How to Calculate Your Hourly Rate As A Handyman Part Two

Step 3: Taxes

You are going to need to pay taxes. There are some taxes everyone has to pay and some taxes that may vary by state. The following just examples and you should meet with a tax professional to make sure everything is included.

  • Self Employment Tax- You need to set aside at least 15.3 percent of your total earnings for this tax. This will cover Social Security and Medicare. Most people have these taxes automatically taken out of their paycheck. As a person that is self-employed, you will need to cover these expenses. They may change from year to year.
  • Federal Income Tax- This will depend on the amount of money you make during the year. The more you make, the higher the percentage the government will take. Many handymen will need to pay between 15 to20 percent of their total profits.
  • State Income Tax- this will vary from state to state
  • Additional Taxes- you may be subject to additional taxes and possibly local taxes.

Add up all your taxes to get the total percentage you will owe.

For example:

  • Self-employment: 13.3%
  • Federal Income Taxes: 15%
  • State Income Tax 0%
  • This brings your total to 28.3%

local handyman installing a doorknob

Step 4: Setting an Hourly Rate

You need to figure out how many hours you are going to work each month. You may spend 40 hours working, but you need to include the time you spend on providing quotes, returning phone calls, driving, and other measures. You may work between 25 and 35 hours a week.

You will not be paid for every minute of your time. You will get paid when working for the customer.

You need to figure out how many hours you can realistically work. You need to have some time for your family.

I aimed to work at least 26 billable hours a week. I had time for personal life and office tasks.

Step 5: Work with the Numbers

Now that you have the numbers it is time to get them to work for you.

For Example:

  • Monthly living expenses =L
  • Business expenses= B
  • Billable hours=H
  • Total tax percentage= T

This is based every month. You rate is L/ (H* (1-T)) + B/H

Example: if you need $5,000 a month to live your and your business expense is $1,200 and your taxes will be around 30% you should plan to work around 32 billable hours.

  • Living Expenses : L=5,000
  • Business Expenses: B=1,200
  • Billable Hours: H=128
  • Tax rate= .03
  • This will come out to 5,000 / (128 * (1-.3*)+1,200/128 with is a total of $65.18 per hour.

You will need to charge at least $65 an hour to make a profit and keep up your lifestyle.

This formula can help you figure out the minimum rate that you need to charge. This number is often higher than what you were thinking.

Step 6: Evaluate

You now know your monthly expenses and the amount you need to charge an hour.

Is this amount reasonable? Can you charge this rate based on your experience, education, and qualifications? If this seems reasonable you can go make some money.

This amount seems high you need to think about why it is high. Many handymen undervalue their services. Sometimes they may not want to charge that much and other times they do not know how much they are worth.

Do not shortchange yourself.

I did not charge enough and this costs me tens of thousands my first year in business. You need to learn business skills so you can make the money you need. You are worth more than you think.

Be sure to check out the Handyman Hourly Rate Calculator by following the link shown below. This calculator will help you will the math and will show you the common expenses and taxes you are paying. This will help save you both time and money.

The Surrey Handyman
14577 105a Ave, Surrey, BC V3R 1S2
(604) 670-7177

How to Calculate Your Hourly Rate as a Handyman Contractor

As a handyman, how much should you be charging an hour?

There is an answer for this, and I will help you figure this price out. This is the same formula you can use as a handyman, online freelances, or another person that provides any service.

The rates for handyman vary. Some charge as much as $100 an hour because they are doing a professional job. There are others on sites such as Craigslist that are willing to work for $10 an hour.

Where do you fit in? What price should you be charging handyman customers?

You are going to find the answer to this. There is a step by step process that will help you get the price that you should charge.

You can charge by the hour, provide a quote for the job, or have a flat rate based on a standard service. You can find success in this way.

handyman near me working outside

Ways to Determine Your Hourly Rate

When running a business, you are working to make a profit. You need to charge your customers enough money to make a profit and maintain your lifestyle. If you cannot do these things it does not matter how cheap the competition is, you will not be able to survive.

If you do not charge enough money, you will work long hours and have nothing to show for it. Your business will not be a success, and you will need to find another job.

You need to charge enough money to cover your monthly bills. This is known as Cost-Based Pricing and is a way to make a profit.

You need to find a minimum price to cover your life and your business expenses. You can charge more than this amount, and it is recommended.

This is only the first step.

Step 1: List Your Living Expenses

How much does it cost for you to like a comfortable life?

List all of your expenses even the ones that you may only pay once a year. Give each one of them a monthly value. Take some time to make sure everything is included and add a little extra for unexpected expenses. This will you figure out how much your normal lifestyle costs. If you are saving for retirement, including this in the list as well, including any insurances that you need to pay.

You can look at the salary from your job and see if you are making enough money to support your living expenses.

handyman doing electrical work indoors

Step 2: Business Expenses

You now need to add up your business expenses. There are some things that you should be thinking about. They include:

  • Cost of health insurance
  • Costs of liability insurance
  • Tools
  • Advertising expenses
  • Mileage and vehicle maintenance
  • Cost of a website
  • Office supplies
  • Phone costs
  • Internet
  • Mailbox rentals
  • Any licenses fees

To get additional details to check out part two of this article.

The Surrey Handyman
14577 105a Ave, Surrey, BC V3R 1S2
(604) 670-7177

GoGo Handyman
14577 105a Ave Surrey, BC V3R 1S2
(778) 850 – 1028

Monday to Sunday
24 Hours

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