Thrown into Restoration Business

[mattg]

I have been restoring cars and trucks for fun and find myself being forced out of the "hobby" classification and into a "business". Now I need to figure out what is fair! Can anyone tell me what the going rates are for full frame off restorations? Also what is done about research time? I am a one man shop and am not looking to build a booming business that will suck the fun and challenge out of the job and not looking to get rich, but do need to afford food now and then.

Thanks for any help, Matt

[Steve Moskowitz]

Matt, you really need to think this through carefully. It is not the going rate for a frame off but the hourly rate you need to cover expenses and make a profit.

If the owner does not do the research and you are spending time you need to be compensated. You really need to sit down with people that do this for a living already and learn all the pitfalls and problems so you avoid issues with customers and you can enjoy your work.

This is no simple endeavor you are getting into. Good luck.

[mattg]

I did mean an hourly rate, sorry. The last car I did was bought from a museum and believed it would be a fairly easy restoration (1935 Dodge Sedan)until it was taken down to metal and found very little metal. I know this is not going to be easy to keep this enjoyable but I am just trying to find a starting point of what is acceptable charges and then figure out what I need to survive and up date tools.

[Bill Stoneberg]

A shop I know of in Texas charges $ 75 / hour for paint, body and mechanical work.

They charge $ 50 / hour for any work like research / ordering parts / phone calls / delivering cars etc.

Plus he adds a 10 % premium for sub contracted work (media blasting / engine machine work etc.)

I dont imagine he is getting rich but his shop is always busy and he has been in business 20 + years.

[jscheib]

Matt,

Bill's statements are right. In the NE, and depending on the quality of the shop, rates would run from $80. to $100. plus per hour plus materials.

I would suggest you get references from those you worked for before and some good photos which show the quality of your work.

Best of Luck.

John

[mattg]

I don't think I will need to charge those rates to survive. Thanks to digital cameras I take plenty of photo's. I did put photo's of one car I did in my spare time (and had to sell) on You tube: http://www.youtube.com/user/RestorerMatt

I am a single guy (49)who is just trying to save cars and would do it for free if I could. Actually if I did it for free I would be making more money!!!!

[R W Burgess]

Cool video Matt.

I had a car shipped to me some years ago in an enclosed trailer. When the trucker opened the box up and ran the gate down, everybody in town gathered around to see, "What's in the Box?"

Small towns, not much in excitement!

Wayne

[Richard Lichtfel]

I have been restoring cars for 50 years and I wanted to do it full time but I didn't think I could have made a good living at it so I just do it as a hobby. An auto restoration shop is really affected by the econonmy. My daughter (God Bless her) married a man in the body shop business and likes to restore cars. Mainly Mopar muscle cars. He has a good collision business and when things get slow he brings in one of his muscle cars and restores it. When he is done he sells it and buys something else that needs restoration. He makes a good living but not rich. He has told me many a time not to buy a car that is not restored and expect to make money on it by restoring and selling it unless it is a rare one and you buy it right. Most people will put more money and time into a car than it is worth. My problem is that it takes me a few years to restore a car and when I am done I don't have the heart to sell it.

Have a Happy New Year!!!

[alsancle]

Restoring cars is a very tough way to make a living. 95% of the time a full restoration on a free car still puts the owner underwater. To say it another way, take any car that's not one of 2% most desirable and the cost of restoration is always more then the final value of the car.

What that means is that the owner, often not knowing any better, is going to gradually realize they are burning money and it tends to put them in a bad mood - which they take out on the restorer.

[ex98thdrill]

First off if you're going to do it as a business, figure out the costs of being a registered repair shop, the costs of insurance, utility bills, plus making enough money to earn a living.

Once you've figured out everything that you need, then make sure you have enough to get your money back and not lose everything you have if someone stiffs you on the bill.

[R W Burgess]

Matt, as a new business owner, never, ever, work on credit!!

Never!

This particular business, you're interested in is lucrative. A good friend of mine in New Jersey asks for a deposit up front to put you in his system. When your slot opens up, he expects partial payment to begin work with. When that payment is exhausted, he will call and ask for another payment. He will also send you pictures, if you are nearby, plus he keeps all receipts.

This gentleman is booked up at least 3 years out at any given time. If you do good work and are dependable, customers will pay you up front. Word of mouth is a wonderful thing!

Good luck!

Wayne

[Dan Marx]

Another issue to look at is what are your strong areas of expertise. Are you going to do all the co-ordination and hire out the work, do just the mechanical, ie frame, engine, brakes, and electrical and have the body work done by someone who can fabricate if necessary. I know of a very sucessful restoration shop that only does the mechanical and electrical, and schedules the body work with a local shop. Hires out the interior, unless a kit is avilable. He works on any old vehicle that comes in.

Dan

[old car fan]

Restoration for most is still a hobby or a passion,when it becomes less than that,it,s work.Think of the buisness end ,workmans comp@20 +percent,if you employ anyone.Try one ,see how it works,.

[Bhigdog]

Almost anything that you think is enjoyable becomes very much less so when it becomes just a job..........Bob

[1937hd45]

Matt, your question is too vague to answer. You can only restore cars you have an interest and knowledge in. Brass car guys don't bring cars to muscle car shops, and muscle car guys......well you know.

[mattg]

Thanks for all the input. I wanted to keep it as a hobby and am not looking forward to all the problems that come along with becoming a buisness. I ran a salvage yard as an independent contractor in Mass and know the problems of operating a buissness. I did everything I could to keep this a hobby to avoid the headaches. Unfortunately I find myself with having to become a sole proprietor.

I do all the work myself except for the machine work on the engines,custom upholstery( I will do kits) and chrome. The 1935 Dodge I just finished needed alot of metal fabrication and you would have a hard time finding where it was done. I am looking at maybe 1 or 2 cars a year and don't want more in fear of having to rush a job. I also want to stay small enough to keep it afordable so cars that might not otherwise be restored can be. If I wanted to be a growing buissness I would specialize in certian cars but I enjoy the variety. I am doing a minor restoration on a 1906 Orient and have a 1935 Mercedes 130 H cabriolet and a 1965 Comet Caliente to do.

I mainly wanted to know what an average restoration shops hourly rate is and how the research time is handled. The $75.00 labor and $50.00 research rates are more then I believe this area would be willing to pay and more then I would require to survive but it does give me a basis to what is being charged.

I can't figure out how to add a photo of the Dodge or I would have added that. When I do originize the photo's of the restoration I will add them to my Youtube site.

[1937hd45]

Here is a very basic question, but the answer will have a big effect on how customers view your work. If you are a one man shop and plan on doing 1 or 2 cars per year what is your definition of a "Restoration"?

[mattg]

I restore to original (to the best of my research) frame off- remove all paint - body on rotissiere - go through all mechanical. The Youtube videos of the MG I did and had to sell shows what I consider restored. Some call it over restored.

When I start a restoration I just keep working on it, 7 days, with stops for food shopping and to mow the lawn.

The dodge is not actually done. My brother, the owner, has not decided what to do with the interior and we still need to find photos or something to go by to fabricate the metal the removeable running board mat is bonded to. But the rest of the restoration took 1400 hours.

[Guest ken bogren]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The $75.00 labor and $50.00 ... </div></div>

Keep in mind that those are probably "billable hours" rates.

So what seems like a full week may not actually add up to anything like 40 "billable hours".

[mattg]

Can you give an example of billable and not billable. I have my ideas of the difference but I suppose that is a gray area.

I also tried to add photos.

[R Walling]

Mattg;

Customers have no idea how long it takes to do restorations. They come in Mon. AM and see the fender on the car, then you take it off, cut and weld, put it back on, times 4 or 5 times. The customer comes in Fri PM and the fender is back on the car and primed and you hand him a bill for $2000 and he goes ballistic.

This scenario is about normal for custom work. (And it still has to come off again for painting!)

And don’t think the $2000 is pure profit by a long shot.

[Guest ken bogren]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">Can you give an example of billable and not billable. </div></div>

Loading a car onto your rotisserie and rebuilding the floor is billable.

Maintaining the rotisserie so you can use it safely is probably not.

Welding the metal on a car is billable.

Running down to the parts store to buy welding supplies is probably not.

[trimacar]

I had a good experience today that relates to customer expectations and what some restoration shops may do.

I took my 1910 Hupmobile apart (it was restored in the 1970's, amateur style). I then took frame, wheels, and body to Vintage Motorcar for them to paint. This is shop owned by Paul Rose, Inwood, West Virginia.

I visited his shop today to go over color choice, fit a belly pan, and other items. He went over item by item, what are my expectations. New wood wheels, just painted, or perfect then painted. Cost difference? Substantial, in the thousands of dollars. I just want color on them, hundreds of dollars not thousands, I can't imagine the factory spent two days per wheel getting them perfect. Frame? OK as is, or fix a few defects (age defects, not manufacturing defects, those we leave alone). Hundreds of dollars, but decided to do it. Body, leave as is and paint, or fix defects. Again, we discussed and came to a decision.

My point is, if one brings a car to a restoration shop and says "make it perfect," then sky high restoration bills will follow. "Making it perfect" is also, in my humble opinion, not the correct approach, as they weren't perfect from the factory. I am restoring a driver early car, so if a little woodgrain shows through paint on wood wheels, I am OK with it. Paul also knows that I restore cars, and so is willing to paint by the piece, with no responsibility for fit and finish on final product. Not every restoration shop is going to be willing to do that, because in the end, there is some responsibility for the final "restored" car.

Costs in our area are in the $50 to $80 per hour range. I do professional interior restoration (leather interiors, early tops) as a hobby (yes, I know that sounds funny, I do it to help pay for my projects), and those costs per hour do not turn customers away. In fact, I have been guilty of quoting high prices in an attempt to "scare away" customer, as I have a finite amount of spare time to work on other projects, and more often than not they agree to terms.

That said, it takes real dedication to turn a hobby into a business. The pressures of a business can quickly sour the fun of the hobby. Dealing with customers can sour things just as fast, unless your customer base is also hobbyist oriented. But, get with the right customers, and things are nice. I did a 1937 Cord phaeton for a friend (it helped that I had a good original in the garage for patterns). He was so pleased that he brought me a wicked project, a Darrin convertible. What a pain that car was, although it turned out well. Hey, I do good work, what can I say, guess that sounds boastful, what did Dizzy Dean say, "it ain't braggin' if ya done it!."

Good luck if you decide to go the "small shop" route; it has its challenges and rewards.

Happy Motoring, and Happy New Year! dc

[mattg]

If I keep it small I hope not to have many customer related problems.

As for billable hours I generally regard more of my hours as unbillable. I deduct hours when things take to long due to working alone. Like taking the body off the frame or testing it back on the frame. If I had a helper it would take much less time and I adust for situations like that.

[R Walling]

Ken:

I agree with your description of billable time. Running out for parts has a different term.

It is called "purchasing parts", and is rewarded in a profit in the sale of the parts.

Mattg:

In my opinion, if you spend two hours taking of the body that would only take 1 hour if you had a helper, you should charge 2 hours. Helpers are expensive to have on hand, so if you don't have one, you are saving the customer a lot of money in that department. Your time is all you have to sell (other than parts) don't sell your self short.

There is a saying from the old blacksmith's day, "There are two cardinal sins in the blacksmith's profession, Never strike cold steel and Never charge too little"

I would consider non-billable time the time that I spend talking to a new prospective customer or fixing a mistake that I should have known better then to have caused.

Sitting down with a cup off coffee while contemplating what to do next is also a billable time.

Think of your billable time as if you were working for wages in a factory. When would you punch off of the time card there?

[Durant Mike]

It's been over a year now but the two restoration places I checked down here in Florida quoted me $45.00 per hour. I guess times are tough for them too. Very few people can drop off a car and write a blank check for restoration of the car. I agree with Wayne that you need to get a good deposit up front and as that goes low, ask in advance to get it replenished. I think many shop owners can tell you of the owner who could not afford to finish the car and they got stuck with a car that they had to sell later.

[Guest simplyconnected]

I think it's a great idea, restoring other's cars. If you keep it in those terms, it doesn't matter what your definition of RESTORE is, because it is ALL custom work. You will perform the work your customer contracts you to do. Being 'custom work' much of your jobs will be problematic because of lack of parts, but it is still up to you to make things work. That's what turns this into a Labor of Love; most owners would be lost without guys like you.

I wouldn't work more than a week without being paid to-date. At least get the cost of materials up front. The car might sit in your shop, waiting for more funds (or for parts), so consider the extra tied-up space you will need. Upon completion, balance is due. Also consider any warranty you might offer, and cover that cost. Remember, things happen, and YOU were the last to work on the car. Get your "agreement" and "understandings" in writing, so everyone is on the same page. If you don't, they will come back and bite you.

Take lots of pictures (and include them in your cost). After all, you have to clean-up and stop working, while you take pictures of someone else's car. (Billable hours) Everyone likes to see pic's of the progression, and they are excellent proofs of your work.

Odds are, you won't do the entire car (because not many are willing or able to finance the whole restoration at once). But, you can do what the customer can afford at the time.

Will $20,000 restore a classic? I doubt it, but that's how much labor costs will be on ONE CAR, if you do two per year, and expect to make $40,000 taxable income. Think of it this way, if there are 2,000 working hours in a year (50-weeks X 40-hrs), then you will make $20/hr. (Your restoration skills are worth far more than that.)

How do you charge for MIG wire & argon gas, or 3M adhesive, thinner, sandpaper, exhaust fans, etc? How about heat/airconditioning, light, phone, etc? Customers expect that to be included in your hourly rate. Now, $20/hr turned into $40/hr.

If you cover all your costs and make a decent profit, this should be a very rewarding business for you. Not many folks love their work (and aren't very good at it). My hat goes off to you for doing what you love to do. Your work will speak for itself, resulting in even more jobs from classic owners who have been looking for YOU for a long time.

Dave

[R W Burgess]

Dave, I can appreciate what you have noted above, but I will repeat. It is NOT necessary to ever have to do restoration work on your own dime anymore. If you are a good and honest person, you can be paid up front. A new business needs all the cash one can get to begin an new enterprise.

Wayne

[Guest simplyconnected]

You're very right, Wayne. I sure wouldn't want anyone to get stuck. I have a huge Honda dealership (Anderson's, in Pontiac, MI) that demands the total repair costs up front for older motorcycles. They claim the repair costs can be more than the bike's value. So, I guess that agrees with you, as standard practice.

On the other hand... Since the shop has the car AND authorization to work on the estimated restorations/costs... Most of the shops around here don't ask for all the money up front. Plating and paint shops operate the same. When most customers see the finished product professionally done, they're more than willing to pay the bill to get their stuff back home. I believe at least 25% up front and scheduled payments as work progresses is a good compromise. It also eases the shock of the total bill, especially when the last payment is small.

To ask for $10,000-$40,000 up-front will turn many customers away, and who knows what will happen in the next 26 weeks? A bank escrow (trust) account would be ok, too. It holds the money-in-earnest, interest is paid to the depositor, and it will be managed by a mutually agreed third party. Everyone is on the same page and all incentives are intact. - Dave

[R W Burgess]

Absolutely, that would be ok with an established business, but we're dealing with a start up for Matt. Can't take too many chances, you know. Referring back to my earlier post.....

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> A good friend of mine in New Jersey asks for a deposit up front to put you in his system. When your slot opens up, he expects partial payment to begin work with. When that payment is exhausted, he will call and ask for another payment. He will also send you pictures, if you are nearby, plus he keeps all receipts. </div></div>

So, in the case above, my fellow would ask for $1000.00 or so up front to lock in the appointment, then when the car is delivered, he'd require, say $2500.00 or so (depending on the job), to get started on the restoration until the "kitty" needed refilling again.

I guess, in the case of people from my area, this would be the "redneck" version of saving your hiney.

Wayne

[ex98thdrill]

And then you get a total jerk for a customer that will tick you off so bad that you won't want to work on anyone else's car.

[R W Burgess]

Pat, this fellow has been running his business this way for over 12 years. No one owes him a penny. He's always smiling everytime I see him, so I guess it works for him.

Like anything, of course, it may not work for everyone.

Wayne

[mattg]

I appreciate all the different scenarios of how problems can arise, and all will be remembered during my setting up of the business. One reason I began restoring cars, besides my own obsession which goes back to Hershey in 1964 at the age of 4, is that people do not collect or restore cars from necessity. Unlike most other automotive business the owner views this as a treat.I grew up in a radiator shop, worked in a service garage and ran a salvage yard,but between those jobs I worked for a furniture maker that built custom furniture most of which (while I worked there) went to mansions in Greenwich CT. Only working for the furniture maker did I see customers happy to be paying. In the other businesses they were satisfied with the work or product but it was not something they wanted to buy.

If and when I do get a customer who either cries over the bill or refuses to pay I am sure I will feel more sorry for him/her for missing the point and pleasure of preserving and enjoying theses works of art and any money I will lose won't compare to their loss. I will use all the suggestions in hopes to make the restoration process as enjoyable to the customer as it already is to me.

More comments and suggestions are still appreciated. Matt

[ex98thdrill]

Oh no, I'm not talking about the guy you're referring to, I'm talking about going into business.

[Terry Bond]

Ive known Matt for quite a few years and am glad to hear he is heading this direction. His work is amazing and he is very talented. Wish that MG would have stayed in the club.

Terry

[1937hd45]

Matt, Do you plan to run this as a legit opperation, letting the town, EPA,zoning etc. INSURANCE company know about it? I can't see the plus side of this,better pick your future projects carefully, there are cars that DON'T deserve to be restored.

[mattg]

Thanks Terry for the kind words.

So far I found I will need a business license for income tax rules. If I have to involve the EPA I would be afraid they would require me to have a spray both. The expense and space for a booth to paint 1 or 2 cars a year would kill the whole idea.

[thomas1ds]

Wow you do amazing work. Can you be my guide in my restoration please? I have a 1935 Dodge 4 Door Sedan also. I am still searching for a few parts still with little to no luck. :-(

Can you give an example of billable and not billable. I have my ideas of the difference but I suppose that is a gray area.

I also tried to add photos.

[jpage]

I'm a residential remodeling contractor and as sole proprietor I struggle with what is a fair billable hour. Here's how I see it. Your hourly rate must include coverage on all your expenses. Total all your monthly expenses ( ins., rent, utilities and the like). Then divide that total by your planned working hours for the month. This will tell you what you have to charge just to break even before profit. Then figure what you think your hourly wage should be for you to make a living. Add the two together and you'll have an idea what you'll have to charge and that doesn't include profit for the company. Profit is added as a percentage onto the price of parts and materials used and labor. Profit is what you'll run your business on. Don't forget as a self employed worker you will pay higher taxes about 25 percent of your regular wage. If you have employees that figure will increase. As far as billable time , when a job is bid for a certain amount of money ,unless there are clauses that cover unexpected or add on expenses , you'll have to work under the bid price no matter how many "extra"hours you have in it. If you work time and material then almost all hours expended on picking up or ordering materials , research , trial and error etc. is covered under billable time. Of course initial consultation and estimating is usually non billable time. If however ,you damage a part or foul up the paintwork ,that my friend you may have to eat! Make sure that if you go into business that you carry full liability ,fire , flood and theft insurance on your properties and equipment and the customers property will in your possession. I know several folks in the restoration business, and I considered it myself once, and many say it's a tough business. It always take longer than expected and will cost more than you estimate, people are always in a hurry and sometimes do welch on payment or unforunatley pass away before completion of the job, which opens another can of worms. Most restores will take downpayments and work until the money is expended and then bill the customer ahead for more money. If the customer is late in making payments the car will sit static in the shop so make sure you have adequate storage facilities. Self-employment has many pros but it also carries many cons. No payed vacation, no payed health care or disability insurances no guarantee you'll get payed on a regular basis and no guarantee there will be continous business. A wise business man once told me that " If you're in business any length of time be prepared to get sued or sue somebody for your money". I don't mean to sound like a downer but you do need to consider all the possiblties before striking out on your own as your family will also be relying on you. If you do, do your very best and above all be honest in your dealings. a bad name will follow you and you family forever! Good luck and have fun!

[Guest BillP]

Hi Matt, There's a lot of good advice here from experienced hands. There's something I don't understand, though. You say you're being forced into this business. Does that mean that you lost your day job and decided to leverage your car-fixing experience into a way to make money? Or does it mean that, for example, somehow a government entity decided that the hobby use of your garage is not acceptable and you have to run it as a certified (fee paying) repair facility? Or what? Whatever it is, if you enter this activity with the thought that it was forced on you rather than something you got into out of genuine interest and free will, where's the fun in that? I find that with most things I'm forced to do, I generally do a lousier job than as if I wanted to do it with natural enthusiasm. Just a thought. Anyway, good luck to you. Nice work on the MG (I have an MGB).