I am running through numbers trying to figure a realistic goal for total yearly hourly percent billable for a sole proprietor (one man operation). I am working with 50% billable based on a 40hr week / 50 weeks a year. The purpose is help me figure out what rate I need to charge to cover expenses and make a profit. Is 50% percent low? I know it can depend on work availability but does anyone use a % billable estimate to calc the rate?
My question is for any surveyor that are one man operations that happen to keep track of their billable hours or maybe a estimate?
Thanks
I keep my hourly rates close to what other firms in the area are charging. I am providing the same service that they are.
In the end, your billable hours are what they are. You don't want to be the lowest/cheapest guy around. Develop a good working relationship with the larger firms, and maybe they will refer work that is not profitable for them to you. It happens to me a lot. I network with them, and I catch some of their overflow work, smaller jobs that are not profitable for them, but great for a one man operation.
When I started out (solo) I kept my rate the same as the large firms, and raised it from there. I correctly reasoned that I was highly experienced, highly motivated, and could respond far faster than the large firms. I needed something like 18 hours a week to maintain my previous income since I didn't have a large overhead and a bunch of people to share the profit.
My mantra, learned from here, is:
Charge twice as much.
Work half as much.
Wait! Work? When did that become part of the income equation? Most people are so busy working they don't have time to make money. There are a thousand examples as to why that is true.
Over the last 18 years I've averaged 1320 hours per year that are chargeable to jobs. I didn't get paid for all of them -- most of my work is done on a fixed-fee basis, so whenever I blew an estimate (and I've blown a bunch of them) I ate anything that exceeded it. But it does give you an idea of how much time a small business has to devote to administrative overhead.
A couple of notes:
1. I didn't include my first few years, which were pretty lean as I was ramping up my business.
2. Since I don't track time not chargeable to jobs, I don't know how many hours I actually work per year. Sometimes it seems like a lot, sometimes it seems like a little. Since I work out of a home office and pretty seamlessly go back and forth between work and non-work activities, it's hard to put a number on it. It's probably not unreasonable to think that I average around 2,000 hours per year.
VRMTSRVY, post: 325611, member: 7295 wrote: I am running through numbers trying to figure a realistic goal for total yearly hourly percent billable for a sole proprietor (one man operation). I am working with 50% billable based on a 40hr week / 50 weeks a year. The purpose is help me figure out what rate I need to charge to cover expenses and make a profit. Is 50% percent low? I know it can depend on work availability but does anyone use a % billable estimate to calc the rate?
My question is for any surveyor that are one man operations that happen to keep track of their billable hours or maybe a estimate?
Thanks
Your hourly billing rate must be 2.7 -2.8 times what you intend to pay yourself. You should never bill on an hourly basis if you ever intend to get ahead - only fixed-fee.
Jim in AZ, post: 325690, member: 249 wrote: Your hourly billing rate must be 2.7 -2.8 times what you intend to pay yourself.
I think these factors are reasonable for a sole proprietor if you define "pay" as net of self employment taxes and health insurance.
Thank you for the input. It helps to have knowledge from experienced people to make the leap A LITTLE less scary.
Depending on your particular circumstances, total billable hours can be lean and based on what work you are able to get or could be as many hours as you are willing to work.
A couple of examples: When I first started, I handed out a few business cards and then slowly started gaining repeat clientele. Each year, the amount of work I had doubled or better for several years. So when I started out, hours billed was a very small number. After a couple of years, hours billed was at my discretion - meaning if I was willing to work 16 hrs a day 7 days a week, I could have done so.
A local colleague started out by buying his deceased employer's business. He kept the phone number, but changed the name. Starting out he had much better billable hours than I did starting from scratch. Now he is in the same position I was - he could work almost unlimited hours if he wanted to.
So be careful of establishing an hourly rate that may not be high enough (especially at the start).
Do not be scared to charge more than others in your area.
If your hourly rate doesn't at least make you think "Wow, that is high." Then it probably isn't high enough.
Please do not devalue your time if you are working on other parts of surveying besides field work. For some reason, in my area, rates vary by function and field rates are higher than any other part of the survey. Research is also critical, why charge less for it. Preparing the documents is also critical, why charge less for it. Attending planning meetings is (not really critical, but definitely annoying), so why charge less for it.
Got luck with your new venture.
What's the approximate going rates for a land survey crew? Is $120/per two man on the low or high end?
Don't create an hourly rate at all, at least not for public viewing. It is difficult to overcome that hourly rate even though as a PLS you can be more efficient in the field by making decisions while you're on the site and not having repeat trips. This is what you market, your skills, and the difference between you and others. don't advertise an hourly rate.
foggyidea, post: 326199, member: 155 wrote: Don't create an hourly rate at all, at least not for public viewing. It is difficult to overcome that hourly rate even though as a PLS you can be more efficient in the field by making decisions while you're on the site and not having repeat trips. This is what you market, your skills, and the difference between you and others. don't advertise an hourly rate.
This interests me. In my contracts, I usually specify a fixed price for the quoted scope, and include my hourly rate for any additional work. Do you just quote an additional fixed price for any additional work? I'd love to get away from using hourly rates entirely.
Gromaticus, post: 326204, member: 597 wrote: This interests me. In my contracts, I usually specify a fixed price for the quoted scope, and include my hourly rate for any additional work. Do you just quote an additional fixed price for any additional work? I'd love to get away from using hourly rates entirely.
"Fees for additional work will be provided when requested" or "Fees for additional work will be based on the amount and difficulty of work to be performed"... something like that. You are to be commended for abandoning an hourly rate! Other professionals don't do it, theres no reason we should.
MISSOURIMULE, post: 326197, member: 9473 wrote: What's the approximate going rates for a land survey crew? Is $120/per two man on the low or high end?
That's going to depend on where you are in the country. I know in my part of the country you could almost cut that number in half (it gets a bit better if you are working on state and municipal work, but probably still not as high as what your quoting). In California, I hear of rates that we could only dream of.
Jim in AZ, post: 326221, member: 249 wrote: "Fees for additional work will be provided when requested" or "Fees for additional work will be based on the amount and difficulty of work to be performed"... something like that. You are to be commended for abandoning an hourly rate! Other professionals don't do it, theres no reason we should.
From the court filings as part of the Lightsquared bankruptcy case - I'll take Ted Olson's hourly rate over a fixed fee any day of the week
Yes, that's what I do, as Jim in AZ suggests. I will quote a fixed fee for additional services.
I often earn an hourly rate in the hundreds and hundreds, sometimes even a grand or two per hour. Lump sum, value added. How is Larry P doing?
50% is achievable. So set your goal for 60%. Even if you do lump sum work, you need to know what it costs per hour based on the number of hours per year you wish to work, 2080 is a fairly standard number. Of course, all calculations should begin with how much you want to make for it to be worth your effort.
