Charging Hourly Rates Vs. Giving an Estimate: What Should Your Handyman Business Do?



Hourly Rate or Project Estimate? What Should Your Handyman Business Do?

For contractors and handyman business owners, there are a couple of main options when it comes to pricing your services. You can charge an hourly rate or give customers an estimate for the project as a whole. There are pros and cons to both options, so you need to carefully consider which option is best for your business early on.



Hourly Rate or Project Estimate?

Chuck Solomon is an experienced handyman, business consultant and author of Building Your Successful Handyman Business. He recently shared some insights about setting rates in a phone conversation with Small Business Trends. Here are some things to think about.

Why You Should Give an Estimate

It Rewards Efficiency

Though Solomon discusses the pros and cons of both options with his consulting clients, he did choose to give customers estimates when he ran his own handyman business. He believes for skilled tradespeople who have a lot of experience and are able to work efficiently, this type of model can help them serve more customers and still get paid for the value and quality of work they provide. So basically, if you finish a job early, you won’t be punished for doing so.

He explains, “Efficiency is the enemy of getting paid by the hour. If you can do a whole job in an hour, then great. But if you’re charging by the hour then you might not be getting the full value of your work and your experience.”

It Takes All Parts of a Project into Account

Offering an overall estimate can offer clients a more big-picture view of the costs involved in a project. You might break down the cost of labor and supplies, but you can still give them an accurate total including all parts of a project, which can potentially make it easier for them to make a decision quickly.

It Guarantees a Minimum Value

Driving to a customer’s house, completing a consultation, going to purchase the necessary supplies, and communicating back and forth with them can all take up a lot of time for contractors. And all this time isn’t always necessarily billable to the client when charging by the hour. However, when you’re giving customers an estimate, you can ensure it meets the minimum amount you’d require in order to get some value from the job.





For example, Solomon says in his business he would only do jobs with a minimum value of $125. But in some cases, he could convince clients to get a few other small jobs taken care of around their homes in order to meet the limit, since he was there already anyway.

It Allows You to Be More Profitable

Overall, the biggest benefit of offering estimates rather than an hourly rate is it generally leads to more profits, according to Solomon. With this model, the more efficiently you work, the more money you’re able to make. So over time as you hone your skills and get better at working quickly, you can earn more and more money for your work.

Why You Should Charge an Hourly Rate

It’s Easier

Solomon believes charging an hourly rate and giving estimates are actually fairly similar strategies. But charging for labor on an hourly basis can actually seem simpler to some people. It ultimately comes down to personal preference. But if an hourly rate seems easier for you and your customers to digest, it can certainly work for handyman businesses.

It Allows You to Give Detailed Estimates to Customers

Even when giving estimates, you still should give every customer a general idea of how long the project will likely take. However, some customers might like a more specific breakdown of the labor costs. And providing an hourly rate offers this.

It Ensures You’ll Get Paid for Extra Work

In the cases where a project takes a bit longer than you originally thought, charging an hourly rate gives you a bit of insurance. You can still earn money by doing extra work, whereas if you give a total estimate upfront, you might be stuck doing additional work for no extra money.





It Gives You the Opportunity to Explain Your Value

Since hourly rates are fairly easy for customers to understand, it could lead to some questions. However, Solomon believes this simply presents business owners with an opportunity to explain how their experience and skills make the rate worth it.

Solomon says, “At some point, you have to just say, ‘This is what I charge and why it’s worth it.’ Then let them make their decision and walk away if they decide to.”

Photo via Shutterstock



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Annie Pilon


Annie Pilon Annie Pilon is a Senior Staff Writer for Small Business Trends, covering entrepreneur profiles, interviews, feature stories, community news and in-depth, expert-based guides. When she’s not writing she can be found on her personal blog Wattlebird, and exploring all that her home state of Michigan has to offer.

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