What about you! This is a fairly common question. When starting a new business - "What do I charge?"
Some of the things that you need to consider. If you're in paid employment or a payee, legally you get
28 days holiday a year, pension, guaranteed wage and employment rights.
With self-employment you don't get any of this. You might be a window cleaner, electrician, joiner, brickie, plumber, builder,
painter and decorator, landscaper - all these different trades have their own costs, however the
"tools" used in this video can be applied to most trades, regardless of what service you carry out.
As you grow you'll find your costs grow, but these are just some of the startup costs to give you an idea,
or maybe you're watching this Video and thinking, "H'mm, I'm not charging enough. How can I charge more!"
This Video will give you the "tools" to help you understand
how much you need to charge and increase your prices, without costing you any money.
Before we get properly into this Video, if I could ask you to hit that LIKE Button down below - just
go ahead and SMASH it as this helps me grow my Channel - now let's get on with the Video.
This next question is something that only you can answer.
How much do you HAVE to earn to pay your bills, your mortgage, your loans, household bills, food,
go for a drink at the weekend, run a family car, live life - and probably just as important,
savings and pension. These are questions that only you can answer. This is what you have to earn.
Things to consider. How many days a year you can realistically work, taking into account wet days,
holidays, days when your van's off the road, you're ill, or you have to price jobs etc. Then think
about how many hours a day you can actually charge. When you take into account, loading and
unloading the van, traveling between jobs, quoting, answering emails, booking work in, going to the
bank to deposit checks. The list just gets endless. It can really eat into your day and the amount of time
you can actually work. That brings us into our overhead costs. Overhead costs are things like
the van, insurance, equipment, advertising costs, fuel, waste, mobile phones. Gardening is a fairly
expensive trade, and there are a lot of expensive tools required. Lawn mowers, blowers, hedge cutters,
trailers, scarifyers, even rakes. Some of the typical costs might be buying or leasing a van,
buying and servicing tools, and just as importantly, having enough money
there to replace those tools when they break. Fuel for the van, other costs like
website hosting, mobile phones, whenever you start adding it up it can seem like an endless list!
The average man with a van out working with no overheads, as a basic figure 10 000 pounds a year.
if you disagree with this let me know in the Comments below.
Is this low, or is this high for costs for the year?
Before we get onto how to charge more, I want to tell you about a bit of software that I use to run
my own business. It's called "Get Jobber" or "Jobber" for short.
It is easy for me to recommend as I've used it for years myself. It saves me countless man hours,
and manages everything in one place. Estimate, quote, schedule, invoice, get paid - and best of all it's very easy to use.
It will save you a lot of unbillable hours, and it easily pays for itself, plus it'll generate sales
and clients love it. Jobber saves me a lot of time on unbillable hours, and
that's time that I can spend earning more money. There is an Affiliated Link in the
Video Description that'll get you a 14-day Free Trial and 20 % off your first six months.
Jobber aren't sponsoring this Video, nor have they asked me to make it. However if you use my
Link to try the software, it helps support this Channel and makes Videos like this possible
But back to our average man with a van. Let's break this down a bit further, let's say you work
a nine hour day. You work 7 a.m until 4 30 pm, with a 20-minute tea break and a 30-minute lunch
break. Round the breaks up to an hour, and then after work you go and quote for jobs or invoice,
and you do a couple of hours on a Saturday morning. At best it's seven billable hours a day,
and two hours where you can't invoice for your time, lunch breaks tea breaks, quoting, talking to
clients in the evening, they are all unbillable hours. If you budget for seven billable orders a day
five days a week, that gives you 35 hours a week to earn. As a side note "profit" is extra. Profit
comes after everything. That includes wages and overheads, and everything else. There should be the
cost to do the job plus profit. Some people think that profit's a dirty word - but it's actually not.
That leads on to the hourly rate calculator. If you are p-a-y-e,
or in paid employment, you get a minimum of 28 days holiday a year, that's what everyone else gets
as standard. For the self-employed let's round that up to 30 days or about six weeks
and two weeks for bad weather another two weeks for breakdown sickness and not enough
work or whatever else often it can be more than this. That's 43 weeks a year of billable hours
times five days a week times seven hours a day that equals one 1005 billable hours a year.
Let's say for argument's sake that you're charging between 20 to 25 pounds an hour.
To keep the maths simple, I'm going to work off 20 pounds an hour.
You're going to be bringing in 30 100 before you pay your expenses.
But back to that average man with a van out working with no overheads. As a basic figure is around ten thousand,
factoring in the cost of ten thousand basic costs, your thirty thousand one hundred is now
twenty thousand one hundred.
This of course doesn't take into account all the time spent on unbillable hours.
Let's say for argument's sake you worked an additional 15 hours a week in between jobs
pricing for work, answering emails, booking work in, going to the bank, and that Saturday morning and all the other fun stuff.
Let's do the maths. 15 hours a week unpaid times 43 weeks a year equals an extra 645 unbillable
hours over one year. Suddenly it sounds like a lot. and billable hours of 1 thousand five hundred and five
add the two together and you get two thousand one hundred and fifty.
Two thousand one hundred and fifty hours you've worked in total.
Take your 20 100 and divide it by the total hours worked. This works out at around £9.34
per hour. It's really not that much for the toll and stress of running your own business!
To put this into context, the national living wage or the minimum wage in the uk
as of April 2022 is 9.50 per hour. That's the starting point for someone over the age of 23.
Chances are they won't be qualified in what they do, or have the years of experience that
you have. They will also have other benefits
such as a pension and a steady weekly income.
This leads into hourly rate versus fixed rate. Charging an hourly rate for most things will hold
you back, and you'll be plagued with clock watchers, and you won't be able to properly invest into your
business. It takes a bit of trial and effort on the pricing front, but the basic problem with charging
per hour. there's no incentive to invest in the best machinery. or methods to improve your knowledge and efficiency.
Lawn mowing is a really easy example of this. I can mow a lawn with a 400 pound lawnmower
and charge 20 pound per hour. Take 90 minutes to do it, and charge the customer 30 pounds
or I can go and buy a 1 500 pound commercial mower and do a much better job,
take less than 30 minutes, and still charge the customer 30 pounds. Everyone is better off.
If you've listened to this and you think that you're not charging enough, and you're really
worried that you can't put your prices up as you're going to lose customers there's another
better way to look at it. For example, you're charging 25 pounds an hour billing for seven
hours per day. This is bringing you in 175 pounds a day five days a week equals 875 pounds per week.
if you raise your price to 30 pounds and manage to keep your diary full your turnover would be 1050
pounds for the week, but that's not really likely to happen as you're going to lose some customers.
Now, if you've lost a small number of customers and you're now doing four days a week instead of five,
now you're charging 30 pounds for seven billable hours a day that's bringing you in
210 pounds times your four days equals 840 pounds. You're still making
nearly the same amount of money what you made whenever you were charging 25 pounds per hour,
and you were working five days a week for that but now you're only working four days a week,
and you're getting nearly the same money without being the busy fool. That gives you
an extra day a week to generate more work. The best part is your new customers will
be on a higher rate. This gives you more to keep investing into the business so you can provide
an even better service. If you want to learn more about Get Jobber, watch this Video here.