Tuesday, February 21, 2012

Pricing - Part 3: "Time and Materials" Billing

Some handyman companies prefer to operate using "time and materials" billing. With this method of billing, the client is billed by the hour for labor. It also means that the client pays for a mark-up in addition to the materials used on the job. This can be a fair way to operate. In order to be fair for the client, you should know the exact rates and mark-ups. Some good questions to ask: What is the standard hourly rate for labor? Is the handyman 'on the clock' when driving to my job and when driving to buy materials? Is there a different (higher) overtime rate, and if so, when does this overtime rate apply? What are the mark-ups on materials, on dump fees, on permit fees, etc.? If a subcontractor (e.g. electrician or plumber) is involved with my project, what is the mark-up?

Again, "time and materials" billing can be fair. This is especially true when you are dealing with a contractor you trust. This trust is important because you need to be certain that all time on your job, and all materials used, are tracked accurately and honestly. You have better things to do than auditing material receipts and standing there with a stopwatch while a handyman is working in your home.

You may be wondering why "time and materials" billing exists. A lot of contractors prefer it because it because it ensures that they are being paid for anything that happens. Did the handyman forget a tool or some material? Did he cut a board incorrectly? Did he start painting with the wrong color? With "time and materials" billing, you are agreeing to pay for their mistakes and for their extra trips to the workshop and/or the home improvement store.

With this type of billing, you may also be billed for "water cooler" talk time if more than one man is on your job. More than a few handymen we have met through the years are pros at both carpentry and story telling. Further, we have been told of a handyman at a local company who routinely buys more material than is needed for a job. The client pays for all the material, along with a robust mark-up, only to have the rogue handyman take the 'leftover' materials for his personal use.

If you like this post, please take a look at our other posts on pricing. Next week, we will describe a simpler pricing method that many of our clients prefer.

Bill Boyd

1 comment:

  1. Good to know about your blog when More than a few handymen we have met through the years are pros at both carpentry and story telling. Further, we have been told of a handyman at a local company who routinely buys more material than is needed for a job..
    Thanks for sharing with us.

    Handyman

    ReplyDelete