I was wondering what you charge for labor where your located. I’ve seen $50.00 for a company doing a good job and $125.00 for a company doing a poor job. Both in scottsdale less that 2 miles from each other and 20 miles from me. Thats a huge difference. Thinking I might raise my rates as I seem to be more toward the lower rate.  It’s kind of hard to figure out. Thats why I’m asking.

Thanks
J

J.

I’m in the Los Angeles area.  We have a lot of custom installation companies in LA and I’ve heard a wide range of rates as well.  Our scale is higher though.  I’m not aware of anyone being at $50 anymore.  More like $85 - $250.

This is where I would lean towards an academic answer.  But I studied physics, not business.  I would guess there is a business formula for calculating what your rate should be in order to make a profit. You probably need to know your daily operating costs and your percent of billable hours.

If you figure your daily operating costs are $100 and you usually have 75% billable time, then you know in 6 hours you have to make $100 + whatever you want to take home per hour.  Let’s make the math easy and figure you want to make $50 an hour.  That’s $400 for the day, plus $100 for expenses, so in 6 hours you need to charge $500 or $83.33/hour.  Of coarse, this needs to equal an amount you can actual sell.  Wouldn’t it be nice to just decide to charge $300/hour and know you could still get 75% billable time?

The way to increase the business income, of coarse, is to get more people working - you don’t make more per person, but the idea is it adds up more than you could get out of increasing the rate for any one technician.  Let’s face it, any one technician is going to have a maximum revenue ceiling.

In closing, as you increase your rates you should step up the professionalism.  Wear a uniform, use company invoices, have business cards, have someone who answers the phones, a web site, etc.

-Morgan

J - check out OnForce’s State of the IT Industry Report (http://www.cepro.com/article/wheres_the_best_place_to_be_an_integrator/) which has some of the numbers you’re looking for.

My theory is this:  “You should charge what you are worth.” How do you know what you are worth?  Simple, you obviously should be competent at what you are selling.  In business, it is easier to charge high and lower your rates as opposed to charging low and raising your rates.  The psychology of the consumer just works that way.  The answer to what you are worth is:  “What are your customers willing to pay you?” You can raise your rates and lose money because no one will hire you.  You need to know your market as well.  This business is mainly word-of-mouth.  You will have a different set of clients than many of your competitors (if you want to call them that).  I rarely compete against other companies for the jobs that I do.  It sometimes seems like the market is saturated with integrators.  But like I said, I rarely run into any competition.  Nature will take its course and weed out many poorly run/unqualified companies.  If you are still around, you are probably doing something right.  I do my work in Silicon Valley and have also traveled the states from Hawaii to the east coast.  Our market charges what seems like an average price of $85/manhour.  Pricing for programming is usually higher.  I have lost a few jobs because of price and that is just natural.  You can’t ‘em all.  Most of the time, a reputation of good work and honesty will keep the business coming, you just need to figure out what you are worth. 

P.S.  Be ready to tell your client why you charge X dollars and the other guy charges Y dollars.