Chapter 4 – Setting Your Prices

Handyman Pricing Considerations

When I first considered becoming a handyman I asked myself, “How much can I earn as a handyman and can I charge enough to make a decent living?”  I proceeded to scour the internet to see what other handymen were charging for their services.

The rates being charged were all over the board.  Some handymen quoted hourly rates on their websites and some quoted job rates.  Some quoted rates for every small job you could think of while others didn’t quote any rates at all.  More than one handyman quoted additional weekend, holiday and overtime charges as if he was trying to cover himself for any eventuality.  It became obvious that there are regional differences with some areas as low as $20 per hour and some as high as $75 per hour.

Overall I was encouraged by what I found.  My goal was to earn a decent living and be paid fairly for the work that I performed.  The rates being quoted by the most professional handymen/women were high enough that I thought it would be possible to make good money.  But the next question came to mind…

What Should My Hourly Handyman Rate Be?

My web search yielded no local handyman rates so I continued my search the old fashioned way…I started asking around.  I know some real estate agents in the area and I asked them if they knew any handymen, and how much they charged.

From their referrals, I talked to a handyman who had a good reputation with these agents.  He told me that he quoted $25 per hour.  I thought it was too low for our area.  He also told me that he would send some of his business my way because he was too busy to handle it all.  Now I knew he was definitely undercharging!

The laws of supply and demand should have driven his rates up, yet he claimed that he had been charging the same rate for the last 15 years.  He hadn’t raised his rates because he didn’t want to upset his long time customers.

This example showed me how important it is to choose your rates carefully.  It will be more difficult to raise your rates later, particularly when you are getting a lot of referrals from current customers.

You don’t have to price yourself cheaply when there is plenty of business available.  Another handyman I talked to had all the business he could handle and charged $50 per hour.  He presents himself well and receives lots of referrals.

To take this project a step further I researched a handyman franchise in our area.  I found that they are charging $115 per hour and have a 2 hour minimum!  Are they too busy also?  I don’t think so.  In fact, they had a booth at the last Home Show I attended.  There they were, hawking their services and showing off their beautiful marketing materials.  Clearly, their challenge is finding enough customers who are willing to pay extra for a professional licensed handyman. Perception is everything and the handyman franchises are doing a great job of cashing in on their professional image.

With this sampling of rates I had a starting point.  Not having high overhead, I knew I didn’t need to charge as much as the handyman franchises.  Since I’ve never been a big fan of working long hours and earning less than I’m worth, I decided that I didn’t want to start too low either!  If I could maintain a professional image and do good work, why not try for a higher rate?  If I charge less then the major franchises I’ll still be seen as an inexpensive alternative.

I decided to start out charging $60 for the first hour and $45 per hour thereafter.  I correctly guessed that my customers would be willing to pay my rate. I also knew that I could offer a discount to my rate as a ‘special’ or even knock off some time when totaling up the invoice if I felt I should.

Do the same research in your area and don’t hesitate to push the envelope.  What ever your local rates are, there will always be a low rate set by the wannabes, a middle rate set by the professionals and a high rate set by the franchises.  Position yourself as a professional by setting your rates at or above the middle and below the top.  You don’t need to be the cheapest handyman in town to get all the business you need!

Should I Offer Senior and Group Discounts?

Yes.  Offer seniors and non-profit groups a discount rate.  When friends and former co-workers approach you with work offer them a discount rate too.  There is great demand in the senior community and non-profit groups for reasonably priced work and, if you deliver on your promises, will be glad to pass your card on to their friends.  The Board of Trustees of one of the local churches approached me to do work.  I decided to offer the church and all of its members 20% off my hourly rate.  They continue to be a great source of business.

Many times I’ll have friends approach me to do work for them.  Because they are friends I feel guilty about charging them for my work.  But realistically, I can’t work all day for nothing…I have bills to pay too.  These same friends would have to pay someone to do the work if I didn’t do it, right?  The solution is to give them a great price and let them know that you are giving them a great discount.

What About Weekend, Holiday or Overtime Rates?

If you want to charge extra for weekend or holidays I suggest you charge time and a half for weekends and double time for holidays.  Most customers will be comfortable with this structure since it closely matches the familiar work day environment.  Will they want to pay it?  Probably not, but at least they will understand the basis for the rate! Use these numbers as a starting point for negotiation.

I decided not to quote weekend or holiday rates on any printed materials or on my website.  Frankly, I didn’t want to advertise the fact that I might be willing to work outside of the regular Monday through Friday hours.  I wanted to keep my weekends for family, rest and fun.  If the customer asks, or the job demands it, I’ll tell the customer that there will be a surcharge for weekends or holiday work.

I’ve never been successful in charging overtime rates.  In every instance where I might have charged overtime I’ve never felt comfortable doing it.  However, if I had an employee and I was paying overtime to them I would definitely pass the cost on to the customer.

Should I Charge By The Hour or By The Job?

There is no best answer for this question.  How you quote prices depends on two main factors: how confident you are about the estimate and what the customer’s particular needs are.

By the job, you are taking the risk of the costs running over.  In order to make this type of estimate you must be confident that you will make money at the estimated price.  If the work goes smoothly you win, but if not, you will find yourself taking the loss.  The more accurate you are when estimating the work to be done and the time it will take, the more money you will make.  Bidding by the job has the best potential for increasing your bottom line and ironically, many customers will be more comfortable with this approach.

Bidding by the hour you’ll always be safe and your compensation will exactly match the amount of time that you spend.  If you’re not sure how long a job will take, this is the way to protect your bottom line.  You can bid on every job that comes your way and always feel comfortable that you will be paid for the time spent.  Understandably, your customers will not always be comfortable with a straight hourly estimate and will want some type of assurance that the cost will fit within their budget.

Ultimately my objective is to cover myself financially and not scare aware customers with my estimates.  Sometimes I’ll charge by the hour and sometimes by the job.  Often I’ll do both at once, charging by the hour but putting a cap on how much I think the entire job will cost.  This makes the customer happy and is a safe approach for me.  I will lose however, if I’ve set the entire job estimate too low.

To cover yourself, always add some sort of cushion to your pricing.  If you think a job will take 3-4 hours to complete, quote 4-5 hours.  If you think it is a $350 dollar job, quote $395 using odd pricing to your advantage.

A handyman I know quotes his rates over the telephone at $25 per hour, a low amount for our area.  However, when he gets to the client’s house and estimates the work to be done, he never quotes the job by the hour!  He always gives them a quote for the entire job.  In this way, he is never held to the low hourly rate that got him in the door.  After looking over the amount of work to be done, he might quote $195 for a job he knows will only take 3-4 hours.  When he finishes the work, if questioned he simply explains that he always figures in time for picking up materials, travel and clean-up.

I’m not suggesting that this is the best way to go about your business but I think it illustrates the answer to the “by the job or by the hour” question.  With experience you will probably make more money quoting by the job than you will if you quote by the hour.  Stand back to look at the job you are estimating and ask yourself, “How much would most people be willing to pay for this work?”  If your hourly estimate will be lower than the perceived value of the work, quote it by the job at the higher price.

What If I’m Not Sure How Long a Job Will Take?

Experience will teach you how many hours it takes to do various jobs.  In the mean time there are pricing guides available and some techniques you can use.

This book contains a guide that shows a wide range of jobs and how they were priced.  You can use these for comparison purposes to price your work.  If you visit the resources section you’ll find estimating books for sale designed for the construction industry.

Remember that estimating handyman work is not an exact science.  Every task is different and every job will have unforeseen problems.  Here is a technique you can use: When you’re stuck, round off the job in your mind.  Stop trying to figure out what the exact cost will be and start thinking in round numbers.  Ask yourself if this work looks like a half day or a full day job.  Will it take one day or two?  This will give you a starting point for your estimate.  Next, add an hour or two as a cushion.

You can also try telling your customer that you’re not sure how long the work will take.  Tell him that it may take as long as a full day (for example) and how much that will cost.  Reassure him that you will only charge for the actual time spent.  In this scenario you’re working by the hour.  If he insists on a firm commitment for the entire job, quote the full day rate and negotiate from there.

You’re in the driver’s seat.  If the work is unpredictable and the client appears to be unreasonable, quote high to cover yourself.  If he accepts, great!  If not, move on to the next.

What If I Run Over? When Should I Charge the Customer?

Be careful how and when you enter into this conversation.  Your reputation is at stake.

Good communication with the homeowners throughout the course of the work will completely eliminate surprises and conflicts when you go to collect your pay.  Make sure he or she understands the work being done and the challenges you are faced with.

If the over run couldn’t be avoided, talk to the customer and explain what the situation was.  Often, a job runs over due to unforeseen problems that crop up as you are working.  If it was totally out of your control the customer should pay.  If you uncover additional work to be done, show your customer as soon as possible and talk to him about the problem that faces you both.  Show proof of any unexpected material costs by showing him the invoices.

If you have a good honest reason for the over run the customer will agree, or at least be willing to split the difference with you.  Remember this old adage: “Volume solves all problems!”  Keep your eyes on getting a referral from every customer.

Lastly, don’t lose your temper!  If negotiations grind to a halt and you’re willing to walk away with your original estimate, just do it.  Tell them that you will stand by your word.  Your customer will be happy and your reputation will be intact.  Ask for a referral and chalk it up to experience.

How Large a Deposit Should I Request?

There are limits on what you can request as a deposit.  Check the laws in your state for the exact limits.  In California, contractors are prohibited from asking for a deposit of more than 10% of the contract price or $1,000, whichever is less.

You’ve heard the horror stories about “tradesmen” asking for a 50% deposit and then skipping town with the money.  Don’t be mistaken for one of these people.   If you have to request a deposit, even if you’re not a contractor, follow the contractor laws for your state.  Following this rule will increase your credibility and increase your chances of getting referrals.

I have chosen to never ask a customer to pay for materials in advance.   I charge all of my purchases on an air miles visa card.  This gives me thirty days to pay and a free round trip ticket when it comes time for a vacation.  If you can, do the same.

If you don’t have the available credit and the job has a large materials requirement there are solutions.  Have the homeowner buy the materials so that they are on hand when you arrive.  You can also go to the store together and let the homeowner choose and purchase the materials.  Handled this way, the homeowner will know that they are paying nothing but cost for the materials and you will have stayed within the law.  Don’t ask for a large deposit.

How Much Should I Mark Up the Materials That I Sell?

I’ve always based this decision on whether or not I was being paid to pick up the materials.  If I’m on the clock when I’m doing the shopping, I will not mark up the materials but will simply show them the receipt for reimbursement.  Otherwise, I will mark up the materials from 10-50% over my cost.  Some of the lower priced items can be marked up even further.

Can I Get a Contractors Discount When Buying Materials?

Any discounts you receive have the potential of being either extra profit for you or additional savings for your customer.  It’s a winning situation either way so don’t hesitate to ask for a discount.

I have found that the major chains have differing policies.  One chain flat out said no, that they do not offer contractor discounts while another said they would sometimes discount very large purchases.  That let me out on both counts!

The smaller chains and small independent hardware stores will be more willing to talk since these stores have local ownership and more flexibility due to their higher margins.  They will probably be willing to give you at least 10% off.  I suggest you approach them when you’ve got a large purchase on your cart.

Some suppliers will allow you to make purchases on account.  This can be helpful for a couple of different reasons.  First, this will give you 30 days to pay and maybe even a contractor’s discount.   But also, this account will establish a history of purchases.  This history may serve as proof of experience if you choose to pursue your contractors license.  Check in with a local contractors licensing school to see what steps you can take to satisfy the experience requirements.

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