Mike,

Charge what you want, but you are making the big mistake that many make, that end up failing. "Under estimating costs."

Even less complicated and less challenging field service professions or even carry-in commodity shops charge more than that, (Your heating/AC guy, Mechanic, Landscaper, Exterminator, CompUSA, etc), there is a reason.

Its better to OVERCHARGE, and then have the margin to stand behind, warrant, and discount your work as needed thereafter. You get more perceived value by doing that. When you set your rates high, you establish a higher worth of your time, and then when you are required to discount, a higher value is put on it by the clients. Charging $40, is admission that you are only worth $40, and that means services delivered perfectly and warranted in the customer's mind.

What people under estimate most is the cost of Recalls and Warrantee. You may charge someone for 1 hour ($40/hr) with little travel costs incurred when scheduled conveniently. But then if there is a recall, to go back it might not be efficient, possibly a special trip, and ends up being 3 hours of your time for free, now making your labor rate $10/hr. When you charge for your recalls, and they will happen, it looks MUCH worse to the customer, than just charging a higher rate in the first place.

Then problem two is scaling it. Business sure is easy when you are the only guy, can handle the work load yuorself, have free time, work just comes in, calls forwarded to the cell phone, and you are in control of the quality. But as you grow you learn that Staff needs to be managed, and business needs to be sold, it does not sell itself, and you can't complete work and answer phones at the same time.

I can share some IBM statisitics for you (from my service management past life).... They stated that to pay for the salary of a single field service staff member, they allocated 400 computers supported per Field staff member. They stated for every Dollar paid to the Field tech, they had to bill 8 times that dollar, to cover all the overhead costs of doing the business, to be profitable. So if you want to pay yourself $20/hour, you need to charge $160 / hour. Trust that to be true, and then challenge yourself to figure out why and how they came up with that number 8X. Such as... accounting, invoicing, collections, service fees, warrantee, purchasing, finance, Profit for investors, overhead, travel/vehichle, management, training, benefits, R&D, communications, forms/material, utilities, and getting through the slow and tough times when guys are on salary and the phone aint ringing. It happens.

Its much harder to increase your rates after you have established yourself as a lower worth. For example, starting out, they get the top dog CEO for $40/hour. Then when you grow, you find your hired help is not as good, but you learn they need to bill more, for you t obe profitable. So now your trying to tell the customer that you need to charge them $60/hour for a less qualified technician. People Lose customers over this. Its also fun when you learned you paid your tech for 40 hours, but he only turned in 20hrs of invoices.

These comments are based on Field Service Repair for per insodent maintenance. This may not apply to long term technical staff placement. As the overhead costs are much different, when someone is just scheduled to show up on a scheduled basis for long periods, paid for straight time, regardless of quality of work, and no bill tracking.

I highly recommend that you do not sell services under market, by more than $5/hr less or so. Its not necessary, and in the long run it will come back to haunt you. Been there done that.

What you need to do is get the phone book and start calling, pretend to be a customer, and determine average market rate in your neighborhood. And don't do much less.

Tom DeReggi
RapidDSL & Wireless, Inc
IntAirNet- Fixed Wireless Broadband


----- Original Message ----- From: "Mike Hammett" <[EMAIL PROTECTED]>
To: "WISPA General List" <wireless@wispa.org>
Sent: Wednesday, August 15, 2007 6:01 PM
Subject: Re: [WISPA] Managed IT Service


Currently it is only myself, so I pocket 100% of it. I'll expand upon my thoughts not to defend my price, but to say where I'm coming from in an attempt to figure out if my current system won't scale or if everyone else is just screwing their customers.

That said, I don't see how all of those things really add up to that much money. At $20/hour, that's just under $42k/year for a full time employee. Make that just over $43k after you figure in unemployment, social security, and Medicare. I only pay income tax on what I profit, so that's not part of the equation.

Office space and use is pretty cheap. $250 for the whole office, I have options on other office spaces in the building.

Most any problem can be quickly diagnosed and repaired, being able to include travel time within the 1 hour minimum. Otherwise, the $15/hour I make for beyond the included 3 hours surely pays for the $5 - $10 in mileage they would use (until I have my own vehicles).

Everything is manual at the moment because there just isn't the volume, but I can't see the minute I spend entering into QuickBooks taking that much time or money to bill them, pay the employee, etc.

There haven't been many things that I've encountered that I haven't been able to fix quickly. I know at least one other person that is about as smart as myself and they'd be tickled pink with $10/hour. I greatly prefer people that have gained their knowledge outside of formal education. After going through college, I would have only hired 2 people in my class of 30 (myself included) due to information absorption and retention rates. College just trains you to expect more than what you're really worth.

etc.

If we're going on 100 billable hours of work a month, that's 33 customers, assuming they actually need my services that month. I've only been doing this a couple months, but I really don't think I'll be needed much. They're paying for something they may not utilize, but have on reserve. 33 customers would be almost $60k/year. That leaves me $15k/year to cover all of those other, misc expenses. If I can't do that, I have bigger problems to deal with.

Maybe I'll kick up my rates 25% or so, but $80 or $120/hour, IMNHO is just screwing the customer.


-----
Mike Hammett
Intelligent Computing Solutions
http://www.ics-il.com


----- Original Message ----- From: "Clint Ricker" <[EMAIL PROTECTED]>
To: "WISPA General List" <wireless@wispa.org>
Sent: Wednesday, August 15, 2007 4:30 PM
Subject: Re: [WISPA] Managed IT Service


I don't see any possible way that you're making any sort of actual profit on
this (or even really breaking even) at this rate, unless you've got some
redicuously cheap labor....

Consider this...
If you're doing $40 an hour, and you had a full time person billing 100% of the time (ie 168 hours per month), then you'll max out for that employee at about $80,000 of revenue....you then have to pay taxes, mileage, insurance,
etc...

Now, take into account that a single full time employee doing this full time
in reality will never do more than 100 billable hours a month...
This is from experience and even assumes that you're fairly streamlined in
terms of paperwork, supplies, travel routes, etc...

This means, at $40 per hour, you'll only pull in $48,000 per year in revenue
for that full time employee....assuming you have a streamlined operation.
There's no room in there to pay them, pay taxes, pay mileage, pay for their portion of office space (and other expense), pay for billing, pay for your
time in management, and so forth.

I'd double it as a starting point if you're in a rural market, triple if
you're urban, and probably more for people who aren't regular customers.
Still, a lot does depend on your market and your business model. Are your
employees knowledgeable?  Do they really know what they are doing on this
stuff, or are they just fumbling through...

Keep in mind, as well, that small business consulting is not too different from dealing with people in the home construction / repair industry--there are a lot of people who just walked off the farm, so to speak, and claim to
be in the business (no insult intended, and some of them do well).  They
aren't always the best in terms of quality, and they aren't always the best in terms of professionalism. Most businesses that have some sense pay more
to get better quality...in some sense, if you price yourself higher, you
price yourself into the good customers. You also give yourself the money to
do it well...

-Clint Ricker
Kentnis Technologies




On 8/15/07, Mike Hammett <[EMAIL PROTECTED]> wrote:

Does this sound fair to all parties?

My normal rate is $40/hour, with $80/hour for emergencies.

I charge $150/month to manage a business's network. This includes 3 hours
of support.  I also will VPN into the network and ensure that operating
systems, anti-virus, etc. are updated, which does not consume any
hours.  Additional support is available at $35/$70 per hour.


-----
Mike Hammett
Intelligent Computing Solutions
http://www.ics-il.com


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