hourly rate and mark up on materials

[atm84]

So I've been doing some calculations.

I know how much money I need to make to survive and have a good living; I have a good idea of what I can charge in order to get work but roughly how much can you estimate you will make from materials.

The type of work that I will mostly be doing is high end domestic and small commercial and some industrial too.

When starting out and creating a business plan what do you estimate to make from materials? Obviously the more I make from materials the less I can charge per hour.

 

[telectrix]

you mark up materials by 15-20% to cover time taken replacing anything that goes faulty. should not affect your labour rate.

 

[atm84]

Ok so basically what you are saying is that any mark up on materials should not be factored into your projected profit?

 

[atm84]

In order to give me enough income, I would need to be making at least an extra £5 per hour on top of what I can get away with charging. I was hoping to make up the deficit by profit on materials.

 

[telectrix]

work it how you think is best. there's no set rules.

 

[atm84]

Think I need a new career where I can earn more money.

 

[Welchyboy1]

The type of work that I will mostly be doing is high end domestic and small commercial and some industrial too.

.

pretty much similar to myself, i try to avoid working on a stated day rate, but price it as 250 per day +vat, also 20% mark up on book price for materials

£45 +vat 1st hour call out, £35 thereafter for smaller jobs

i also buy most essentials in bulk such as t&e, back boxes, cable clips, jb's, sockets etc and would put around 50-100% mark up on these items

I Try to keep the majority of my domestic clients as middle class as i can, they are usually the best payers and want a higher quality job

 

[telectrix]

i find that the lower income bracket of customers are the better payers. frequently ask if i want money up front.

 

[PEG]

As said by Tel,there are NO fixed rules when working for yourself. What works well for one,may well be a disaster for another. I have found that good payers come from all means,and a bad payer remains so,even when their finances improve. Speaking personally,i would suggest NEVER advertising,keeping your work as varied as possible,and,never taking money up front,fund all aspects until completed,then IMMEDIATE full payment...You can see how "non-transferable" these pearls are...Good luck in your endeavour irate:

 

[Welchyboy1]

In order to give me enough income, I would need to be making at least an extra £5 per hour on top of what I can get away with charging. I was hoping to make up the deficit by profit on materials.

overall youll get away with charging what your worth, if the customer thinks they have recieved value for money then youll earn well, but if your charging the earth and supplying a poor service then you wont do so well, and unlikely to get any follow up work(and this should be your ultimate aim)


The mark up on your materials should be to cover your time running around for materials and help cover your expenses, tools, fuel etc. and maybe a little on the top for yourself, thats the way i look at it

So hopefully most/all of your labour charges will be your clear profit

also helps to know what wholesalers to use for different materials, for example, i would generally use one for most of my daily bits, but another is much better on price for led fittings and another for bigger swa cable, you would be surprised at the difference, dont just stick with one wholesaler

these are all small savings that build up over the year, dont scrimp on quality however, just shop around to get the best price

 

[Guest111]

The best tip I can give is to be careful with your pricing,a customer is always happier if at the end of a job you can turn around and say "well it's actually going to be a bit cheaper than I said" rather than "it's going to cost a bit more".

 

[atm84]

Some good advice there chaps. Welchy boy you have answered my question well regarding money from material markup. As stated above in one of my posts in order to give me enough money to make it worth my while then I need to be charging more per hour but realistically I just do t think I could charge that, hence the more I can make from materials the better. Just wondering how to put that in a business plan etc. in order to estimate my income.

 

[Octopus]

Some good advice there chaps. Welchy boy you have answered my question well regarding money from material markup. As stated above in one of my posts in order to give me enough money to make it worth my while then I need to be charging more per hour but realistically I just do t think I could charge that, hence the more I can make from materials the better. Just wondering how to put that in a business plan etc. in order to estimate my income.

You only really do it with historic data, but to keep it simple say:

You spend £1000.00 on parts each month

Then divide £1000 by (100-25) = 1333.34 - so your "profit" on the mark up will be £333.34 based on 25% mark up!

So if you work 40 hours per week, 4 weeks per month you will be adding about £2.00 per hour to your income.

Makes you think and there are some on here who add less or nothing at all.

Obviously you can increase your margin!

Hope this helps

 

[Guest77]

With materials the more expensive the less margin, for example I would probably add 40-50 quid onto 60-70 quids worth of materials, but I wouldn't add 400-500 onto 600-700 of materials as I would never had won any work, and a prison sentence would be essential lol, it is all about common sense and giving the customer value for money, charge them less than they can get the materials for but add as much as you can on within reason, only you can decide, there is no figure cast in stone IMO, 15% a good guide but a guide only.

 

[Essexboy7]

Think I need a new career where I can earn more money.

give me a shout when you get one mate!!!!