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Hourly Charge

Susan May

Gone.
In response to another thread, I started this one...

In our store, our hourly rate ($44/hour) is on our price chart. We use this rate for pricing odd things like, object mounting, or large things, like 32X40 Needlepoint blocking. If the job is out of the ordinary, it gets a time charge, plus supplies. I quote an amount of time, then actually time myself. If the time is less, the customer gets a break, but if the time is more,I learn a lesson.

On my price chart I have a time estimation column for tacking down a crocheted doily, it is a good basis for timing anything that I do. You have to know your abilities, and how fast you work. I often time my work, so I will have a good idea how long odd things may take.

(Bob, I know you are going to tell me that my price per hour should be $45, but $44 divides evenly in to $11/ 15 minutes.)


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Sue May :)
"You want it when?!?!?"
 
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Bob Carter

SPFG, Supreme Picture Framing God
Sue-Actually, I would've gone with $60/hr or $1/minute. But as Mike said (and we do also)We mentally calculate what the time needed and then charge accordingly to the complexity and what I think it's worth. The per hour charge is not always fixed.

Mike asked if he thought it was a problem since he doesn't have the rate posted. My response is no, it's not a problem. As a consumer, don't like signs like that. But how does everyone else feel about posting a rate sign? I think it sends a negative impression and reinforces the impression that all of us are expensive. Anybody post their rates, and if so, any feedback?

Thanks for setting up a separate thread, Sue. It needs it's own attention.
 

Janet

True Grumbler
After explaining to my customer all the work that will be involved in completing their piece such as a shadowbox or getting that needlework precisely centered, then I let them know that my hourly rate is $45. I don't think a sign should be posted. My hourly rate on another job might be a little higher or a little lower, depending on the job.

Sign, sign, everywhere a sign...blocking out the scenery...



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Rob Markoff

PFG, Picture Framing God
Susan, Janet, et all-

How did you arrive at your hourly rate?

If you have employees, what do you pay them on average per hour?

If you pay an employee $10 per hour, what is your actual cost?
 

rosetl

CGF II, Certified Grumble Framer Level 2
Our shop rate is $50 per hour. However, it is rarely ever used as we do attempt to set up our computer system to estimate time as well as materials in the pricing structure. Though I may actually "watch the clock" on my sewing jobs (Like big rugs--one where I often add in at least some hourly), I don't increase it to the client. I use the data to make better estimates....and a guideline for scheduling & basic pricing.

A work order is treated much like a contract -- the agreement as to the costing of the job, without actual costs or hours figured in or changed.

Occasionally I have sold "billable hours" and taken in work by the hour. I've found it better to estimate and "contract" the job as the customer feels uneasy with the "open contract"---or at least have a maximum price on the job. This is very rare. But, in this business we've been asked for assistance on the wildest of things!

TL - Studio Frame
 
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Frank

Guest
Boy...I really hate to get into this as it could go on forever but I have listened to so many people with questions on this subject I just have to jump in here.
In the "cost plus" method of pricing that manufacturers often use it is imperative that your hourly charge reflect all of your costs. Cost plus pricing is basicly:
Cost of Goods + Labor and Overhead + Profit = Selling Price.
Cost of goods should include all wastage, shipping and anything else that affects your material cost. Labor and Overhead is expressed as an hourly charge. To establish an accurate hourly charge total up all of your expenses for a year including all your employee wages (yes, even yours), all store overhead, cost of any errors you had, etc. You can even add the amount you would like to have for any expansions or equipment you wish to buy (capitol improvements). Some shops add in the amount of profit they would like to make in a year here instead of later. Anyway you take this entire huge amount and divide it by the number of PRODUCTION hours in a year. Note this is production hours NOT shop hours. Waiting on customers, ordering, being on the phone, doing paperwork and such is not production time. Only count the time actually spent framing. As far as employees go, 5-6 hours of production out of a typical employee per day is common. Less if they are expected to wait on customers. Owners usually spend less time producing (if any) due to constant interuptions.This should give you a real hourly charge.
When bidding a large job it is common to add up all the materials including wastage and shipping, figure the amount of time the job will take times your hourly charge and (if you added in your profit to your hourly charge) you should be profitable. If you didn't add in your profit to your hourly charge you could tack it on after. How do you know how much time to charge for? Use a stopwatch on your employees (they really hate this!!) and time how long it takes to do each step in the framing, i.e.: cutting a mat, chopping a frame, assembling a frame, fitting the piece, etc. This is called "doing a time study". If you do this on a number of projects you can establish very good averages on the time it takes to do each step in YOUR shop.
In doing a basic pricing guide for your shop the above formula and times will work for every item. It can get pretty intense figuring the time and material differences between an 8x10 and a 24x36 but it can be done (MS Excel is a wonderful thing!).
The only problem I have with Cost Plus pricing is that it doesn't allow for differences in perceived value. In other words there isn't much difference in the selling price between an inexpensive moulding and a high end moulding but there is a big difference in how it looks. One way of handling this is to establish a material cost based on perceived value instead of actual costs. That also contributes to your bottom line. Cool, huh?
Sorry to go on so long, hope this helps...
Frank
 

rosetl

CGF II, Certified Grumble Framer Level 2
And, to answer Rob's question. For me, its the amount existing labor needs to produce (not sell, actually produce, make, do, whatever) to handle overhead, not including any supplies or equipment.....and about what it seems the market will bear.

Theoretically, if we all we did was labor one month for every hour assigned to production personnel, we could pay the rent, etc. Therefore, we need to sell mats and framing to make a profit in my shop or not be able to afford helping someone to their car!

I should add --I believe my rent is low for the area but high for most frame shops.

And, $10 an hour costs just about $12.

TL - Studio Frame
 

Susan May

Gone.
I have just spent WAY TOO LONG looking for a thread that has dissapeared.

Rob, you asked how we got our hourly rate, and if I could find the lost thread I would have quoted it. There was a thread about hourly rates, and how to compute one. We looked at that thread and adjusted our old rate accordingly. Our old rate was $36/hour. I will watch my customers, and if I see no problems, I will raise my prices again.
You also asked if we had employees... right now the only people we have are my Mom, and me. But, if I had employees, it would not change the price. Your prices should always assume that the most expensive person is working on the job. (If you priced for the least expensive person, Framer Murphy would make the person call in sick.)

I will look and see if I printed out the old thread.

Bob, your right... $60/per hour sounds like a better price to me.
But I have to do price changes in smaller jumps than that.

As for posting the charge on a sign? No. My prices are in a book that I keep below my counter. I have had to move it out of customer reach, because someone acctually stole one of my price charts once. (They took a whole notebook!)



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Sue May :)
"You want it when?!?!?"
 

Bob Carter

SPFG, Supreme Picture Framing God
While most of the posts are helpful, I would caution anyone of using too mechanical method of pricing calculations. Maybe if we ran Kathie Lee type sweat shops in Guatemala, we could more definetly determine these "true costs". But we all have far too many variables. I agree with Frank's assertion to find an average cost of doing business, and the simplest way is to get out your year end P/L or statement of income. Your total expenses are neatly totaled on the bottom. This may give you a more accurate idea of your "break even" points, but no way should that detemine what you should charge for anything. That is a decision you have to make, not calculate. And the only way to do that effectively is know your market and shop the competition. Be careful of taking the easy way out, you might be leaving money on the table.

And as you become more familiar and comfortable with this type of analysis, the easier it becomes. But don't leave such an important decision to math alone. It's only one component.
 

Susan May

Gone.
An interesting thought Bob, But don't you think that the math is a good place to start?

I understand your reasons for not being "mechanical", but you also have to have some sort of set price. I certainly would not take my car to a garage that changes their labor price to fit their mood, why would I expect any different of my customers.


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Sue May :)
"You want it when?!?!?"
 

Bob Carter

SPFG, Supreme Picture Framing God
Sue-Absolutely, you should have your prices determined. But my point was math was only one component. If that's a comfortable starting point, use it. Just don't let that be the sole determining factor for the reasons listed above.
 

Lance E

Member
Setting the hourly rate is possibly one of the hardest and most confusing decisions there is to make. All I can say is be aware of the surrounding market, in all aspects of business, also know your costs (including future increases). Let these numbers rattle around in your head and something should go "ping", theres your answer.
In other words, there is no magic formula.

Always charge your labour out as accuratly as possible, computers make sure you remain consistant.
 
A

Audrey

Guest
I think the only people who should have posted rate signs are fast food restaurants and delis. LOL In other words, rate signs are only a good thing if the prices on them are unexpectedly cheap.

With something as complicated as custom framing, or custom work of any kind, your walls and your "atmosphere" are going to dictate how people see your prices; I've heard many people say, "Oh, I never went in there--it LOOKED expensive," or "Oh, I'd never take something nice there--they look cheap."

So they've already sized you up when they walk in the door; it's up to you and your design/expertise to help them see why you're charging them the eventual price you arrive at. I'd hate to lose a customer because they see "$60 hour labor charge" over my sample wall, and assume that it applies to everything; most framers know that it only applies to labor-intensive work, but the average consumer has no idea.

Besides, if it's not posted anywhere, you have no one and nothing to argue with you should you raise it.


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I don't care what color your sofa is.
 

Janet

True Grumbler
R Markoff:

In answer to your questions:

1) I "shopped" other frame shops and listened to my friends who think our work is much better than our immediate competition.

2)Just Charles & myself with a high school helper two afternoons per week. She doesn't actually do any framing. $7.50/hr for her. Keep in mind that she works 3 hrs. two days a week and basically for cleaning glass, running errands, delivery to customers and yes, takes care of some personal things that I sometimes don't have time to do. She's happy as we just gave her a 50 cents per hour raise back in January. (Her last job was for one of her own family members at a health club and they paid her $6/hr. after 2 years of p/t work). Our shop is within a mile of her house and two blocks from the high school.


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How cheap do you want it to look??
 

Janet

True Grumbler
R Markoff:

In answer to your questions:

1) I "shopped" other frame shops and listened to my friends who think our work is much better than our immediate competition.

2)Just Charles & myself with a high school helper two afternoons per week. She doesn't actually do any framing. $7.50/hr for her. Keep in mind that she works 3 hrs. two days a week and basically for cleaning glass, running errands, delivery to customers and yes, takes care of some personal things that I sometimes don't have time to do. She's happy as we just gave her a 50 cents per hour raise back in January. (Her last job was for one of her own family members at a health club and they paid her $6/hr. after 2 years of p/t work). Our shop is within a mile of her house and two blocks from the high school.


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How cheap do you want it to look??
 

Janet

True Grumbler
R Markoff:

Must've hit post reply once too many times. Tried to delete the 2nd one, but only "forum leaders" are allowed to delete.

Janet

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