You cant expect, trade or wholesale prices if your not in the trade.
Do you go into a furniture store or milk bar and ask for wholesale price?
The Electricians price he gets is built over years of dealings with the wholesalers and.
The price varies so much on equipment its not funny. the more you buy the smaller markup they put on it.
alokahuja when you said he gave you trade price, he probably didn't.
Also if you think his hourly rate is to high. I suggest you read this post by someone in another thread Its very good
Here is the link to a calculator to work out how much to charge.
http://www.masterplumbers.com/utilities/costcalc/
Also understand that you do not have work week in, week out and not all days are money making. Not to mention people ripping you off builders going bust and taking all your money.
I'm not saying tradies don't overcharge, but understand the cost of doing business in this country is crazy. OHS, workers comp, and employee’s entitlements all add up to a very large %. There are plenty of hands in my pocket.
But there are always those shonks that charge way too much (and there are plenty). They usually end up with no work.
It's hard to explain to those that are employees because they have a totally different mentality and how things should be priced to someone running a business.
More calc
Quote:
Historically, we have always charged ourselves out on an hourly basis. If we think a project will take 15 hours to design, we estimate 15 x our hourly rate. This makes it imperative that our hourly rate isn't plucked out of thin air; it must cover our fixed costs + wages + a profit margin.
Fixed costs and wages are called expenses. These are non-job related costs that must be paid regardless of how much work is produced. They include things like equipment leases, car expenses (including parking), internet connection (including download/upload costs), fax and photocopier paper, rent, accounting and advertising costs. It's also important to remember that wages include salary + tax + superannuation + workcover insurance costs.
The amount of profit margin you want is determined by past experience and the market. A suggested benchmark is 20%.
One way to ascertain an hourly rate is to add your fixed costs of (say) $5,000 per month with the wages bill of (say) $5,000 per month with a profit rate of (say) 20% i.e. $2,000 per month.
$5,000 + $5,000 + $2,000 = $12,000 per month or $144,000 per year.
Next, it's safe to assume you will work 48 weeks (240 working days) per year, less public holidays. The number of public holidays will vary from state to state, but, on average we work about 234 working days. Multiply that by 8 hours per day = 1872 billable hours per person per year.
That means your hourly rate is $144,000/1872 = $77 per hour.
You might think that's great because you're charging $100.00 per hour.
Wrong.
The $77 per hour assumes that you can charge yourself out for 8 hours of every working day of the year.
What about time for new business, or administration duties?
A more realistic figure is to work on 6 hours billable per day, making your total billable hours 1,404 per year
With fixed costs and profit of $144,000 per year your hourly rate is $144,000/1404 = $102 per hour.
To make the hourly rate even more accurate, you must identify all possible chargeable time and the items you purchase on behalf of your clients. One example is travelling time to and from client meetings. If you don't want to charge it, but find you are spending 1 hour a day on the road, then you need to revisit your overheads formula and work on 5 hours billable per day, equalling 1170 hours per year. That will change your hourly rate to $123.
We have found by rigid examination of the hours we work, the tasks we do and the cost of running the business, we are able to sustain good, reliable profits.
You may charge at a set rate but it doesn't mean people will take it if it's too high. So it ends up a catch 22 situation. You lose days from too high a quote and end up needing to charge more to cover costs. Which means you end up losing more work. You have to be flexible in different cycles of the economy. There are times where you make it and times to get by in.
