J Wynia wrote:
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.

That's all wonderful basic economics but everyone
pays taxes. When you calculate how much a person
makes, you don't figure how many deductions they
make, their gambling debts, etc. Note that I also
said if working full time. I'm glad for you that
you can keep increasing your fees and still have
plenty of employment. Those less fortunate have
to reduce their fees to maintain full employment.
All of which has nothing to do with a guy
spending 2-1/2 hours at a cost of $150, which
without more information, should have taken way
less time and way less cost in many parts of the
country.