What is Your Time Worth? How to Figure Out Your Hourly Rate

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by Dan Perry on August 23, 2012

How much should you charge per hour as a handyman?  Does anybody actually know the answer to this?  Nope!  It’s up to you to figure that out.  Handyman hourly rates are all over the map.  Some demand over $100/hour because they know what their doing and do it efficiently, professionally, and immaculately.  Then, there’s the guys on craigslist that charge $10/hour.  In this post, I’ll provide a simple step by step way of determine what you should charge when billing by the hour.

The truth is, the amount you can charge for your services are determined by one thing, and one thing only – the customer’s willingness to pay.

That’s right, good old supply and demand never goes away.

There are hundreds of factors that play into how much customers are willing to pay for your time including professionalism, experience, reputation, location, type of project, and so on.  All of these factors should be considered along with the process I’ve detailed below.

How to Determine Your Hourly Rate

#1 Living Expenses

How much does it cost for you to live comfortably and happy?

Write down a list of all of your expenses and an approximate monthly total for each.  Spend time and try to think of all of your expenses, even the ones you only pay once a year.  Assign a monthly value to each and  add them into an excel spreadsheet (or just write them down).

Make sure not to leave anything out.  Include entertainment and even a little extra for unexpected expenses.  The idea here is see how much living actually costs.  If saving money for retirement is part of your lifestyle, make sure and include that, too.

#2 Business Expenses

Now, list your handyman business expenses and assign a monthly value to each expense.  Once again, include everything.  Here is a list of most handyman business expenses.

  • Health Insurance
  • Liability Insurance
  • Tools
  • Advertising
  • Vehicle Mileage and Maintenance
  • Website
  • Office Supplies
  • Phone
  • Internet
  • Mailbox Rental
  • Licensing Fees

(To get more detail on the expenses of running a handyman business, check out my Yearly Report which details all of my expenses for an entire year in addition to other helpful tips and strategies to help you succeed.)

#3  Taxes

Figure out your tax responsibilities by doing a little research.  Here are some taxes you will be required to pay.  However, this list is not all inclusive and you may have other tax obligations outside of these.  I am not a tax professional and am only providing the following information as an example.  Your specific tax obligations may be different and you may consider consulting with a professional.

Self Employment Tax – For the year of 2012, self employment taxes are set at 13.3% according to irs.gov.  These do change each year, so you’ll need to keep up with this.

Federal Income Tax –   As you probably already know, this tax depends on how much money you make each year.  The more you make, the higher the percentage of taxes you will pay.  For the purpose of figuring out your hourly rate, you will need to estimate this tax.  After all expenses and tax write-offs, I don’t plan on making more than $30,000 this year.  I’ve estimated my federal income tax at about 15% based on my expected tax bracket.

State Income Tax – Check with your state to find out if you need to pay this tax.

Once you have an estimated percentage for each tax, add them all up to come up with your total tax percentage.

Let’s say your taxes are as follows:

Self employment:  13.3%
Federal Income Tax:  15.0% (based on less than 32K/year)
State Income Tax: 0%

Total Taxes = 28.3% (example only)

#4  Billable Hours

The next step is to figure out how many billable hours you are going to work each month (assuming you have the business).

You may be thinking that 40 hours is a good estimate.  In reality, however, with all of the quoting, following up, driving time, etc. it is probably more realistic that you will bill somewhere in between 25 and 35 hours per week.

The goal here isn’t to see how many hours a week you can work, but how many hours it is reasonable to work without totally consuming your life.  After all, you’ve started this business to have some freedom right?  Enjoy that freedom and set a limit on your billable hours.

For my handyman business, I’ve decided that 25 hours/week is a good amount of work.  This allows me time to improve my business, have a personal life, and run this blog.  I’ve based my work load on my own personal lifestyle design.  I recommend you do the same.

#5 Do the Math

Don’t want to do the math? I’ve created an hourly rate calculator to help you do this faster than ever! Click here to download “The Handyman Hourly Rate Calculator.”

Now that you have an understanding of your costs and how much you think is a reasonable time to work, you can do some quick calculations to see how much you need to charge to live the lifestyle you have designed for yourself.

It goes like this:

Total Monthly Living Expenses = L
Total Monthly Business Expenses = B
Total Hours/Month = H
Total Taxes (%) =

Hourly Rate = L/[* (1 – T)] + B/H

Example:

So let’s say you need to make $3,000/month to live, expected your business expenses to be about $1,200/month, estimate your taxes at about 30%, and plan to work about 32 billable hours per week.

L = Monthly living expenses = $3,000
B = Business Expenses = $1,200
H= Monthly Billable Hours = 128
T = Total Tax Rate = 30% = 0.30

Hourly Rate = $3,000/[128 *(1-.3)] + $1,200/128 =  $42.86/hour  

#6 Evaluate

So, now you know how much you need to charge in order to live the now defined lifestyle that you have laid out in terms of expenses.  The next step is to evaluate this hourly rate and determine if you can provide that much value in one hour.

Is the number you came up with reasonable?  Based on your experience, qualifications, etc, can you comfortably look a customer in the eye and say “I charge X dollars per hour my services plus a trip charge of Y for smaller jobs?”  If you can, awesome.  You’re all set.

If you don’t believe you can offer as much value as you’ve calculated, then you can either reduce your expenses, work more, or gain the experience required for you to charge that rate.  It’s that simple.

One thing to consider is that you probably won’t always be charging by the hour and instead, you’ll charge a flat rate.  This can allow you to be much more profitable as I have earned up to $175 in one hour!  Testing for the profitable services as laid out in this post is highly recommended.

Like I said earlier, handyman pricing is all over the map.  There is no defined way of calculating your rates since skill level and quality varies so much.  If you have the confidence to charge a high rate and the customer testimonials to back it up, go enjoy your riches.  You have the ability to live the life that you designed on your terms.  I call that freedom.

Be sure to download the “Handyman Hourly Rate Calculator” by clicking the link below. Then, share this article!

“Handyman Hourly Rate Calculator”

{ 20 comments… read them below or add one }

Thomas November 23, 2012 at 6:19 pm

Thank you for your advise. I was looking for some guidance to set a fee for handyman services and I have an answer now. Best regards, Thomas

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dave December 24, 2012 at 9:48 pm

just wanted to say your blog has been very informative….thanks for the time and effort you put into it…

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Wade Myers February 6, 2013 at 12:12 pm

You have to love the $10 an hour guys. I can’t tell you how much time I have had spent explaining to customers that these people are working under the table because there is no way they are paying for insurance, taxes , business expenses and eating for $10 an hour.

You MUST convey to the customer that you are licensed and insured and that you have to charge enough to stay in business to honor the warranty that comes with your work and that to do this, you have to charge X number of dollars.

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Big D February 6, 2013 at 5:56 pm

Good point Wade. It’s unfortunate that most customers don’t understand what it costs for quality work.

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Eric K April 9, 2013 at 12:23 pm

Has anyone ever done business with a customer who is also handy themselves? That is a freakin’ nightmare. Naturally, they don’t value your skills as much as say an insurance agent or a dentist. And don’t get me started on rental owners LOL

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Big D April 10, 2013 at 6:35 pm

Yep, some customers are just flat our terrible to work for. What they don’t realize is that it only makes my service more expensive to them :)

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Glen Betts April 28, 2013 at 3:30 pm

Big D,
Excellent commentary. Another value to a quality handyman who is ethical is that the customer can trust him with their home and contents. The biggest referral I received came from a man whom I had never met before. He handed me the keys to his house, told me the three things he needed repaired, and said, “Ted said you could be trusted”. WOW! That’s why I work by myself. That trust and confidence cannot be bought and it also gives a great sense of protection to the customer.

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Big D April 30, 2013 at 7:14 pm

Totally Agree. Trust is one of the largest factors in whether or not somebody will hire you. Thanks for the insight.

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Terry June 3, 2013 at 9:01 pm

Great topic, Big D. You’re learning :) I say that because I, too, am learning, and have only recently came to the realization of the cost of running a BUSINESS!

The prevailing thought on total number of billable hours (due to the paper work, etc. that you alluded to in your post) seems to be 1000/yr. I suppose this may be trade specific, but in mine, it is 1K/year.

Also, have you considered a Profit Margin along with your Overhead?

Some suggest that you begin with what you would like to earn a year, and go from there with expenses, payroll burden (if any – and this goes beyond the amt. a business pays its employees: workman’s comp., etc.), along with those you wrote about.

Well, I can get long winded easily, but very good post, and thanks for sharing.

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Lee Dam July 10, 2013 at 6:58 am

Hello Big D,

I thank you for sharing your very valueable information. It has really helped me in adjusting my business plan. This has also been my biggest struggle is what to charge per hour and also how long does it take to do each task. I am trying to take as good notes as possible so when I do a similiar job I am more realistic in time to do and of course price. I love reading your blog.

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Big D July 10, 2013 at 2:06 pm

Thanks Lee! glad I could help!

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Cal Kustoms July 24, 2013 at 11:44 am

Hey Big D, can you simplify the calculation above for the #5 tip. Some of use did not do algebra. lol.

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Big D July 24, 2013 at 2:27 pm

Cal,

Sorry, I can’t simplify the equation. But, if you copy and past the equation into a google search and just change the numbers to your own, Google will do the math for you!

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Ron September 5, 2013 at 7:26 am

Hey D ,as a new handyman buisness owner ,I have a soft spot for senior citzens they get a discount plus ,I still lower my rates to help them out even more.Some senior members seem to want to take advantage of my services. Think its time to stop giving double discounts to those that can afford it. Have a great day .

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Rob October 13, 2013 at 12:04 pm

Great info,

I will charge 42.50 per hour but believe the first hour should be higher to cover travel and tool setup etc. You can spend lots of time setting up your
Tools and drop sheets etc to protect the customers property

Thanks

Rob

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USAGeorge February 20, 2014 at 9:22 am

Skilled handyman work is a profession. The expenses run well beyond taxes and the obvious costs. We run a residential handyman service and bill on short calls a minimum of $90 per hour. One way to get a feel for what a billing schedule should be is to bill no lower than what a big box like a local Lowe’s or Home Depot charges for similar work. Charge less and you’ll become another fly by night,short lived enterprise.
Customer sanctification is essential.
1. Be firm on your price,no negotiating.
2. Work within your limits.
3. 24/7 emergency calls are a must.
4. On jobs that are beyond your ability be ready to still help the customer and hook them up with a reliable outfit that specializes in that particular work. Follow up by calling the person within a week to make sure the other outfit did satisfactory work. You will have a customer for life.
5. There is no such thing as a 40 hour work week when your self employed,get over it or go work for someone else.
6. Never engage in price negotiation nor try to explain to the customer why the cost is what it is. Hold firm.
7. Investment in parts is essential along with tools,that cost will be surprisingly high.
8. Present a detailed billing to the customer. Parts and labor cost should be itemized.
9. Be professional in every word and action.
Repeat and new word of mouth customers will be your bread and butter. These are the customers you want,they are more interested in a quality job and not bottom basement shoppers.
The list could go on but unless your making a living with the ability to save for retirement your going to go out of business.. Price like a professional because the only handyman services that thrive are professionals,not day laborers.

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Dan Perry February 21, 2014 at 12:27 pm

Thanks for the insight George! Always appreciate others perspectives. Why do you feel 24/7 emergency calls are a must?

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MM Goodill September 1, 2014 at 8:57 am

Had a handy man do some simple work. Trim under stair lip, four short pieces of quarter round and rehang a kitchen cabinet door with new hinges. Brought a friend that he was teaching the whole time he was working. Charged me for 3.4 hours of work. What would a job like this usually run for time?

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Silvio JCK September 17, 2014 at 3:03 pm

As a professional contractor, yes I do handy man work and the way I price it is
Regular charge $ 100.00 per hr for handy man work
Will the customer be looking at what I do? Then it is $ 150.00 per hr
Will the customer be asking question as why and how I do things, when I am working? then it goes to $ 200.00 per hr
No flat rate, sorry
Recap, I like your site, thanks for the good info and fantastic comments
Best to all handy man
Silvio

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Dan Perry September 18, 2014 at 10:04 am

Ha! Love it. Thanks for sharing.

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