XR - with those rates, you're either going to develop a following of devotees wanting to learn how to do it, or an angry mob of jealous engineers is going to come break in your door.

I've seen large firms with principal/partner level engineers billing out much less than that.

Also, the plumber has an investment in a lot of tools and equipment, as well as inventory in that truck. He's probably driving around in at least $250k of locked up capital. A good chunk of that $155 is servicing that (either paying on loans or as ROI).

Quote (Pham)

I've seen large firms with principal/partner level engineers billing out much less than that.

Also, the plumber has an investment in a lot of tools and equipment, as well as inventory in that truck. He's probably driving around in at least $250k of locked up capital. A good chunk of that $155 is servicing that (either paying on loans or as ROI).

My guess is most plumbers have less than 5k in tools - about the cost of my computer. A torch and a pex crimper suits about 90% of their needs. Inventory gets charged out with a markup so no issue there.
I have insurance expenses and the cost of an education and all the other expenses that are part of running a business.
There is a local company that charges $1,200 just to come out to a residential job - so my rates look pretty appealing!

Quote (XR250)

My guess is most plumbers have less than 5k in tools

Fair enough. The guys I use have panel vans loaded with lots of nice stuff - cameras for scoping, etc. - so that's where my number is coming from. But then, I don't call a plumber until I've exhausted my ability to do it myself - up to and including snaking drains, installing new toilets, and main trunk lines under the house. If I can't fix it, I need somebody with the nice stuff.

With a couple of very rare exceptions, $1200 is about my minimum for a job now.

Quote (pham)

With a couple of very rare exceptions, $1200 is about my minimum for a job now.

Most of my jobs fall in that range but I do a ton of 15-30 minute site visit and report for $675. I usually only have 1.5 hours in those with driving. Less if I can stack up 3 in a day near each other.

Billing rates depend on the market, and what the client is willing to pay. We can all sit around and sing the praises of QBS, but if the competition doesn't care, they will get all the work.

People do not always look at the quality when there is a significant difference in price.

XR250, $225/hour is excellent (for you), but when and for what kind of jobs/customers do you actually get to charge this rate? I would imagine if the job is more than 1-2 hours then small time clients would start to get sticker shock at that rate. Sounds like for your "15-30 minute site visit and report for $675" you must be charging a flat rate, since at 1.5 hours, that equates to $450/hour. I'm curious what can you possibly be doing in 1.5 hours, when you factor in drive time, time on site (only 15 minutes!... geez), and time to fire up your computer and write a report, not to mention customer intake (answer the phone, sales pitch, signed contract, etc.) and project closeout (invoicing/billing/getting paid). I charge less than you per hour, but I generally don't take any jobs under 8 hours. I just don't feel that I can provide an adequately professional level of service in less than 8 hours, nor is it worth my time. Each one of these small projects/assessments is like solving a damn rubik's cube, not so much in the engineering aspect, but more so in sorting out the client's issues/concerns. They always either hold back vital info (common if they are in a dispute with another party), or they vomit every one of their 1,000 nit picks that they have been cataloging in their brain for the last 20 years.

Quote (gte447f)

XR250, $225/hour is excellent (for you), but when and for what kind of jobs/customers do you actually get to charge this rate? I would imagine if the job is more than 1-2 hours then small time clients would start to get sticker shock at that rate. Sounds like for your "15-30 minute site visit and report for $675" you must be charging a flat rate, since at 1.5 hours, that equates to $450/hour. I'm curious what can you possibly be doing in 1.5 hours, when you factor in drive time, time on site (only 15 minutes!... geez), and time to fire up your computer and write a report, not to mention customer intake (answer the phone, sales pitch, signed contract, etc.) and project closeout (invoicing/billing/getting paid). I

It is a $450 flat rate for the site visit and 1 hour min for the report. Drive time is usually 15-45 minutes round trip, report or drawing is usually 30 minutes. More complicated jobs are charged additional I don't take into account setting up the job as I multitask it while I am drafting some other job. Honestly, no one seems to complain about how much I charge. They are happy that I can get out there and have a report back in a reasonable time.
I might do 6 of these in a week. (I used to do 12) Most of my time is spent on the $1,200 to $5,000 jobs though.
Billing is about 5 minutes and they pay online so my bookkeeper takes care of that.
I have these down to a science and I am pretty good at red flagging potentially difficult customers on the phone.
One of my competitors actually has his wife drive him from job to job so he can write the reports between them.

I've moved away from the small report jobs and more toward larger designs. If I ever find myself needed to go back to those (I turn away several a week), I'll probably invest the time to write a program to automate report generation.

I like them because they get me out of the office and I can stop at the gym or do other errands.

Quote (XR250)

One of my competitors actually has his wife drive him from job to job so he can write the reports between them.

The "Lincoln Lawyer" of engineers.

We charge $210 per hour, but very few jobs are true hourly rate type jobs. Most are fixed fee, but we use $210/ hr for pricing projects generally.

We usually charge $750 minimum for a small house job and report. That's 1 hr round trip driving, 1 hr SV, 1 hr report, .5 hr admin/ billing so it comes out close to the $210.

Besides these small <$1k jobs, it's probably at least $300 per hour for the small/ medium size jobs. We try to price it so that worst case scenario we'll hit $210/hr.

But I feel exactly the same way you do about wanting to charge more after paying someone $500 for something super minor. If these guys can get good money driving around with a crappy pickup truck it makes me want to charge double.

I know of engineers around here that don't pick up the phone for anything less than $2k, but we are efficient so we can afford to knock out $800 jobs or $5k ones.

We are at $250/hr in SC doing mostly residential work

I worked at a big firm ~6 years ago where principals were billing at $300/hr

Site visits + reports are $600, more if its an issue that requires drawings or more in depth investigation. Most of our projects range from $1200-$8000

It is rare that we have anyone fuss about our fees.

Our lawyer charges minimum 15 minutes of his $500/hr every time we send him an email. Answering contractor calls and emails for field issues takes up so much time with these types of projects, controlling that time and trying to somehow get compensated for it is a constant battle.

XR250/TheDW - how long have you been at those rates? Have you escalated them recently (i.e., since Covid), or have you been up there for a while?

Before Covid, the firm where I was working (Virginia) had just raised principal billing rates to about $180/hr. Not sure where they are now.

I started my own business during Covid, doing mostly residential letters and a few little design jobs. I set my rate embarrassingly low to buy up as much of that work as I could get. Looking back, it was probably a mistake, but oh well. I've been gradually raising my rates since and I'm approaching what would have been competitive or perhaps a little cheap in 2019, though most of my work now is lump sum and I price it by project value rather than time.

This is a timely post as I've been thinking about revisiting my company budget to plot my timeline for increases, so getting an idea of where the ceiling might be is helpful.

We were at $200/hr for a long time (at least 5 years) and bumped it up to $250 maybe 2 years ago

Our workflow is set up well so that our lump sum projects will usually put us over our hourly rate

Like jerseyshore we don't often do hourly work, it mostly comes into play with anything construction assistance related, or redoing stuff because of architect changes, or added fees for more in depth site visit work

I have been over $200 for a while. COVID and post COVID have been my best years as I am charging significantly more on my flat rate jobs and actually working a lot less.
I might have to move closer to DW's rate.

Thanks. I may accelerate my rate increases...just need to be careful that the frogs don't jump out the pot before it starts boiling...

Bump those rates up. I am in a pretty HCOL area, but I haven't seen less than $200/ hr for an engineer in a few years. Most civil or structural firms bill around $300/ hr for principals from what I've seen around here.

Keep in mind plumbers keep us in business by cutting joists and beams. So part of that 155$ is for engineering fees. HAHA

Same reason HVAC contractors charge so much.
I think I'm gonna add $10 to my rate starting today.

Quote (phamENG)

I price it by project value rather than time.

Is that working well?

The older guy in our office says decades back, they would price everything on 0.5% (.005) of estimated construction cost with a ballpark $/sf figure.

I know material costs have come back down but that rule of thumb would still have us almost doubling our fees on most things. If its a project I am not confident on how much time it will take, I'll start there, laugh at how nice it would be to charge that much, and take a random fraction of that fee.

I am quoting $1.50 to $3.00 sq/ft right now for houses.

It works really well if you have the right clients. I have a few clients that value me, and are willing to pay it. I've certainly lost some jobs - and clients - but I'm okay with that. I have enough work, so there's no point in working people who want to beat me down on my fees (especially since I know they are charging the owners a % of estimated construction cost).

XR - I'm right there, too. The high end for my usual fare.

I imagine your jobs are more complicated from a lateral stability standpoint. Although it seems that half the houses I get nowadays require a moment frame.

Sounds like I need to raise my lump sum fees a bit then !

I very recently started my own company. Based on hourly rate, apparently I'm much closer to being a plumber than an engineer! (To be fair, I'm moderately good at plumbing, with the exception of soldering.) Most of my jobs are not hourly, so the hourly rate isn't that important, but reading this is certainly encouraging. I didn't realize so many of you are charging that much.

Like XR250, I'm usually somewhere in the $1.50 to $3.00 per SF range for residential, often more if it's not new construction.

TheDW - your $250/rate...who bills at that rate? Is that a principal? Senior Engineer/PM? Project Engineer?

I've never priced a job based on estimated construction costs, but that's a thought to consider going forward. I know houses are a minimum $350 sqft these days, but not sure about commercial/ retail/ multi-family.

It's definitely not one size fits all when it comes to pricing just based on the nature of our business. So many variables and unless you have a narrow focus of work, pricing a 10k sq ft new house vs a two story office building etc. are going to be different approaches. Market rate in your area sets a lot of it too.

Quote (phamENG)

I've certainly lost some jobs - and clients - but I'm okay with that.

This was one of the hardest things to get over when I started my own business. I wanted to get every job and I could afford to be dirt cheap because I was just working out of my basement. But I didn't want to devalue my experience so I wanted to charge what I felt was appropriate. I lost a couple of jobs really early on and after being pissed for a while I settled on the "I'm okay with that" feeling. Really helped me price stuff out and raise rates and fees going forward.

There's always someone willing to work for less. Just don't want it to be me.

Quote (phamENG)

TheDW - your $250/rate...who bills at that rate? Is that a principal? Senior Engineer/PM? Project Engineer?

All of the above, we're very small with 2 principals functioning as PM's and a handful of EITs, everybody is $250/hr. We've talked about breaking it up but haven't gotten around to it.

OK, just quoted my first job at $235. Thanks DW. I'll send you a cut.

Our firm in California Bay Area bills $250 for principals. Most of our work is in residential construction.

I work down under
sole proprietor doing specialist work - (structural - buildings - niche sub-specialty)
I charge 280NZD or 170USD /hr
the big players charge up to around 350NZD or 210 USD.

whats interesting is rates havent really moved in the last 7 years or so, generally.

Hopeless is charging up to $330 NZD /hr for people with 6 years experience lol

Who is hopeless?
billing rates really depends on specialty/industry
building construction being quite a lower paying industry, generally, though maybe one of the higher paying industries in NZ (due to our lack of any other big resource economy)

$185/hour (in the upstate of South Carolina).....mainly for industrial design.

Quote (TheDW)

Our lawyer charges minimum 15 minutes of his $500/hr every time we send him an email. Answering contractor calls and emails for field issues takes up so much time with these types of projects, controlling that time and trying to somehow get compensated for it is a constant battle.

It is never too late for me to go to law school.

I am a noob when it comes to this topic but always eager to learn. What are primary factors that drive up billing rates? Certainty isn't about your skills or knowledge as some smart guys still be losing jobs to wack "engineers" (engineers in quotes). It seems other trades have figured out billing rates. What parameters do you use to bill? Obviously, not all sq-ft will be billed the same, right? I don't expect an engineer to charge say same $100/sq-ft for a job in Mississippi compared to a 180 mi/hr wind zone in Florida.

Does the "market" (market here mostly referring to client) determine the prices? Is insurance a factor? Do you consider the job being high-profile or its complexity? Or the license of application being used (revit fees being higher than Autocad) or even the tools used?

When we're on T&M our rates are as follows (Ontario, Canada):

Senior Engineer (me): $190 CND / Hour
Welding Engineer (brother): $395 CND / Hour

On the engineering side I mostly do designs for our own purposes (as a contractor) or as a temporary works engineer for outside contractors. My brother does consulting as weld engineer primarily for those attempting to weld reinforcing steel to other things. Mostly our rates are based on what a few small but reputable firms around these parts charge so take what you will.

@Enable is on the money.

What determines rates?

of course market forces are a big factor. location, supply/demand.

but within a particular market, i find the two biggest drivers of pricing are:

1. Specialization.
2. Level of service.

If you do the exact same thing as 50 other firms in the same town, all it takes is one slow-down to really set a firm bottom on pricing. once a bottom is set, it tends not to rise very much. Charging much more than the commodity rate is tough. You can charge a bit more for good and fast service, but the "good & fast" market will also have competitive price pressure.

If you are a true specialist, you will not have much competition. These guys are often busy, and thus not often very fast. So consumers of the specialist service, who want it good, and fast, often don't mind spending more to get it.

I think a good parallel to look at is doctors. General practitioners often dont make that much money. But brain surgeons, anesthesiologists?
Specialize, specialize, specialize.

1) Many decades ago, I worked for an industrial consultant doing large (i.e.: $60M T.I.C.) jobs for $60 per hour, billing 100% of our time.

2) We rented local office space (near a customer) from a commercial consultant that would boast about their $100 per hour rate, but billed only 60% of their time.

RESULT: By the end of each year, the low rate industrial guys had worked about 45 hours per week and made double of the commercial guys who had worked 60 hours per week. Also, since going on my own, I learned that bidding fixed fees cost me a lot; they ALWAYS added scope and then argued like crazy; life is too short.

INTERPRETATION: That was not the result I was hoping to discover, but it is difficult to argue against reality.

I now bill low: $130 (probably at 75% of local market rates). I try to bill 100% of my time (but often eat many hours). My monthly income is doing well. It is not a get rich quick scheme but can be a satisfying career, well rewarded.

Careful with reporting 100% utilization rates. My insurance company has advised against it, in their way. You see, nobody is billable 100% of the time. It's not possible. There are a lot of tasks that cannot be billed to a customer but are, nonetheless, required for running a business (even being an employee). So they tend to look a bit more closely when they see utilization rates consistently above 80%...in most cases, that means "unpaid overtime", greater potential for employee burnout, and greater potential for mistakes that can result in a claim.