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Topic Title: Hourly Rate
Topic Summary: Self Employed
Created On: 19 November 2012 06:11 PM
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 19 November 2012 06:11 PM
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Ampman

Posts: 1004
Joined: 06 February 2006

Evening all,

I may be forced to go self employed very shortly , just wondering what you self employed charge an hour to make it worth while ,

cheers ,
 19 November 2012 06:27 PM
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DMcG1978

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Hi Ampman, I have been self employed for 14years, and in that time I have been CIS4 and CIS6 VAT reg. Ltd. Prob depends on your line of work.
But general rule I've aimed at is a grand a week, or £100 per half shift, making it £25/hour + VAT. If I'm desperate then £20/hour or if I'm busy then £35/hour. Hope that helps

Regards

D
 19 November 2012 07:16 PM
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hifly

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it will depend a lot on where you are.

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 19 November 2012 08:57 PM
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slittle

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And what sort of work you're doing.

If you can find something very niche then £50 an hour is possible (I get it on certain things) but in general somewhere between £30 and £35 works


Stu
 10 December 2012 03:26 PM
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maximilian

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Depends if you work for a contractor or have own clients. We give 25% discount off standard rate to our contractors.

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 10 December 2012 05:46 PM
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BrucieBonus

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Where are you based Ampman?
£50 an hour £300 day in London - but then you have to watch the VAT threshold (unless majority of your customers are VAT reg - mine ain't!)
 10 December 2012 06:56 PM
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Zs

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Ampman, don't consider it as being forced. It is fine and the flexibility will please you even though you will work very hard for your money.

It depends on where you are and how popular you are. I have just increased from £250 a day to £300 pro rata for anything less than 8 hours. My days are long though. I am over busy and not coping well with it so maybe I will shake a few off? I don't charge a mark-up on supplies but the wholesaler is three minutes from home. Those are all things for you to consider. I don't have a call out charge per se but charge £50 first hour £40/45 for the second and thereafter I make it up as I go along depending on what I have stepped into. Usually regular customers, but call outs can be tricky.

IMO, if you work in a community, you need to factor in doing some work for no fee other than a cherry bakewell and a cup of tea because you know they need help and cannot afford it. BS 7671 and a heart. Recently I carried out an I&T for LABC housing sector, on a local home which was an absolute disaster. There is no way they can afford any improvements but I know they will get a notice served. I changed all the rewirable fuses for type B converters from another job, bunged in a bit of bonding (not pretty but functional) on the spot. That man's gratitude was humbling and worth not asking them for anything. You will do alot of that kind of thing and sometimes those are whole days.

Find out what your local competitors are charging and pitch about the same? Or take the 'reassuringly expensive' route like those shoes I want?

Zs

Edited: 10 December 2012 at 07:11 PM by Zs
 10 December 2012 07:29 PM
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OMS

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Originally posted by: Ampman

Evening all,

I may be forced to go self employed very shortly , just wondering what you self employed charge an hour to make it worth while ,

cheers ,


Do three things:

1 - work out what you need per year to cover everything (you, van, tools, overalls, insurance, test kit and paperwork, registration with approved bodies, notifications etc etc etc etc)

2 - from there make a prediction on how much work you can handle(or win) in a year - are there sectors you can specialise in (EICR, Domestic, Agriculture, commercial - can you offer design to others or to clients - are you up to speed on handling Fire alarm, emergency lighting, CCTV, access control, home automation where you may have USP's.

3 - work out how much time "off the tools" youll spend quoting and doing paperwork (factor at least 30 - 40% of your working time on top)

That'll set your rate to ensure you get paid what you want and you cover OH.

From there, as Zs suggests, test that locally - you may well find that there's a huge difference - there are areas where sparks are working for £80.00 day

Adjust the rate or decide what makes you better than the next guy - that may involve a few bakewell tart and tea jobs to build a customer base.

Reassuringly expensive is OK when you have enough customers with repeat work or in a position to recommend you - depends on your lifestyle if you want to go that route.

Remember one thing - you might not be making money sitting at home - but that's still easier than working hard to lose money. Don't be afraid to turn work down if it doesn't suit you

Good luck with it - it's not an easy game if you've come from being employed or contract labour - all of the thinking is now yours to do

Regards

OMS

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 11 December 2012 09:22 AM
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mark2spark

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If you haven't got any work, then £120 a day is better than nothing though.
Seems to be hit and miss for me still. Phone rings off the hook one minute, then next minute i have to pick it up now and again to see if there's still a dial tone

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 11 December 2012 08:23 PM
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Zs

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Oh Mark2Spark you just broke my heart, there's something in my novel about that. Nowadays of course we just phone ourselves up from the mobile and then the other way around.

OMS is right about not going to work in order to lose money. I have done too much of that over the years. I also believe that we should not have to fight for our earned money. Tomgunn has got the measure on that. Deposit and interim invoices. In fact, unless an interim payment comes home to roost tomorrow I will get some time off from the commute. The job looks lovely and I'm really enthused to finish it but no pay, no Zs.

Zs
 11 December 2012 10:39 PM
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antric2

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Evening all,
Ampman, re read Zs and OMS's posts again as there are some damn good points there to be taken on board.
I have been self employed nearly 8 years now and would say that I am still trying to find a steady rate.I will not do less than £120 a day as up here in the domestic world it is very competitive but average £160 per day.

.....'Dont work to lose money' is somethimg i learnt late into self employment and when I realised it I needed to give my self a slap for not seeing it sooner.

When starting off you need to build up your customers so you charge what you need to initially to get a job and then leave plenty of cards with that satisfied customer....but remember,you wont be able to charge these initial customers a good rate later on so make sure you have a good memory when you are busy enough to have a two tier system.
Regards
Antric
 12 December 2012 09:34 PM
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Ampman

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can someone please explain going to work to lose money an example would be nice ?

ie is it going in to cheap on jobs or jobs that run over a couple dayys etc...

cheers
 12 December 2012 09:46 PM
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leckie

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I'll explain some numbers.
If you work on the books as a sparks with a company van you are like ly to get 11-13 pounds per hr.

If you sub contract labour only to a company you will need approx 25 percent more to get the equivalent inc holiday pay, etc.

If you are working as the electrical main contractor you also have, as oms explained, additional insurances, PI and PL, trade associations, advertising, plant, meters, etc

You can't work forty hrs for forty hours pay. You need to add about 25 percent for quotes, certs, etc. So if your on 12/hr on the books you need about 18 for subbing to be he same Inc van. If you main contractor you will need about 25/ hr to be the same as 12 per hr on the books

Edited: 12 December 2012 at 09:53 PM by leckie
 12 December 2012 10:05 PM
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OMS

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Originally posted by: Ampman

can someone please explain going to work to lose money an example would be nice ?

ie is it going in to cheap on jobs or jobs that run over a couple dayys etc...

cheers


It's quiet, you don't have much work and you need the brass - you put in a price that's low - to win the work in competition from a guy up the road who's nicking the sockets from his day job and doesn't pay for anything as he's got everything he needs from work - plus he isn't worried about tax, insurance etc.

You do the job, get paid, but on reflection your rate was so cheap that you've failed to recover your overheads - and then your next jon has to increae in cost to recover those overheads. trouble is, your still in competition with the guy up the road - so you repeat the exercise - and now you have a months worth of shortfall n recovering your overhead - so that means there's no holiday for you that year - you neeed to put in 52 weeks

alternative - you price a job (client wants a quote) and fail to recognise that installing 3" trunking at high level takes a lot of time moving the acess scaffold - plus you forgot to price the manufactured bends the client is insisting on as a spec item - you though that site made bend would be OK - so every day you are working hard and loosing money doing it as the increased time and extra materials are costing you dear

There are plenty of other ways to lose money when your working for yourself - you forget that you spend up to 3 hours a night quoting, bidding, sorting paperwork, certificates, invoicing, chasing debt, ordering materials - your missus wonders what the hell you are doing glued to the PC all evening - she looks at the bank accounts (you are too busy) and wonders why she's spending 13 months worth of income every year - you are quietly going bankrupt without noticing. You need to max out your overdraft to pay for all the trunking fittings you bought and didn't price, the bank wants interest on that and you're on 60 day terms from the client - you finally realise that your total income diluted over the hours you work is ridiculous - you'd be better off working nights and stacking shelves in Tesco.

As I said, get your rate sorted up front and ensure that rate covers the oncosts you have to have to be able to work - doing it later is fatal.

Just remember that if making money was easy - everyone would be doing it wouldn't they

Good luck - don't let me put you off, I was self employed for a good while, it's a great way to work to earn a living - just be careful about what you do - have a plan and test it - if it works, stick to it.

Best regards

OMS

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 12 December 2012 10:16 PM
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slittle

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Always keep a spreadsheet (or scrap of paper) to see how it's going week on week or month on month depending on your invoicing cycle.

There will always be ups and downs but it's very, very important to know where you stand at any given time. I always project to year end as well to keep an eye on how it should pan out. If for example by month 3 the projected profit at year end was negative I'd be very,very concerned and start looking to make savings.

You can't always make as much money as you would like to, but it's important to always make something.... To be able to leave home in the morning costs you money before you even get the tools out of the van.

Look at your costs, (how much you want to take home plus vehicle, insurances,test gear etc) and work back from that to a figure based on working about 30 weeks a year to cover it and see what you end up with.


Stu
 12 December 2012 10:18 PM
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leckie

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There are all sorts of reasons for going self employed/starting a business. I started at 21, 35 years ago. Two reasons at that time. One - nobody in my town would pay for me to carry on doing college. Two - I hated listening to other people and having a boss. I wanted to do what I wanted to do. That has never changed.

I have done quite ok over the years. And more than that I am hugely happy doing exactly what I want to do.
 12 December 2012 10:25 PM
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mikejumper

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Originally posted by: Ampman
Evening all,
I may be forced to go self employed very shortly , just wondering what you self employed charge an hour to make it worth while ,
cheers ,

You need to get an idea of what the competition is charging.
You could set your rate at £25 an hour and find you're getting no work because others are charging much less.
Worth bearing in mind also that this is your charge out rate rather than what you pay yourself because a proportion of that £25 has to pay for the usual running costs of a business.
 12 December 2012 10:29 PM
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leckie

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But if you charge much less you would , financially, be just as well off on 12/hr with a van on the books.
 16 December 2012 04:13 PM
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Ddub

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What you need to do first is work out your break even point.
How much money will it take for you to keep your business open for a year with no work?
Add up all your expenses for a year i.e, van running costs, registrations, Insurances etc
Now what will your wage be a week? In other words how much do you need to keep the roof over your head and the wolves from your door? Worked it out? Good, multiply it by 52.
Now you have 2 figures, your business expenses for the year and your wage bill for the year. Add them together.
How many hours do you think you'll realistically work on site per year? Remember this is the actual hours you'll be physically on a job. You may think to yourself 8 hours per day? Think again, some of that time will be spent on the road. Customers will only pay you for the time you're in their house, or place of business (commercial). Per year, I would suggest a more realistic figure would be say 1500 hours, but you may think more, you make think less. I'm sure plenty of nay sayers will jump right in and say the figure I just PLUCKED will be wrong.
So now you take your expenses and wages, add them together and then divide them by your billable hours. This is what it costs you to keep your business open per hour, your break even.
Of course you want to make money so you need to add profit to your break even figure and that can be what ever you desire, but be realistic.
So now when you price a job, all you need do is estimate the number of hours it will take and multiply it by your calculated hourly rate. Then add the materials to that with profit.
Don't just pluck a figure out of the air, you will fail! You need to know what your costs are. By all means check what others are charging in your area, that's good advise, but if you find they're much lower than what you worked out, chances are you're going to struggle
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