Hourly Rates and Overhead

Craig, was there a contract in place? If so, politely tell the client to pay the bill as agreed to in the contract or his attorney will have more billable hours to charge him when you take his sorry butt to court.

Jason

Jason,
Yes it did. And the contract was drawn up by his attorney....I emaild a copy of the signed agreement.

Some things just get old.

Hope things are going well for you.

Sounds like his lawyer is clairvoyant if he was able to ascertain the amount of overhead in someone else's firm. Nevermind the liability involved in our line of work...

BTW... I have received that line before and at the time I chuckled and said, "That's nice; when can I expect payment?"

-Tad A.

I was going thru some files here dated 1955. In one particular file, there was a letter from the client in 1955 stating that he was ill over the invoice amount that he had received from the company. The response letter simply stated to the client to pay whatever he felt the 3 days work was worth to him in hopes to remain on good terms with the client and to receive future work from the client. The past surveyor spent a total of 15 hours doing this particular job and billed him $97.83.
It was interesting to realize that this type of issue has been happening since then. Makes me feel that I'm not alone when it comes to clients complaining about the cost of the survey. Still,in todays economy the cost of a survey (in this area)is more than the cost of the land. 5 acre lots in a early 60's subdivision have sold for the premium price of $2500. A lot of the old subdivisions were done on paper only and never monumented. Most lots are transfered by tax sales and never surveyed.

In most every other business, when a check bounces or someone walks away without paying for their goods, you contact the authorities and they are charged with theft and must go to jail. There are many fees that would qualify for felony charges.

We don't have it that easy. We must file a claim against the property or put up with their excuses while we have ends to meet. We are in a position that we must spend another exorbitant amount of money and time just to collect what is already due.

Walk out of a store with items and they simply have to point a finger and get results.

I have even had to have a talk with closers that did not send me a check from closing because an attorney or realtor simply said that the amount of my invoice was not included in the monies appropriated for closing. I have had to remind more than several that by law their job is to pay all invoices before or at closing for the matter is not final and no transfer of property can be made with any out outstanding monies being owed.

I may stretch the actual ground that I stand on, but it really irritates me too.

"rant off"

Craig,

We used to have the same problem all the time with people going insane and bitching up a storm saying they don't pay overhead when we showed our overhead rate when billing private individuals and companies. Plain and simply, yes they do, they always do, they just don't see it broken down that way normally. Do you think a mechanic really makes $75/hr? No he makes a crappy $15/hr and the rest is overhead.

The solution is simply to calculate a new hourly rate that includes the overhead and bill things this way, the first time. I'd suggest sending a new invoice over. My guess is that your new combined hourly rate will be in line with what a lawyer, mechanic, or maybe even your psychotherapist charges per hour. 😉

Actually the sole proprietor usually has more overhead to charge out than a larger company. Why do you (or rathe the idiot client/attorney) think larger companies are so successful and taking over the entire economy.

It's not the total overhead that counts, rather it's the billable hours available to pay for it. One room in the house is worth a certain rent. One room in an office is worth a certain amount. The question is how many hours are you billing to cover whatever overhead you have. It should be obvious that an office that supports five engineers and three survey crews can probably bill a lower amount than one surveyor working out of a basement that has a rent value. And all basements have a rent value. You could be using it for entertaining, kids, actual rental, etc., etc..

Business is tough for the small company in any field. Should charge more for better service. Any other plan is bound to fail.

Thanks for the comments.

Duane, not only did you hit the issue on the head you hit it out of the park.

The client called an hour ago and wants me to do more work. I explained there is no more equipment. No can do.

At this point if I don't stop shaking my head I fear a self imposed whiplash.

"The client called yesterday morning and said one of the reasons he questioned the amount was because (he claims) his attorney told him my hourly rate was to high. He said I have no overhead and therefore should be at a less rate. (he didn't want to hear about one of my monthly expenses called Mortgage/rent, which was $2950). He didn't want to talk about his attorney's rate..."

I probably would have told my client that "wine-ing and dining the attorneys wife is pretty expensive and there is no way in hell I could afford his gay lover."