Are you a new handyman starting a business or trying to figure out how to price your services? Then you’ve come to the right place. Pricing affects how much profit you bring in, how quickly you can grow, and how you fit in with competitors, so learning how to do it properly can help to make your handyman business a success.
In this guide, we’ll walk you through:
- Deciding what to offer
- Competitor research
- Setting hourly rates
- When to offer discounts
Step 1: Decide what handyman services you’re going to offer
Handyman services can include everything from interior painting and appliance installations, to making small repairs, changing locks, and even entire home remodels.
While you might be open to offering anything and everything, you should try to determine which services make the most sense for you.
Think about things like:
- What you have experience in (painting, plumbing, carpentry, etc.)
- What tools you have to get started
- If you’ll need to supply materials or parts, and where to get them
- Whether you’re aiming for commercial clients, like apartment buildings, or residential clients, like individual homeowners
- What client type you would prefer to service like full detached homes or condominiums, for example
- Which services you offer, and who you plan to offer them to can help you to do better competitor research and calculate your business costs
Step 2: Research competitor pricing
After you know what services you want to offer and what you don’t, you should look into what different competitors are charging in your community. This will help you to get a feel for local price ranges and service offerings.
Look for competitors through sites like:
- Craig’s List
- Facebook Jobs and Marketplace
- Home Advisor
- Angie’s List
- Google search
Try to look at all kinds of different competitors to get a well-rounded overview of the handyman industry in your city or town. Then, start to look for direct competitors who offer similar services to you.
You’ll probably see a large range of different pricing. It’s important to pay attention to the differences between who is charging low and high rates.
The handymen on the lower end of the scale may be less experienced or new, while those in the higher end of the scale may have established businesses with years of experience in several fields, like carpentry and remodeling.
Ideally, you’ll want to try to set your own prices somewhere in the middle. If you charge too low, you may not be able to cover your own expenses. If you charge too high, you may overvalue your services and miss out on customers.
Step 3: Set an hourly rate
Your hourly rate depends on a variety of different things. From costs to average hours, you need to get out a calculator and figure out what you need to make to turn a profit.
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Determining your expenses
Expenses can be divided into two different categories: personal and professional.
Your personal expenses are things like your personal mortgage or rent, bills, vehicle payments, etc. Calculate these amounts by tracking your monthly bills and living expenses.
Professional (or business) expenses are things like tools, business cards, a vehicle, a business cell phone, or client management software. You can calculate these costs by using an expense tracker, which can be used to track both office expenses, like software, or on the job costs, like a part or tool.
You need to know these amounts if you are going to set a rate that brings in enough money to cover them.
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As a self-employed handyman, you’ll need to pay both federal income and self-employment taxes. And, depending on where you live, you may need to pay state income tax and other amounts as well.
Since your income taxes are based on how much you make each year, how much you need to pay in taxes will vary.
If you need a hand figuring out how much to calculate for taxes, try talking to your state’s department of revenue or contacting an accountant.
Knowing how much you need to pay in taxes will influence your rates.
Estimate your hours
It can be hard to figure out how many hours you’re going to schedule each month, especially when you’re first starting out.
You can use time tracking software to track your hours for each job and average them out over time to get an idea of what you can expect.
Setting a handyman rate
Setting a rate is where all of your expenses and tax rates come in.
A basic way to do this is to add up your monthly expenses, divide them by your expected hours, and then add markup and taxes on top.
For example, if your combined personal and business expenses were $5000 a month, and you expected to work an average of 160 hours per month, you would take $5000/160 to get a minimum hourly rate of $31.25.
Then, you need to add in taxes and profit. Let’s say your taxes added up to 25% of your income. Take your hourly rate and divide it by your tax rate: $31.25/0.25=$7.80. That means taxes will be an additional $7.80 on top of your hourly rate, bringing it to $39.05 before any actual profit.
That $39.05 is only what you need to break even. It does not include profit, costs like vacation or sick time, future business expenses, or markup on parts or supplies.
You will need to add profit and markup on top, to ensure that you can make enough to cover increasing costs in the future and to grow your business.
The average self-employed handyman in the US charges between $60-$70 per hour.
Step 4: Offering discounts
You can offer discounts for a number of different reasons, but when you do, you need to make sure that you don’t end up losing money on a job.
Discounts only really make sense in certain situations, such as:
- Group rates for neighbors or communities
- Service packages
Offering group rates to specific neighborhoods or communities can be a great way to bring in new business and get your name out there. You can even structure them to encourage large groups to participate by offering additional discounts based on more customers.
For example, you could do something like this: 10% off services for a minimum of 10 customers, but 15% off for a minimum of 15.
This helps to make sure that the number of customers you get can offset the discount that you offer.
Service packages are perfect for making additional profit. Often, handymen offer easy, common services as an addition to a larger service at a discounted price.
For example, you might charge full price to install holiday lights on one level but offer a discounted price for a second level or fence.
What kind of service package you choose to offer depends on the skills you decide to offer and the type of clients that you focus on. Just be sure to plan out your service packages in advance so that you can use them as upsells when you create an estimate or send a quote.
This can also be an ideal way to handle clients who try to negotiate. If possible, stick to your base rate, but offer an additional service at a discounted rate.
This way, you don’t miss out on much-needed income, but the client feels like they’re getting a deal.
Having a healthy handyman business
Determining pricing is one of the most important things about starting your handyman business. Not only will it ensure that you make enough to cover costs and turn a profit, but it will also influence the customers that choose to work with you.
Research competitor rates, accurately calculate your costs and projected hours and add a profit margin to help your business to start off strong.
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