Just In How to Calculate Your Hourly Shop Rate

[Notarealsignguy]

I find it hard to figure in slack time between jobs or through supply hiccups. You need the good times to cover the bad and that is tough to anticipate.

 

[rydods]

Just ran hourly rate calculator from Firesprint and it looks like I should be charging a shop rate of a little over $400 per hour. My current shop rate is around $100. What am I doing wrong, or am I filling it our right and losing money? Is this shop rate for Designers, Production and installers? We are a sole proprietor and I have calculated all expenses personal and business.

 

[FireSprint.com]

Just ran hourly rate calculator from Firesprint and it looks like I should be charging a shop rate of a little over $400 per hour. My current shop rate is around $100. What am I doing wrong, or am I filling it our right and losing money? Is this shop rate for Designers, Production and installers? We are a sole proprietor and I have calculated all expenses personal and business.

That seems a bit high. How many people work full time and how many people work part time at you shop?

 

[FireSprint.com]

Just ran hourly rate calculator from Firesprint and it looks like I should be charging a shop rate of a little over $400 per hour. My current shop rate is around $100. What am I doing wrong, or am I filling it our right and losing money? Is this shop rate for Designers, Production and installers? We are a sole proprietor and I have calculated all expenses personal and business.

That seems a bit high. How many people work full time and how many people work part time at your shop?

 

[FireSprint.com]

Just ran hourly rate calculator from Firesprint and it looks like I should be charging a shop rate of a little over $400 per hour. My current shop rate is around $100. What am I doing wrong, or am I filling it our right and losing money? Is this shop rate for Designers, Production and installers? We are a sole proprietor and I have calculated all expenses personal and business.

That seems a bit high. How many people work full time and how many people work part time at your shop?

 

[FireSprint.com]

Just ran hourly rate calculator from Firesprint and it looks like I should be charging a shop rate of a little over $400 per hour. My current shop rate is around $100. What am I doing wrong, or am I filling it our right and losing money? Is this shop rate for Designers, Production and installers? We are a sole proprietor and I have calculated all expenses personal and business.

That seems a bit high. How many people work full time and how many people work part time at your shop?

 

[rydods]

That seems a bit high. How many people work full time and how many people work part time at your shop?

4 full time employees and me (owner full time). That's it.

 

[FireSprint.com]

Just ran hourly rate calculator from Firesprint and it looks like I should be charging a shop rate of a little over $400 per hour. My current shop rate is around $100. What am I doing wrong, or am I filling it our right and losing money? Is this shop rate for Designers, Production and installers? We are a sole proprietor and I have calculated all expenses personal and business.

That seems a bit high. How many people work full time and how many people work part time at your shop?

4 full time employees and me (owner full time). That's it.

So that’s 5 workers. Maybe 20-30 billable hours per day?

 

[rydods]

That seems a bit high. How many people work full time and how many people work part time at your shop?

So that’s 5 workers. Maybe 20-30 billable hours per day?

Ok. This is where I get confused. On billable hours. Here is our breakdown

Production person - sends to print, runs printers, laminators, weeding and taping, cleans up the shop more than the rest of us
Graphic Designer - Meets with customers if I'm busy, helps set up jobs if I'm busy, Graphic design and helps production put larger rolls on machines
Installer assistant - Helps with production when needed (weeding/taping) Helps with sign installations and application of material to vehicles/signs, painting and small construction work
Head installer- Helps with production if we're backed up, installs for signs and application to vehicles and signs. Services signs (sometimes bucket truck), painting and construction
Me - organize our workflow each morning, meets with customers (phone/text/email/in person), sets up jobs for designer and production person, helps with graphic designs if we're backed up, helps trouble shoot machines, helps with production if backed up, helps with installs if they are large or time consuming. (basically try to spread myself around to help)

 

[FireSprint.com]

So the art here is guessing at the number of average billable hours per month you’re going to have. This is a business decision you just need to make. If I was the owner of your shop, I’d probably figure about 25 hours per day at 20 days a month. That’s 500.

Then I’d take that and divide it into your fixed expenses, like loan payments, base full time salaries, rent, memberships, insurance, and utilities. Anything you have to pay every month whether you sell a job or not.

Let’s say you had $35,000 in monthly expenses and labor.

$35,000/500 = $70 per hour

Add $30 in hourly profit, you’d be at $100 per hour for billable hours to your client.

 

[rydods]

So the art here is guessing at the number of average billable hours per month you’re going to have. This is a business decision you just need to make. If I was the owner of your shop, I’d probably figure about 25 hours per day at 20 days a month. That’s 500.

Then I’d take that and divide it into your fixed expenses, like loan payments, base full time salaries, rent, memberships, insurance, and utilities. Anything you have to pay every month whether you sell a job or not.

Let’s say you had $35,000 in monthly expenses and labor.

$35,000/500 = $70 per hour

Add $30 in hourly profit, you’d be at $100 per hour for billable hours to your client.

Thank you! This has been extremely helpful and I appreciate it. That puts things into prospective a bit more. I've used estimate sign software and used the hourly rate wizard to "roughly" calculate around an $85 hourly shop rate. However, I've never been entirely certain that this is correct and as I've raised wages, added employees and our other expenses have increased with additional loans and so on, I've started to question this rate and am trying to fully understand it.

It didn't help that we lost a large customer a year ago and I'm noticing our business account dwindling down slowly. I believe some of this has to do with our accounts receivables being consistently around 20,000 to 30,000 on average. Estimates, Invoicing and statements are also my responsibility and completing a job and having a satisfying customer has been my higher priority. Statements, phone calls and banging on doors for payment, not so much.

 

[kcollinsdesign]

(total income - non-labor expenses) divided by hours worked.