Originally Posted by TickTock
So, piecing info from her blog, posts here, and the link MNeumes provided, DH charged $65-$85/hr, worked an average of 30 billable hours/week, and profit from material accounted for the rest. Gross was $250k / year.
$75/hr * 30 hours / week * 50 weeks / year (allowing for two weeks vacation) = $112,500 / year.
That leaves $137,500 in material profits. That's $2,750 in profit from materials per week.
OTOH, they also had an apprentice, and I assume they made some profit off of him or they would not have kept him.
Anyone have experience with running a small, independent plumbing operation? Are these numbers reasonable? In particular, is never working more than 40 hours a week reasonable?
My father's a plumbing contractor (and my former employer). While it's only in commercial construction, I know enough about the cost side of things to comment:
First of all, the apprentice thing is suspicious. Times must be pretty tough for an apprentice to agree to work just 30 hours/week (unless he's experienced enough to work on his own).
Also, he'd probably charge the same rate for his apprentice as himself - but even if he cut the rate down, that would mean $125k in revenue from his work, and (?) $100k in revenue from the apprentice (assuming the apprentice works just 30 hours a week - again, suspicious).
That leaves a minimal amount of revenue from materials.
So the biggest question is: was there an apprentice or not? If there wasn't, then the materials amounts - while high - might
be justifiable - but it'd still be a big stretch (but then why mention him?). If there is an apprentice, the materials might be reasonable, but almost at the point of possibly being too low.
But the other problem I have with this whole thing is what his exact work is (again, I think she evaded specifics....) Did MMND say he was in service work, or just say that he's involved in plumbing? It can be pretty hit-or-miss in the service industry if you are a one-man shop...to reliably average just 30 hours/week in work would require either turning a lot of people away, or just happening to roll the dice right and getting the right number of calls. If he does small 'jobs' - even that would be tough (presumably) to reliably have enough work (on average) per week to say he pulls in $X/year. Also, I'd never expect to see two plumbers work together consistently in "service work" (for the same job, since service plumbing jobs are typically handled by one person), so (again) the question of the apprentice comes up. If he does small jobs where he works up a firm quote to someone, it sounds odd that he wouldn't have a lot of dead/unpaid time of driving to peoples' homes to give them a quote before doing the work.
However, with the materials, don't forget to avoid confusing GROSS with NET. Plumbers pad the materials like any other industry (I was quoted $350 by Midas to replace my Explorer ECR valve - material cost if I bought the valve on-line is about $75. Labor they quoted was about 1.5 hours @ $60/hr. Talk about material mark-up!). A plumber could easily have a 100% to a 200% markup on SOME materials (pipe, fittings, washers, toilet parts), but not others (complete toilets, water heaters). But even then, if he truly has $125k in material revenue, that comes to $83/hr in material revenue. For a service plumber to average that day-in and day-out, that seems suspiciously high - unless he's the fastest plumber in the world.
To give you a comparison, the entire Busch Stadium plumbing system ended up at roughly $34/hr in material costs (total material divided by total plumber hours) - and that includes everything from 16" storm drainage pipe to 8" steel water pipes, all of the toilets/urinals/sinks/floor drains, the hangers supporting the pipes, etc. Sure, I did one hell of a buyout on it and material costs at today's rates would be roughly $70/hr in material costs - but it just seems difficult for me to see how a service plumber would bring in that much material revenue. And if he does small jobs, there's almost no way his materials would be that high (even if he had a 100% - or more - markup on his materials).