Shop Rate

[SignStudent]

So I've already established my shop rate to be $45/hr. Right now I have no employees but I'll be hiring someone pretty soon and I'm wondering exactly how this will affect my shop rate. That's based on putting in 25 billable hours per week.

Hiring said employee is going to cost me about another $12/hr. Now comes the part I'm confused about. Say she puts in 25 billable hours herself, how exactly would my shop rate be affected? Does it just go up to $57, or does it actually go down to half of that ($28.50) because twice the people means twice the billable hours?

I hope this makes sense lol.

Edit: Crap I just realized if her billable hours = 25 but I'm paying her for 40 that means she'd cost $19.20 per billable hour making it a shop rate of $64.20 ($32.10??).

 

[ova]

Are you paying her under the table? When you hire an employee, you have to figure in workmens comp, SS, maybe insurance, and the list goes on. It's not just their wages you have to acount for. Make sure you do your homework.

Dave

 

[SignStudent]

Are you paying her under the table? When you hire an employee, you have to figure in workmens comp, SS, maybe insurance, and the list goes on. It's not just their wages you have to acount for. Make sure you do your homework.

Dave

Nah, not under the table. I actually would be paying her $10 per hr, I figured $12 would cover that stuff. Am I right or do you think it would be more?

 

[ova]

You better hire an accountant or at least consult one. I believe workmen's comp and SS is a % of gross pay.

Better yet, do a search on this site and you'll put yourself to sleep reading all that's been posted on this subject. People here have been doing this longer than me and have been very helpful to many.


Dave

 

[James Burke]

I actually would be paying her $10 per hr, I figured $12 would cover that stuff. Am I right or do you think it would be more?

I think you'll be looking at more than this...better check with an accountant asap.

 

[Fred Weiss]

My view is that the helper's cost has no effect on your shop rate if you have figured it correctly and arrived at $45. I say this because you would have to have virtually no overhead and and very modest income requirements/goals to be able to come out very well at that rate. I know our rate was $65 an hour ten years ago and is currently $75. Many sign companies use a figure of $100K per employee as a benchmark. 25 hours x 52 weeks = 1300 billable hours. $100,000 / 1300 billable hours = $76.92 shop rate.

In general terms, a helper should tend to offset and reduce your shop rate providing there are enough billable hours that can be given to the helper. Since he or she costs less than you do (assuming you are taking a proper salary), and assuming you can now bill 50 hours a week (25 to the helper and 25 to you) then you now have doubled your gross return on labor with no more increase to your overhead than the cost of the helper which should be total pay plus 20% to 30% for benefits.

As per the other comments, shop rate has been covered in more than a little depth. Most of that content is in the premium forum archives and is only available to premium subscribers.

 

[Mosh]

You pay someone $10 an hour is going to cost you around $20 an hour with taxes and insurance, and employees never work as hard as the owner does. Keep that in mind.
Even a small shop should be getting $60-$75 an hour.