beyond $50/hour.
Especially after the e-mail I received this morning from a handyman named Steve.
Steve found my blog and said that I was doing everything right with my handyman business, accept for one thing. I AM CHARGING WAY TO LITTLE!
He is now at least the fifth person to tell me this in the last 2 months. Not only did he say I was charging too little, but he mentioned that I should be charging $75/hour minimum.
I have to tell you that I am intrigued by this thought. I’ve always planned on achieving a rate of roughly $80-$100/hour on average eventually, but Steve is recommending to charge this much right off the bat.
Is Steve right? What do you think?
I think he has uncovered one of my limited beliefs that is holding me back from real success in this business.
This limiting belief all started when I first started my handyman business and met a 20 year handyman that charged $35/hour. I immediately thought that I would need much more experience to compete with this guy. I mean, I have about 1/10th of the experience this guy has and he only charged 35 bucks an hour.
Since then I’ve found ways to push it a little bit and slowly step out of my comfort zone, but I would find it very hard telling a customer that I charge $75/hour.
Sure, I’ve achieved this rate by bidding on jobs and completing them in less time than expected, but there are always those jobs that it just makes sense to charge hourly.
So, I’m going to get an interview with Steve and hopefully he can share some insight on how he is able to demand such a high rate.
Either way, thanks for the challenge Steve!
Let’s do some quick math. If I charge $75/hour and averaged 20 hours/week, my yearly revenue from labor alone would be $78,000. That’s only 20 hours/week of billable hours and doesn’t include profits from materials. Sounds pretty good to me. I’m in.
Watch out for thieves….
The other day I was replacing a door for a customer that lived on a busy street downtown. At first I thought, this is great. I’m going to get all kinds of exposure to people driving by while I work on this door. Who knows, maybe I’ll even get some leads.
As it turns out, luck was not on my side that day.
While I was inside working on the door, somebody decided they needed my DEWALT Chop Saw
more than I did. I had it set up in the front yard of the home and somebody must have driven by and snatched it.
As you can probably imagine, I was pretty pissed off. While doing a job that paid about $500, I had a $220 chop saw stolen. Not cool.
Income and Expenses
Income:
- Search Engines: $2,411.68
- Referrals: $1,082
- Existing Customers: $1,008.82
- Craigslist: $180
- Direct Job Costs: $998.73
- Phone: $69.81
- Mileage: $529.47
- Insurance: $94
- Bank Fees: $14.69
- Service Magic: $87.94
- Angie’s List: $83.83
- Other: $85.28
Total Income: $4,682.50
Total Expenses: $1,963.75
Net Profit: $2,718.75 (last month: $1,580.69)
This month I had a significant increase in the number of leads I received from my website. There have been some recent changes that google has implemented that changes how websites are ranked in the search results. This could be a large part of the reason that I saw such a dramatic increase in business from this marketing method. As you can see above, I brought in $2,411.68 from leads generated by organic search results. This far exceeds any month prior.
Organic search results are my favorite way to generate leads because it required minimum effort once set up and costs no money. I have put very little time into my website in the last few months, I don’t pay any money to receive these leads, and they are always quality customers. Definitely my #1 marketing method considering the return on investment.
By taking a look at the net profit numbers you can see that I increased my profit this month by over $1,200. I’m with these results, but I did have to work quite a bit harder for the money. Just by looking at my mileage alone for the month it’s clear how busy I was. There was a lot of time wasted quoting customers and not getting the business. Also, jobs that should have been finished in the first day took longer than expected and required me to drive to the customers house twice. I’d really like to eliminate this in the future if possible by scheduling better.
My Handyman Hourly Rate
Billable Hours: 94.25
Income from labor: $3703.75
Hourly Rate: $3703.75/94.25 = $39.29
This doesn’t make me very happy. My goal for the hourly rate is at least $40/hour and I was just shy of this. The main reason that I’m unhappy with this is that I quoted several jobs based on $50/hour. This means I did a terrible job at estimating jobs.
There were at least 3 big jobs that took much longer than what I had estimated to the customer. Whenever this happens, I try to stick to my original estimate as much as possible (unless the customer asked for more during the job).
On a positive note, this has given me serious motivation to increase my hourly rate (along with the e-mail from Steve).
Working Smarter
Let’s take a look at some quick numbers here.
It took my 94 hours to make $3,700 in labor income which yields an hourly rate of $39.
If I would have averaged $50/hour:
- I would have made $4,712.50 (an extra $1,000) assuming that all of the same customers would have actually hired me.
- OR, instead of working 94 hours to make $3,700, It would have only taken me 74 hours.
Assuming that the latter is more likely (based on the fact that less people will hire me if I charge a higher rate which is not necessarily true), I would have worked 20% less. This means that I would have saved 20% on vehicle mileage as well. Additionally, I would save a significant amount of time invoicing, processing payments, accounting, and many other things that come along with each customer.
This tells me that I NEED TO CHARGE MORE! By doing so, I can achieve the following:
- Work less hours for the same income.
- Free up time so I can have time to improve my business and test other marketing methods.
- Decrease expenses.
- And just enjoy being a handyman more than I already do.
Goals for November
Goal #1: Yep, you guessed it, $50/hour minimum average hourly rate.
Why, because it just makes sense. This is an exciting goal that I’m really excited about. I’ll either make more money, or have more time. It’s really a win-win situation and I can’t wait to share the results with you next month!
In the mean time
I hope that you enjoy reading this as much as I enjoy writing it and that my insights have helped you come closer to your goals.
Nothing makes me happier than getting an e-mail from a reader letting me know that they have decided to start a handyman business based on my advice. It’s truely an amazing feeling.
I look forward to continuing to put my business on the line by testing business strategies so I can share them with you.
But, I NEED YOUR HELP. I need to know what you are most interested in learning about. So, if you would be so kind, I would really appreciate it if you would take 2 MINUTES to fill out the short 3 question survey.
CLICK HERE NOW ▶ ▶ ▶ THE SHORTEST SURVEY YOU’VE EVER TAKEN
Thanks in advance for taking a minute to help me help you!
Hey BigD
I definitely agree that you have to raise your prices (and to more than $50). You have to think about the VALUE you provide to your customers, not just the income/expenses equation.
People hire you because you are an expert; can save them time on stuff they don’t want to do; get things off their to do list; give them back their weekends; or make their house look better. That’s worth more to people than $40 / hour.
By the way, awesome blog! Wish you every success.
Thanks! I appreciate your input and the comment on the blog. I’m going to take your advice and implement a higher rate. I’ll just have to figure out what that is…
I know how it goes with pricing your hourly wage. I am just starting out (had my first job last week) but I have been a carpenter for over ten years. I am trying to get 60/hr to start, with a 100 dollar minimum charge. It is sometimes difficult to tell people that’s what my charge is because as a carpenter, I was only getting 36/hr. I estimated 6 jobs last week, and all but one didn’t even flinch at the price. I guess when it comes down to it, our clients either don’t have the time or ability to do what we do, and its a small price to pay to keep their home looking good. On a unrelated subject, I found a great estimating tool last week. Craftsman Books has a home improvement estimator made for us handymen. Thought it might help you.
Keep up the great work! Your blog has been a huge help in starting my business.
That’s great to hear that you going out on your own after being a carpenter for 10 years. That experience will serve you well in this business.
Do you own the home improvement estimator? It seems like it’s geared more toward larger home improvement products rather than small repairs and maintenance. I may just check it out anyway.
Thanks for the tip and I’m glad I could help!
Yes I own the estimator program. It is geared more to the larger projects, but it is still useful for a lot of smaller projects. I have used it to estimate several jobs so far. A garbage disposal replacement, gutter repair, bathroom floor replacement, and replacing a toilet to name a few. It does have its limitations. Only about half of the estimates that I have been ones that it will help with.
Looking forward to your next monthly report!
I believe as a handyman the best way to charge (if you want to maximize profit) is to charge flat rate. I haven’t charged by the hour in quite a few years and I can’t imagine why I’d ever want to go back. Obviously, it helps to have experience so you have a good idea of how long jobs take but I always recommend to any handyman that they should make the switch to flat rate as soon as possible. It can be tough to build the confidence to bid flat rate if you get too comfortable charging hourly. I find that it’s much easier to make $50, $75, $100 an hour when I am bidding flat rate. I can’t imagine actually having to tell customers I charge $100 an hour.
I stopped charging hourly when I was charging $50 an hour. I knew I wanted to make more per hour but it was going to be very tough if I had to tell my customer how much I wanted per hour. Also, when you want a raise you don’t have to tell anyone. You can simply raise your prices instead of telling your customer that you now charge $50 instead of $40 per hour.
By the way, I’m Travis. Nice to stop by. Good site.
Travis,
Thanks for the insight. I agree that charging flat rate is ideal IF you have enough experience to actually know how long something is going to take and know the cost of all materials involved.
However, as a handyman there are infinite repairs that you will run into and it’s almost impossible to know how long each will take. I think most handymen just starting out will consistently underbid jobs and end up earning much less than if they would have charged by the hour.
Since I started my handyman business, I have been experimenting with both methods from day one. If I feel confident in my ability to bid a job, I will provide a firm bid. If a customer asks for a bunch of random uncommon repairs, I will usually give them an hourly rate. I always give an estimate of how long I think it will take so they still have an idea of cost, but I have room to increase if a job takes longer than expected.
Again, I totally agree with you that flat rate is ideal. But, I think charging hourly is necessary in some cases and especially for new handymen.
You make valid points. Also, I don’t always go flat rate on materials, just labor. In fact, I often give the customer a ball park on materials because as you know that can be tough to estimate on some jobs.
Hey Big D,
Been enjoying the great tips and enthusiasm.Congrats on your success !
Starting up next month here, my own home repair and handyman business.
Been in the building industy a long time and empoyers have become dead ends too often.
My big obstacle is location and bad economy in the far northeast so am probably starting out low on the hourly price scale.
But i think i am getting the picture better about flat rate bids being more profitable.
Estimating time to do jobs is not my strong point so will have to be careful not to under bid work.
Will have to test the waters and see how people react to bids and or hourly rate.
Website is under construction and almost ready to go up, sounds like the website is a good advertiser for you.
Thanks for sharing your stories !
Hi Dean,
That’s great man! I’m excited for you.
I think your on the right track to test bids and hourly rates on your customers. If you aren’t good at estimated jobs yet, I would suggest sticking with hourly rates. Most veteran handymen will advise otherwise, but almost all of them started doing the exact same thing. The reason most start with hourly rates is because it is a necessary stepping stone to gain the knowledge and experience necessary to provide solid bids.
Good luck and keep in touch!
New to your blog Big D, and impressed with your Marketing Skills. Handyman covers a lot of skill sets and tools. Specializing in certain work can be key. Time is money.