George E. Cawthon wrote:
As for labor costs, realize that $75 and hour translates into $150,000
per year working full time (if he doesn't work full time it is his
problem not the customers). Might be common where some people live, but
not where I live or ever have lived. Few people make $150,000 per year
and certainly no labor, skilled or not makes that much. $10-15 hour is
common for labor, skilled laborers (not counting electricians and
plumbers) get $20-30. Electricians and plumbers get $50-60 and much of
their work is hardly skilled.

$75/hr does NOT translate to a $150,000 salary. People need to quit
equating a charged rate with hourly wages. They aren't equivalent. I
don't do home repair, but am self-employed.

1. It's fairly difficult for someone doing work onsite to get a full
2000 hours directly billable to customers/clients. You can work
"full-time" and still not get 2000 hours on invoices, especially if jobs
are running 2 hours each. If you think you're going to get four 2-hour
jobs into 8 hours, you're dreaming.

2. Self-employed people and business owners get to pay for things that
an hourly wage employee do not and that all comes out of the gross. I
get to pay for *both* sides of Social Security and Medicare (the
matching portion of that deduction on the paycheck) or pay the 15%
self-employment tax. I have to pay an accountant, lawyer, etc. for
business-specific services that I never needed doing the same work as an
employee. I also get to pay for health care directly, with no employer
subsidization or group rates.

3. Self-employed people get to deal with the ups and downs of economic
cycles and seasons FAR more directly than employees do. How many screen
doors does a handyman install in January in Minnesota? How about July?
If the work is seasonal (deck staining, personal income taxes, etc.),
there may only be 5-6 months out of the year to earn money to keep going
the rest of the year. There's no unemployment the rest of the year when
you're self-employed.

One of the biggest mistakes people make when going from employee to
self-employed is to just take their currently salary x 2000 hours and
that's their new rate. They then find out, that for their industry,
November to February is completely dead and they only make 25% of what
they make in "normal" months. Suddenly, they've taken a paycut even
though they're "making" what they did as an employee.

Last, and most importantly, price is not a function of cost (what it
cost the handyman to do the work), but rather of demand. If he's busy
enough (and his definition applies, not yours) at $75/hr, then that's in
perfect balance with supply and demand. If not, he'll end up lowering
his rates to get enough work.

Recently, I had more work than I had time, so I raised my rates. I
raised them again when there wasn't any change. Eventually, I raised
them until I had the right amount of work to match my "supply" of time.
If I decide to cut back to half-time or any other supply reduction, the
same thing will apply.