How to charge for jobs?

[Batmanacw]

I know this is a pretty complex question.

My buddy works a full time job as a machinist. He also does work for his own shop in his spare time.

I work a full time job traveling 3 weeks a month on average. My weeks at home are for catch up on calls, taking care of local business, and rest.

Since he is busy a lot he has been kicking I odd jobs my way. I generally do quality work so he trusts that I won't make him look bad. Lol! We are talking basic easy stuff.

Anyway....I never know what to charge. My original thought was $60 an hour.

I have an Amish guy who comes over for me to press out old pump bearings and press in new ones. I'm so quick about it I charge him $10 and we chit chat while I strip it down and get it back together in 15 minutes or so. I made the shaft so he is under strick instructions not to beat on it.

A guy might bring over a shaft on Saturday to "drill and tap" but I'm not sure what they mean yet. If its a 5 minute job I'd figure $10 and not really think about it. The tooling costs money but not really that much for one hole.

Should I institute a minimum of like $10? Stick with $60 an hour? It seems like time spent is a fair gauge of the value of a small job if the hourly charge is enough to cover the tooling expenses.

I just want to cover costs and a little of my time.

 

[derf]

20 bucks minimum....and @ 60 an hour it's easy to figure a dollar a minute.

 

[matthewsx]

IMHO, unless you're willing to setup a regular business payment should be calculated in liquid measurement.

Two challenges with charging for work in a home shop:

1. Liability: In the unfortunate event that something you did causes bodily or monetary harm you can find yourself in a heap of trouble. Your homeowners insurance won't cover business liability, and the lawyers will go after anything you own including your home, with the shop & tools. Don't think that only working for folks you know will protect you, if they get hurt their insurance company will be the ones coming after you regardless of if they want it or not.

2. Competition: Many places don't have any independent shops left, or the ones that exist don't want to take in small jobs that don't pay much. But.... The fact that you're operating out of your house, without employees, insurance, taxes, etc. gives you an unfair advantage. It only takes one would be competitor to turn you in to the local zoning authorities or business licensing department to also make your life more difficult than you would wish.

I know there's plenty of folks who do small jobs without any problems so it's not necessary to tell me how I'm chicken little with the sky falling. Do as you will, but I've run several small businesses and decided how to charge based on overhead, expenses and profit needed.

If you're using up tooling have your buddy replace it rather than charging if you can.

Also, $60/hr is too low....

John

 

[Batmanacw]

IMHO, unless you're willing to setup a regular business payment should be calculated in liquid measurement.

Two challenges with charging for work in a home shop:

1. Liability: In the unfortunate event that something you did causes bodily or monetary harm you can find yourself in a heap of trouble. Your homeowners insurance won't cover business liability, and the lawyers will go after anything you own including your home, with the shop & tools. Don't think that only working for folks you know will protect you, if they get hurt their insurance company will be the ones coming after you regardless of if they want it or not.

2. Competition: Many places don't have any independent shops left, or the ones that exist don't want to take in small jobs that don't pay much. But.... The fact that you're operating out of your house, without employees, insurance, taxes, etc. gives you an unfair advantage. It only takes one would be competitor to turn you in to the local zoning authorities or business licensing department to also make your life more difficult than you would wish.

I know there's plenty of folks who do small jobs without any problems so it's not necessary to tell me how I'm chicken little with the sky falling. Do as you will, but I've run several small businesses and decided how to charge based on overhead, expenses and profit needed.

If you're using up tooling have your buddy replace it rather than charging if you can.

Also, $60/hr is too low....

John

I'm not working on automotive type stuff typically. Just garden tractor type odd stuff. Think Amish farmers and not city people lawyer types. No zoning to worry about where I live. Tons of cash business out here. I'm just taking on the occasional tiny job.

 

[mmcmdl]

IMHO, unless you're willing to setup a regular business payment should be calculated in liquid measurement.

I know I've taken this the wrong direction . I charge my tractor time by liquid consumed .


In most cases , I charged different prices by the machines needed . Small lathe jobs are a dime a dozen as everyone owns one . Larger mill and lathe jobs I charged more . Depends n tooling needed as well . $60 sounds reasonable but most people won't pay it . Try to sell a $90 bolt to someone . They see a bolt in the hardware store for 60 cents and they don't understand .

OTOH , if you know it's a breakdown job , you can charge what the market will pay . $1000 is nothing when a million dollar machine is sitting idle .

 

[Batmanacw]

We are talking a couple grand a year in business goofing off on the weekends.

 

[mmcmdl]

We are talking a couple grand a year in business goofing off on the weekends.

That's how it starts . If you enjoy it , keep it that way .

 

[Ulma Doctor]

Your time is valuable when you have skills
$1 a minute is cheap
If that works for you, then there is no problem
I generally think of how difficult the job is before estimating a price.
If the job is not difficult , i don’t mind making a deal
Conversely, if the job is going to be difficult, then compensation is reflected

 

[Batmanacw]

That's how it starts . If you enjoy it , keep it that way .

Starting up a full on business right now is not something I want any part of. I've got a good job.

I just enjoy taking on little projects for fun. My time is worth something. Gives me a few extra dollars to spend at the flea market. I'm aware that some jobs could include liability but I understand what risks I'm willing to take. Fixing a two wheel dolly for an Amish friend is low risk.

 

[Ischgl99]

I have a side woodworking and machining business and John is correct about thinking about risks to your business. I am lucky to live in an area where the town doesn’t care if you run a business out of your house as long as customers don’t come on site and you don’t get many deliveries. My immediate neighbor gets almost daily UPS deliveries, so they certainly won’t complain about my occasional work related deliveries, especially since we get along very well. I analyze the risk of any products I make, or repairs, and if it’s going into something risky where someone could get hurt, I pass.

When I started, I created a spreadsheet of all my costs and factored in what I want to earn per hour. Without factoring in “renting” my workshop, that was $50/hr, so $60/hr for a hobby shop is not bad, but if you had any plans on getting larger, it would be best to have a market rate since it will be harder to raise rates later without losing customers. The one thing many start up companies never factor in is replacement cost of machines and tooling. Your costs should not be what you paid for your machines, rather what it will cost to replace them since you might not ever find that deal again.

One area where you might get bitten is accounting for shop supplies and tooling. It’s easy to forget what you spent over the course of a year, but it can add up. It’s tempting to claim the tools you buy as going to your hobby shop, but if you were not doing outside work, would you buy those tools? The nice part about tracking this on a spreadsheet is you can update them as you get more information. Starting with your best estimate is perfectly fine, but after a year, you may find some of your assumptions were not correct and you need to adjust rates. The best way to do that is to keep a good track of your expenditures.