Patrick Cavanaugh has 30 years+ running a successful painting business, and helping others improve their business, and raising the standards of painters everywhere.
Calculating overhead - Secrets of knowing what hourly rate to charge for your work.
Let me ask you a question. What hourly rate should I price my work at?
Or, What is the going rate for painting work?
I wish I had $5.00 for every time I have heard someone ask that question of another painter.
So what?
Here are two more examples of "so what".
1- I am a 35 year old married man with 3 kids a big mortgage, and my wife is a stay at home mom. I pay all my medical expenses out of pocket. I have two painters and two tucks with all their bills and expenses. I pay for workers comp and liability insurance on our combined payroll. And of course if I get hurt my government won't allow me to collect disability; because, I am the owner.
2- I am a 45 year old man living with my wife who is tenured teacher in a big upper class public school. Her job pays all medical expenses and insurance. We bought our home 20 years ago, and the mortgage is small for today's standards. We are childless and have no major expenses.
Different needs, both business and personal, so what do they charge?
The "going rate", or whatever that is. The problem, with selling our services for the "going rate", is that the "going rate" is someone else's rate, not your rate. So to ask anyone what the "going rate" is a sure fire way to work for an hourly rate lower than you need.
You should ask yourself what your "going rate" is. That is, what do you need to sell your jobs at in order to do the best job you are capable of and make what you need plus profit. The way to know is to add all your costs including what you need to earn and diving that by the amount of hours worked.
Just add all your costs, for the year and divide by your historical hours worked. That will be your "going rate" not some number thrown out in order to be the lowest bidder. And that is usually what someone else's going rate is.
The problem with most people in our business when calculating overhead is not including everything.
For example, do you pay yourself to do an estimate? We all advertise "free estimates", they may be free to our clients; but, they are not free to us. Leaving out things like this will give you a lower number than what is needed. And the greatest challenge of painter/craftsman/ business owner is to learn to think like a businessman before thinking of himself as a painter.
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