How to Charge Moving Rates
I can’t believe how much money I was leaving on the table because I was not charging enough for my services. Both hourly and flat moving rates.
There are 4 basic charging methods for your moves:
- Charge per person (including the truck.) (Works best for hourly rates.)
- Charging based on how much you pay the crew. (Can be used for an hourly or flat rate.)
- Charge based on local and interstate tariffs. (Best for long-distance moves.)
- Charge a flat rate. (Good for large local, long-distance, or interstate moves.)
A rule of thumb: your payroll for the crew should never be more than 40% of an hour’s charge. Ideally, it should be around 25 to 30%. (I’ll explain this more very soon.)
If you did your research correctly then you would have discovered a lot about your competitors’ rates and fees that you can exploit:
- You would have discovered if they charge an hourly or flat moving rate.
- You should have discovered if they charge from port to port or when they arrive.
- You should know if they charge a travel/fuel charge.
And so on.
Knowing the ins and outs of how my competitor’s rates and fees I can take advantage of their weaknesses.
This knowledge will help me in determining which method(s) above that I am going to employ to undercut their prospects while at the same keeping my moving rates competitive and sufficient to earn the profit I need to expand.
I have a great video on YouTube that explains how you could charge your hourly moving rates here.
Here’s how this works:
You have to determine how much you need to pay to get the best guys (we’ll go over this very soon).
Whether you own a truck or not you have to consider the truck as one laborer. A good rule of thumb is that you should charge per hour for the truck the same as the highest-paid crew member.
Hourly Moving Rates:
But for this example, we’ll assume that you own your own truck and that you pay your driver $17/hr and you pay the laborer $13/hr.
Your labor is $30/hr.
Pay should between 30% to 40% of your hourly rate per hour. If you’re paying $30/hr for labor you could charge for your services between $75 to $100 per hour for your 2 men with a truck rate and still make a good profit.
Hourly Rates with Moving Truck
But now let’s add in that you are renting trucks.
You are still paying the crew the same amount.
You are renting a Penske truck. You have a commercial account and you’ve worked out a killer deal and are only paying $.25/mile with a $100/day charge.
You’re moving a 2-bedroom apartment locally not going more 20 miles. The move should take about 4 to 6 hours.
You are paying 100/6 = $16.67 per hour for the truck. For the mileage, you are paying $5 for the mileage. That is $.83 per hour. Because you have to turn the truck in with the same amount of fuel that you used and it was full.
A Penske gets about 8MPG in Diesel. You went 20 miles. Therefore, you used 2.5 gallons of fuel. On average Diesel is going for $3/ga. That means you will have to add $7.50 in fuel. That is $1.25 for every hour on the job.
let’s add this all up?
- $30/hr for labor.
- $16.77/hr for the truck rental.
- $.83/hour for the mileage.
- $1.25/hr for fuel.
The total for this $48.75 per hour. To make it easier we’ll round that up to $49/hr.
When you rent a truck, you have to consider that the truck is another laborer. In this case, the truck costs you $19/hr after we round up.
How much are you paying an hour then?
$19 for the truck. $17 for the driver. And $13 for the laborer. This totals $49/hr.
Remember in our formula your pay shouldn’t more than 40% of the hourly moving rate. The closer to or below 30% the better.
This means that your hourly rate range in this instance is $120 to $165 per hour.
Another formula that you can use to determine how much you should charge per hour is really simple.
You charge between $30 to $40/hr for each member of the crew. You need to include the truck as a laborer.
This means you would charge between $60 to $120/hr for your hourly services.
Now let’s bring this all together.
Final Thoughts on Hourly Rates
Your research determined, at least in my case, that licensed and insured movers charge between $85 to $125/per hour for a 2-man crew with a truck.
We also know that the guys that are the best in the area are charging at the top of this range and the ones doing poorly are at the bottom of the range.
We also know that the one at the top of the range target, for the most part, the high-end customers while those at the bottom of the range target the poorer renters and homeowners.
Here’s where most of the rookies make their mistake. They figure out all their expenses to do the move. In our case above its $49. Then they double it. So, they start charging $99/hr. That’s great. They’re making money. But he top guys are charging $120. That’s $20 you’re leaving on the table.
What is not factored in when the rookies start charging this is the hidden expenses: Taxes, licensing and insurance, marketing, advertising, website, and what are they paying themselves. How much are they worth.
That extra $20/hr starts to look really good. It’s actually the breaking point of staying a small company and just getting by or becoming a 7 Figure Moving Company.
Now that you know what you can charge for your services based on if you own a truck or not and how much your competitors charge you can then determine how you are going to charge per hour.
Flat rate pricing:
Now you have to research how much you are going to charge when it comes to flat-rate pricing.
When charging flat rates, the key to success is doing in-home estimates on any home that is 1500 square feet or more.
And the success of doing an in-home estimate is having and using a cube sheet.
Using a Cube Sheet
A cube sheet is a list of typical household items that get moved. These items are then assigned an average cubic feet amount.
You go through the home noting the which items are going to be moved and the amount the items.
Here’s an example, as you go through the house you notice that almost every room has 2 table lamps. In the line for table lamps then you would mark how many table lamps would be moving.
For illustration, we would say 10 lamps. Each table lamp is given a pre-assigned cubic feet number. We’ll say it’s 5. The total cubic feet of the lamps are 50 cubic feet.
We come by that figure by simply multiply 10(lamps) x 5(cubic feet) = 50(cubic feet).
You do that for each item in the home that is being moved.
Once you’re done with the cube sheet you add up all the items being moved and you add up all the estimated cubic feet.
The items noted on the cube sheet then becomes your inventory of sorts.
This inventory will protect you. What sometimes occurs is that when you arrive to do the move, magically out of thin air, there is no more to be moved than was estimated. And if you have given a flat rate you are obligated to move those items, which means that you are now losing money.
That inventory protects you from that unfortunate circumstance.
With the total cubic feet estimation, you would multiply that by 7.
Let’s assume you did the in-home quote and you came up with 1500 cubic feet estimate. You would multiply 1500 by 7 (1500 x 7) which would give you your estimated weight.
In this case, your estimated weight is 10,500 pounds.
Most long-distance and out of state moves are priced based on weight and mileage. Some moving companies use cubic feet.
Flat Moving Rates Based on Cubic Feet
I would not suggest you use cubic feet to do your estimates instead use the weight and mileage. But do what you feel more comfortable.
And if I am being honest, I never charged based on cubic feet and really don’t know-how. I stick to what works and has worked for many, if not most, of the successful moving companies.
But you do what’s best for your company. I make no judgments.
For newly started moving companies and owners the hardest part of doing the cube sheet is estimating the number of boxes.
The remedy for that is experience.
The more estimates you do and the more packing jobs you do you will eventually come to know intuitively how many boxes and home is going to need for any given circumstance.
Using your Hourly Cost to Figure Flat Moving Rates:
I am not a big fan of this method as you leave a tremendous amount of money on the table, but it is wildly popular with the newer companies.
It’s also a very effective method if you haven’t gotten the skill and experience to do in-home estimates using the weight and mileage technique above.
To do this method you would still need to do an in-home estimate.
But instead of figuring out weight and mileage you would determine how long and what equipment was needed to do the job.
As an example, you go to a 3-bedroom home. Determine that it could fit in one truck and it would need 3 men for the loading and unloading.
Good. How much is your three men and the truck per hour?
Now you determine how long it’s going to take you from start to finish to pack (if there is packing), load, transport, and then unload.
Let’s say it’s going about 150 miles. Okay, that’s a 3-hour drive one way. 6 hours for the round trip.
3 Bedroom home with three guys you estimate will take 8 hours for the load. You estimate it will take 5 hours for the unload. That’s 13 hours for the load/unload. Plus 6 hours for driving. That’s a total of 19 hours.
So far so good.
(I’m assuming that you are using your own truck so there are no mileage charges you have to add.)
So, fuel for your truck is going to be around $115 for the round trip.
We’re going to assume that you charge $160/hr for 3 men with a truck.
Here’s the calculation:
160 X 19 = $3040. $3040 + $115 (fuel) = $3055.
Right now, using this method, you’ll be charging your customer $3040 for the move at a flat rate.
Unexpected Additional Costs
What if there are unexpected services…?
I would add at least another 7% to 10% for anything that was not expected.
For this example, and to make the math easy, we’ll use the 10% figure.
$3055 x 10% = 305.50 + $3040 = $3345.50.
Your customers’ final estimated charge is $3345.50.
This doesn’t include valuation upcharge.
Using this method, you make a good chunk of change to put in your pocket.
And if you add in some cost-cutting strategies your profit margin could increase exponentially.
Let’s compare how much you would make using the above two strategies:
The weight and mileage method: $6750
The Flat hourly method: $3345.50
Now you see why I HATE the flat hourly method. I would double my money using weight and mileage.
In essence, I am losing nearly $4K but only charging an hourly flat rate.
Don’t get me wrong; us the hourly flat rate method, when you are new and lack the experience of doing a weight and mileage estimate, is better than nothing. I recommend in fact.
But you should be learning from the job you do so that when you do graduate to weight and mileage you have a great understanding of what it really entails.
Pricing Packing, Boxes, and Supplies.
Another place where new moving company owners get held up is knowing how to charge for packing.
Most just revert charging by the hour because that’s what they know.
And that is fine and it works but the problem then becomes you can’t guarantee how many hours it will take, all you can give the shipper is your estimate. When you start to go longer than you estimated and the shipper is paying by the hour your shipper is going to grow more and more concerned and even angry.
I’ve found that charging by the box is a far better way to charge.
You can guarantee the cost to the shipper so that there are no hidden or extra fees that they weren’t expecting.
And by padding the estimate by about 7% you can cover most overages if there are any and still maintain your flat rate and not piss off your shipper.
How you charge by the box is very simple: You take the individual cost for each box and item and charge at least 50% or more, no more than 150%.
Say your small box cost you $1. If you raise your charge by 50% then you’d charge the shipper $1.50 for each box.
The cheaper the boxes or items are the higher the percentage I would mark up.
The reason for this is elementary, you’re going to be using them more so you will make your profit in the small cheaper boxes and items.
And you’ll want to charge a set fee for packing and unpacking of those boxes to cover the labor. Obviously, you would charge more for the packing of the box than you would the unpacking.
Let me give you an example:
You pack a small box. You charge the chipper $2 for the box plus $8 to pack it. You make $10 for every small box you pack. Pack up 30 small boxes and you make $300.
A good and experienced mover can box up about 8 to 10 small boxes in an hour. That’s $100 gross profit for you. You pay $10 for the cost of goods (boxes) and you pay the mover $15/hr. $10 plus $15 equal $25. $100 minus $25 leaves you with $75 net profit.
That’s making bank now son.
Crating and specialty services:
From time to time you are going to run into things that are needing to be crated up. This could be artwork, rare furniture, chandeliers, etc.
Some of these crates will be small and some large.
Then there are specialty services that may be required. Like taking things off the wall. Unplugging and disconnect wires and hoses from things like washers, dryers, refrigerators, and so on.
You may be asked to move large items like hot tubs and pianos.
In some cities like San Francisco, Chicago, New York, and others you may have to have a crane to bring things up so can move these items through a window.
And sometimes you may have to remove windows and even portions of walls to get things in and out.
In all honesty, you shouldn’t even bother with those things. My suggestion is hiring a third-party service to do it.
By hiring a third-party service, you protect yourself from liability and you can concentrate on doing what you know and what makes you money.
It’s super simple to price these things out.
You get these companies to give you a quote then you mark it up by 20%.
Of course, you can choose to do it yourself and keep all the money. That’s your choice.
Use the third parties quote as your guide in your estimations.
There you’re done.
Told you it was super easy.
This is a lot of info about charging for your moving services.
I wrote this as completely as I could with enough illustrations to make you understand.
Because, If I can get you to avoid the problems that I had in my pricing then you’ll be miles ahead of me. And you’ll probably do a lot better in faster time.
But in the end, you have to do what’s right for you, your company and the guys that you employ.
But do me a favor, make sure, whatever you charge, that you are pricing so that you make a profit and have enough margin to carry you through the slow season.