What would you charge?

[Great Feller]

What would you guys charge in these situations. This is the kind of stuff I'm anticipating once I start advertising.

1. An old lady wants you to come over and cut a small tree down and haul it away. It might take an hour to cut and load it.

2. A guy wants you to come over and fell a tree that leaning over his garage. It's not a bad lean, something you can wedge over.

3. A farmer wants you to come over and spend the day cutting and skidding hedge posts out of his back 40.

4. After an ice storm a person calls and wants you to trim some broken branches in there front yard. Stuff you can reach with a pole saw.

I don't know if I should charge by the hour or by the job! What about mileage or a fee of $50 to just show up. There are too many situations and scenerios to just charge a flat rate. Charging $20 an hour to run a saw all day long doesn't sound bad, but charging $20 an hour to fell a tree that's leaning over a garage doesn't sound like enough. What should I do? Thanks

 

[BC WetCoast]

Figure out the hourly rate you need to make a profit. This will include your variable costs (varies with the amount of work you do):
- labour and bennies
- gas and oil
- maintenance and repairs

Fixed costs:
- insurance
- marketing
- lawyer/accountant
- equipment (lease or depreciation)
- office lease

Take your yearly fixed costs and divide them by the number of hours you estimate to work in a year. For example, a regular 9-5 employee works approximately 2000 hrs/year.

Add the variable costs and the hourly fixed costs and this will give you a breakeven number. This is the cost per hour you must make on average (good bids and underbids) to breakeven. Now add a profit and risk percentage (say 10% profit and 20% risk) and this will give you an hourly rate that you should be using for your estimating.

When you go to the job, estimate how long it will take including travel and dump and there you have your quote. You may have to play a bit to adjust to the local market, but the amount you play becomes a conscious decision. You may want to add a PITA premium to some jobs, give charity bids to others. Just remember what you need to achieve on average.

It's going to cost you ~$50/man hour to operate, whether you are cutting a small tree for the old lady or fence posts for the farmer. Only difference should be time. The harder the job, the more time it takes. Just because you don't use all your equipment for each job, doesn't mean it isn't costing you money (depreciation, fixed costs), so your hourly rate shouldn't vary.

As the axiom goes, time is money.

Big companies determine their effective hourly rate (the rate they actually achieved - total revenue divided by total man hours for a given period) on a weekly and monthly basis. It is easy to fall behind and very hard to catch up.