Maintenance man charging percentage of tool set value?

32 Replies

My fiancée and I just bought our first duplex that is already occupied. We hired a friend who does maintenance for a large real estate management company. He has recently started doing personal jobs on the side but is new to the business part of it.

He went to a unit and replaced an outdated thermostat, fixed a light fixture that was hanging, and sprayed WD-40 into the units entrance lock because it was giving the tenants some trouble.

When we got the invoice, he charged for 45 minutes of labor but also charged an extra $30 for additional fees and had no further description. When politely asked to breakdown what made up the additional fees he said it covers mileage, any supplies he has to use and 2% of his tool set value.

I am wondering if that makes sense. Especially paying for his tool set value. I do not see anything more than a drill being needed. Shouldn’t the expense of needing to periodically replace tools be put into their hourly cost? What are others experiences with hiring out maintenance? Thanks!

Yes you should pay for supplies he bought or used (eg if he replaced a lock), but not for the tools he used to do it. If he charges you for 20% of the price of a drill and does that to 5 people, he's paid for his drill, the next 5 people he's making profit off the tool.

I would not hire him again.  

I agree with Theresa- supplies specific to that job, sure, but his tools should be covered by his hourly rate and his mileage is a cost of doing business and he can deduct that on his taxes. He can't charge you mileage and get the deduction, either. 

I would have simply charged you at least 1/2 hour travel time. You can expect a guy to travel across town to do 1/2 hour of work and just charge 1/2 his hourly rate. Would you work and travel around all day to only get paid for 4 hours of work  at 8 different sites?  The % of tool costs is funky but he just straight up charge for travel. 

Originally posted by @Jourdain Francine :

My fiancée and I just bought our first duplex that is already occupied. We hired a friend who does maintenance for a large real estate management company. He has recently started doing personal jobs on the side but is new to the business part of it.

He went to a unit and replaced an outdated thermostat, fixed a light fixture that was hanging, and sprayed WD-40 into the units entrance lock because it was giving the tenants some trouble.

When we got the invoice, he charged for 45 minutes of labor but also charged an extra $30 for additional fees and had no further description. When politely asked to breakdown what made up the additional fees he said it covers mileage, any supplies he has to use and 2% of his tool set value.

I am wondering if that makes sense. Especially paying for his tool set value. I do not see anything more than a drill being needed. Shouldn’t the expense of needing to periodically replace tools be put into their hourly cost? What are others experiences with hiring out maintenance? Thanks!



@Jourdain Francine:

Jourdain,

A lot of techs charge a trade fee, which means just for showing up. As an example, I had a problem with an AC unit the other day. My AC handyman charges $80 just to show up. Then he tells me what the problem is if he can find it quickly and we go from there.

If he only charged you $20 for "Tools" but no trade fee, then I would be fine with it. If he charged you the trade fee, the supplies, the "Tool" fee, and all that crap, then I would say you have 2 options. 

1. Explain that what he is charging is not right and have him drop his tool fee. This is assuming he is good at his job but maybe doesnt understand the business side.

2. Fire him and find a new guy.

Good luck,

Matt

 

@Jourdain Francine I do not like anything about how he charged you. A flat hourly rate or something to that effect makes more sense to me. I also don't hire plumbers, electricians or hvac techs that do this type of thing (trip fee, service fee, etc).

He can do anything he wants ( as long as there are no laws dictating his billing).   But the norm is a call/service fee of x and then any labor/parts on top of that. 

The mileage can be charged as he wants, but IMO if he charges a service call that should encompass that too. 

Tool will be depreciated so charging clients for tool use is double dipping, but my guess is he does not know and will figure it out as he goes. 


A more accurate description of the charge would be "overheads". There are always indirect overhead costs (for example, I pay about $15k/yr for worker's compensation insurance as a general contractor), as well as consumable items (cleaning supplies, screws, nuts, bolts, WD-40, you name it), These things add up when you do property maintenance at any volume, and if you don't recoup these costs, you operate at a loss and quickly go out of business.

I agree it was a poorly worded response from your handyman. But the real question is was his charge fair and reasonable? Would you prefer to pay $250 or so to an HVAC technician or an electrician who didn't charge you for "tools"?

@Jourdain Francine regardless of how he breaks down the cost, look at the job cost. His tools are paid for one way or another. Whether he buries it in the hourly cost or as part of his overhead. It is pretty common to have a "trip charge" like this with any job. On small jobs in particular it is important, because the time/effort to go over for a 45 minute job is the same as an 8 hour job. That is why the best strategy is to have a punch list so you maximize their time on site.

Others that are saying "don't hire him" have no idea what they guy even charged you. Would you rather be charged $100 per hour or $20 per hour plus a $30 trip charge? That is my point is look at the job cost rather than getting hung up on a few dollars for his overhead. 

What was totally job cost, like $70? Anyone would bills 45 mins and less than 1 hour of time is a nice/honest and probably poorly paid guy. That likely didn’t include drive time and you got that for free. Pay the man.

@Jourdain Francine

Look at the overall cost. What he describes the charge as is six of one or half dozen the other. It sounds like he is just starting out as running his own side business and might be carrying the same billing practices as the company he works for. If you got a fair deal and he is really your friend, might you suggest to him that he should change how he bills. I’m all for transparency but “2% of tools” has a very weird ring to it. My immediate thought...does your drill break after 50 days?

@Jourdain Francine

Overhead is overhead no matter how you chop it up. Compare the whole cost with competition and don’t loose sleep over line items. Dude could be the best deal around!

@Jourdain Francine

Honestly, it sounds reasonable to me, although I’m curious to know what his hourly rate was.

I was ready to criticise the contractor when I read your headline but then upon finding out he charged only 2% of his tool value, it seems acceptable enough. I was expecting to read 20% etc.

I have started a contracting company recently and the overhead costs are enormous. The multiples insurances are a killer, plus the other expenses for tools and work attire really adds up.

Generally these costs are factored into the hourly rate, hence why I’m curious to know what his hourly charge actually was.

My only criticism I have about your contractor is the non disclosure before coming. I always like to inform people of charges in advance, so there’s no surprises. He should have said before coming that he charges X amount per hour, plus Y amount for mileage and tool usage.

Originally posted by @Jourdain Francine :

My fiancée and I just bought our first duplex that is already occupied. We hired a friend who does maintenance for a large real estate management company. He has recently started doing personal jobs on the side but is new to the business part of it.

He went to a unit and replaced an outdated thermostat, fixed a light fixture that was hanging, and sprayed WD-40 into the units entrance lock because it was giving the tenants some trouble.

When we got the invoice, he charged for 45 minutes of labor but also charged an extra $30 for additional fees and had no further description. When politely asked to breakdown what made up the additional fees he said it covers mileage, any supplies he has to use and 2% of his tool set value.

I am wondering if that makes sense. Especially paying for his tool set value. I do not see anything more than a drill being needed. Shouldn’t the expense of needing to periodically replace tools be put into their hourly cost? What are others experiences with hiring out maintenance? Thanks!

 Yeah, my initial thinking was this was baloney.  But, others do have good points.  Perhaps you can help your friend out with a better way to present his billing and to tell people up front what his charges are.

I looked into hiring a handyman to just help me hang a light fixture, because it was going to be really difficult to do myself.  Anybody decent, willing to come do just a small job had a minimum 2 hour charge.  It wasn't worth it to me, so I figured out how to do it myself.  But, I can see why they do it.  It would be really hard to schedule your day for small jobs, and make a profit.  

So, it sounds like it was a fair overall bill, but he needs help in how to present his billing to people.  He needs some marketing help.

It's really hard to do business with friends.  I avoid it.  Good friends are hard to find and harder to keep.

@Jourdain Francine

Are you insistent that your help works at a loss?

I’m in the trades and work with handymen, electricians, plumbers, HVAC techs, etc.

If you actually expressed offense to what he billed you (which was a loss for him), I promise you, you’ll be at the bottom of his priority list moving forward.

When I pay my guys to do side work. Plumbers and electricians get $100 per hour cash. Techs and Carpenters get $50 an hour. And I pay for all materials. I’m in Greater Boston, so you can adjust my numbers down a bit. But not by that much.

If you’re gonna be long in real estate, you’ll need them, and more are retiring than entering.

@Sue K. you might try Taskrabbit.  These are folks that do small jobs and it can be a better way to do the type of job you described 

This looks very much like bills I would see from large, well organized and efficient contractors. On development proposals that large contractors bid these are the things that need to be accounted for, and they way they do so and enable themselves to low bid while still being profitable is to bid extremely accurately. If they bid $50/hr and 18% overhead then they could miss out on profitable jobs, and get unprofitable jobs...such as. If there is a project next door to another job they already are doing, they can complete it with no equipment drop, so they should bid lower...but how much lower? By bidding accurate line items they can effectively bid low while still making money.  

My experience in dealing with home owners as a consultant is they 'think' a fixed fee proposal is better, without understanding that a job is unique and can often be done cheaper if they can bill individual items accurately. Now he could invoice those items in the background and just give you the final total, but if asked for the breakdown and he gives you that you can't beat him up for how he arrived at his number...

I would pay him if in the total bill is "acceptable": he fixed your problem, gladly it was an easy fix!  

I would look at it in a different angle:

- was it responsive and came quick/ call you back quickly?

- did he fix the job quickly and on the first time or did he had to come back several times to figure it out and fix the problem?

- do you think he would come quickly if you had another problem that you needed to fix?  

Moving forward: ask how they bill you ahead of time! Fix fee to get to the property or service call fee? hourly? is he insured and licensed? does he have a business license? Can he supply you with those documents? What if the problem does not get fix the first time, will he come back, how quickly and charges to come back the second time? Does he take a % on the parts? what does he offer as a warranty on his work and the parts used?

I am usually looking for not the cheaper but not the highest either who answers all those questions... when you find someone that you do not have to micromanage, sometimes paying just a tad more is worth for your sanity... it depends on what you are seeking... :) 

HIM: small time contractor who is being punished for his honesty, giving you a below market total price and breaking down exactly how much it costs: labor and the cost of owning and using tools to cover scope of his work in this industry. In order to serve you, he needs to have a collection of tools, and recoup the total cost of the tools from all clients. You can alternatively go buy the tools yourself and give them to him, but of course that would take so much longer. YOU: cheap, problematic client, insistent to rob your contractor. You realize that billing and invoicing takes ADDITIONAL time for him which should be factored into your price, but currently you are getting that cost of providing you the service for free? 

Originally posted by @Greg Ghunt :

HIM: small time contractor who is being punished for his honesty, giving you a below market total price and breaking down exactly how much it costs: labor and the cost of owning and using tools to cover scope of his work in this industry. In order to serve you, he needs to have a collection of tools, and recoup the total cost of the tools from all clients. You can alternatively go buy the tools yourself and give them to him, but of course that would take so much longer. YOU: cheap, problematic client, insistent to rob your contractor. You realize that billing and invoicing takes ADDITIONAL time for him which should be factored into your price, but currently you are getting that cost of providing you the service for free? 

While I appreciate you taking the time to reply, your response is a bit immature when you do not have a full understanding of the situation. He is a friend who is trying to figure out how to develop a business. I am working with him as he works on building more experience and credentials. I am certainly not getting anything for free and paid him before I even posted this thread. We just bought our first home/duplex and are simply looking for advice on how others usually get billed by their maintenance service. Again, thank you for taking the time out of your day to put so much time and effort into your response.