He may be good at math, and have a sharp pencil both, but shop rate depends on a lot of things. One of the most important is the area he"s in. For instance if I moved to SC I could charge a little less simply because fuel is cheaper, land prices are cheaper, taxes are lower, etc. In other words the basic overhead costs are less so you can charge less. Right along with that are other factors like how many employees he has and how much he pays them. Think about it like this. I work alone and charge $65 an hour to insure the bills get paid. Now if I had one more guy working for me I could, theoretically, charge $55 per hour and still make the same profit to pay the bills. I could do this because while I am working and making $55, I"ve got an employee also working and making $55 for me. Out of his $55 I pay him $25 an hour, cover his benefits for another $20 per hour, and wind up with $10 left over going in my pocket. Ultimately that makes me bringing in a total of $65 an hour -vs- the $65 I was charging just for myself. The problem with this is that when my employee is standing around with no work to do I"ve still got to pay him his $25 an hour, plus benefits so, basically I"m loosing $45 an hour that I"ve got to recoupe somehow. The only way to do this is to charge the regular $65 an hour all the time so there is "extra" money, to be put in reserve, to cover the times when work isn"t coming in.
Ultimately we all charge what we need to to stay in business in the area we are and under the conditions conditions we have to work under.
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Today's Featured Article - Madison's County - by Anthony West. Philip Madison has been a good friend of mine for quite some time. He has patiently suffered my incessant chit chat on the subject of tractors for longer than I care to remember, and on many occasions he has put himself out, dropped what ever it was he was doing, to come and lend a hand cranking handles, or loading a find onto a trailer. Although he himself has never actually owned or restored a tractor, he was always enthusiastic and always around helping with other peoples projects.
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