Home – New Forums Money matters How to charge to cover cost of staff?

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  • #986951
    EmbalmSkincare
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    Hi all,

    I’ve been wondering lately, how do you charge for your services to cover the cost of staff and yourself?

    For example, let’s say you have someone who does most of the work for you but you need to charge more so that you can give yourself a little income and cover other expenses such as insurance.
    Do you just put a percentage on top of the hourly rate for your staff?

    I’m particularly interested how this would work in the trade/construction industry. If you are bound to a standard hourly rate of i.e. $30 in the industry, which is also the hourly rate you have to pay your tradie, how do you do it?

    Any thoughts?

    Sorry if it sounds a bit confusing.

    Thank you!

    Warmest regards,
    Mel

    #1160338
    LucasArthur
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    Hi Mel

    Not sure of the correct answer, although with me if I charge labour I have the ability to cost my jobs and factor all fees into final quote.. Covering labour, insurances etc etc.

    May also be more about what client is ‘willing’ to pay as well.

    When I was in service industries I had reverse engineered ALL costs for my business on a yearly cost broken down too monthly, weekly, daily and even hourly… This allowed me to know what I had to charge to cover the minimum (which included everything) and then add margins.

    Re your query of is there a rate expected to be charged, unsure

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1160339
    Simply Money Honey
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    Hi Mel

    It really depends on your industry, competitors and what customers will pay.

    You could increase the hourly rate to factor in your management time and profit margin however you need to make sure your hourly rate is still competitive.

    You could have a standard % mark-up on all hours, billed as admin fee or profit margin. I know when we renovated our house our builder gave us a list of hourly rates plus he charged 12.5% on top of all material and labour costs for his profit.

    The most useful thing would be to try and find out how competitors are charging so you can offer a comparable rate.

    Cheers

    Gabrielle

    #1160340
    Greg_M
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    There’s lots of formula’s around for calculating your rates and markups (think there’s one on the forum somewhere).

    For construction specific costing … if you’re lucky enough to be working “cost plus”, somewhere around 10+ % over agreed base rates would be the historical add on usually.

    If you’re working to fixed pricing, or straight rates, it’s a case of what the market will bear.

    Currently most commercial subcontractors I know are losing money, and have been for over 6 mths … they’re just trying to minimise the losses and get enough turnover till margins improve … wishful thinking IMO.

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