Chapter 4 – Setting Your Prices

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.

Scroll to Top