Plumbing charges - self employed

Pennywise

If he's good, reliable etc. and is already busy, then he can safely increase his charges 2 or 3 fold. If he doubles his charges, he can afford to lose half his work and still make the same money! If he doubles his charges and most customers stay with him, he'll have almost doubled his income. It's a no-brainer!

I've had loads of clients like your OH as clients of my accountancy practice. People who are too busy but not making enough money to live on. First thing to do is cut down the work - spend more time on the phone when a potential customers calls - find out what they need - give them some ideas of your charges, etc - only go to see them for a proper quote once you know it is a worthwhile job. Restrict the geopgraphic area so time and money isn't wasted on travelling more than a few miles. Charges need to be increased regularly in small steps to get to a more realistic level of £40-£50 per hour - increase them by say £5 per hour every couple of months so it won't be too much of a shock to regular customers. Implement and enforce a strict call out charge for small jobs and emergencies - say £50 as a bare minimum to include the first hours' time. Ensure a clear cut difference between going out to give a quote and going out to do a repair - that brings you back to spending more time on the phone at first contact!

He also needs to properly charge out for his materials. It is very easy to give away the goods and charge only for time.

People are not as price sensitive as you think. Once a person has found a good reliable tradesman, they'll stay loyal regardless, as it is easier than trying to find someone else and risking being conned or getting a duff tradesman.

By putting prices up gradually and often, you'll see the "pain barrier" - that's when customers start to leave and that's probably the time to stop increasing prices. Don't get hung up when customers start to complain about prices - you're still OK until they actually DO something and leave.

In my own practice, I realised I was far too cheap and way below my competitors. I was a busy fool. Always plenty of new clients. Soon had no time to look after them, and not making any money either. Over the past four years, I have trebled my charges. I cherry-pick new clients. I now earn a realistic amount and work far fewer hours. My only regret was taking so long to realise I was out of step and the wasted years when I was working all hours and not spending enough time with my family.

Sad to say, but your OH needs to change his whole ethos - he isn't behaving like a business and until he changes his ways, he'll stay a "busy fool". You also need to get on top of the paperwork. There is no reason why he can't do his invoice on site and hand it to the customer - many would pay him straight away.

tramps

hi morricl
i am also new my husband has been self employed for 18 years now (agricultural repairs) he will charge an hourly rate starting from the min he leaves the house ie if the job takes 30 mins to get to he is charging the customer for his travel he then charges the next customer from the minute he leaves the last customer. do not forget to charge for time picking up parts, phone calls email ect often he will pick up parts for several customers but i make sure each customer is charged for thier time to pick up parts. as for paper work we sit down each night and list jobs done for the day it only takes 5 mins invoicing is then easy at the end of week/month. as for costings we sit down 6 monthly check prices of fuel ect look back on previous years and put prices up accordingly if that makes sense!!!!!!!! my husband is also terrible at paper work been there done that IYKWIM we find this is the only way to keep on top of things and also we get to chat at night about our days and i also think £20 is to cheap

Debt_Free_Chick

I think many sole traders struggle (or worse, fail!) as they don't appreciate the importance of setting a realistic charge for time/labour. "Labour" isn't just what it sounds like - it has to include all overheads as nomad pointed out in post #4.

In addition, you don't work 365 days of the year. In fact, a sole trader has only around 180 days a year to earn a full year's pay - take off 104 days for weekends, 30 days for 6 weeks holiday (or however much you plan to take) and a day a week for doing the paperwork, marketing, finding new business, doing estimates and invoices etc.

The OPs hubby is therefore only projecting total income of £21k. The overheads have to come off that and the cost of running a vehicle, plus mileage, alone is going to take off a sizeable chunk. My guess is that his profit is only going to be around £12-15k.

My suggestion is to "work backwards" following nomad's advice. Look at the overheads, estimate them for the year, add on his desired drawings and then divide by 180 working days. What does that look like as a daily rate?

When I first got with my OH he was failing to factor in his overheads and made a profit of only £12k. Once I got my hands on things, his profit rose to £35k the following year - and he's still got more work than he can complete!!

Customers have to understand too - understand that your charge for labour is not simply profit for you. It has to cover the costs of running the business AS WELL AS pay you a wage to cover your basic living costs.

baldelectrician

op

Your hubby has 2 options

1. Go work for someone else (and get over £10 per hour in his hand)

2. UP his charges - Min job £35-£40, up to an hour

There is no point living to work, work to live. He will get grumbles when he puts up his charge, but he will lose few customers.
A few will moan and leave - then realise he is still good value. Most of these will return, some won't due to pride.

I don't generally send invoices out. I have a laptop on site and print the invoice off there and then, or take payment using card there and then.
This cuts down the paperwork time at the end of each day and the client realises how much time you actually spend on their job.
It also saves forgetting to charge- this causes friction. Leave it too late and the client has spent the budget allocated. He may also forget to charge (he is working then for free)
Getting the money at the end of the job makes cash flow better. I also pay my wholesalers as I go, preventing any large bills at the end of the month.

By the time the job, paperwork and reciept / invoice is done an hour has passed (minimum)

muckypots

Hi Morric

I think you'll find that people are generally far less bothered about direct price than they are about reliability and having a good job done promptly. Personally I would prefer to pay someone £50/hour to turn up promptly and get finished rather than stay in all day waiting for some £20/hour clown. My time equals money too!

Your husband shouldn't be doing any favours for aquaintances - it's amazing how many mates you've got when you're a tradesman - remember this is his business, not a weekend moonlighter. Personally I would prefer to pay a mate the going rate to do a job rather than a complete stranger.

The best favour your husband can do for his clients is put up his rates as suggested elsewhere so that he can remain in business - if he goes bust then they'll have no plumber at all, cheap or otherwise!

Good luck

Ally5002

My husband is self-employed as a gas central heating installer and we too live in a very rural area, and I understand the concerns that your OH has about raising his prices but £20 is definitely too low, I would suggest £30 an hour at the least for now then review it again in 6 months time.

As for the invoicing, it really is so important that this is done promptly, I have always done this for my husband's business, even though I worked full time until recently as I am much more organized when it comes to paperwork than he is. I'm not saying that I enjoy doing it but it's got to be done by somebody.

bestyman

Hi,
Im a plumber and would say the charges are far too low. I do mostly emergeny work and charge £70 an hour. This way seem a lot but thats £70 per hour on site, not £70 per hour stuck in traffic, at the merchants, giving free quotes etc.
Some weeks I may only invoice 10 hours. Thats £700 less fuel, advertising and other overheads of at least £200 so I end up with £500 on the weeks I work with no holiday pay or pension.
I know your not in London but look at this link, they are one of the biggest companies going so they must be doing something right.http://www.pimlicoplumbers.com/content/2/charges

stphnstevey

I am trianing to be a plumber, but speaking to the qualified plumbers I know, £30-40 seems about the going rate outside of London. Corgi Reg is going to cost me about £3000, van, tools, advertsing, travelling costs all eat away at this.

tomstickland

He might be the nicest plumber in the country, but it's no good if the work is actually costing him more than he is charging.
I'd think you could double the charges straight away with no problems.
Doing favours for friends can be a slippery slope.

I say you should both analyse the true costs of running the business, work out the average weekly job time and estimate the minimum you should be charging just to exist.

Canucklehead

Good evening: Just spotted your thread...my OH is a self employed P&H engineer, 30+ years in the business here in the southeast. Your OH needs to think to the future, up his rates and put something aside for a rainy day (or for when the knees give out, and they will;) ) Always lots of work out there for competent and reliable plumbers/CORGIs....many people are willing to pay for a job well done.

As an aside...a refreshing change to read a thread where folks aren't sticking it to the skilled trades...thanks one and all!

HTH

Canucklehead