Bernie
I beg to differ with you. Undersell yourself means in this case £20 is too cheap. He may only have been there for half an hour but unless it is the house next door, he also had to travel there so his time was more than that.
Do you think £20 for perhaps an hour less overheads is a fair rate. It may be the only job he did that day so around £15 for his days wages? How does he manage his costs on that? 2 pot noodles for the dinner? He could get £15/hour working for someone. The customer is paying for not only his time but for his knowledge.
I was speaking to a joiner friend recently and he told me of a customer who had come to him for a price to mitre 2 worktop joints. He quoted £120 (£60 a cut). The person decided he was too expensive as he could hire a router and a jig for £25. Fair enough. 2 days later he was back, could he have the job done. Joiner went to the house and customers wife told him her man had hired a router and wasted 3 worktops. Total cost for the job was 180 for the extra worktops + 25 to hire the router + 120 for the joiner. You pay for the knowledge and the experience too.
A company (or sole trader for that matter) has to base their prices to cover their costs plus profit. Training and insurance overheads are only a small part of that.
A one man band may have small overheads with just have himself to worry about, gas competencies, public liability, advertising, an old van to run, tools and plant to buy, accountant to pay etc etc and will base his prices to cover his costs but you can be, no matter how tight he runs things his overheads are over £100 a week.
A Small to medium sized company will have higher overheads. Perhaps an office/workshop to run and staff, public and employers liability, training costs for every employee, pensions, trade affiliations, health and safety management etc etc the list grows and grows plus you can guarantee that not every employee is making money all the time ( they all like a skive or an early finish) but still require paying. Prices then have to rise accordingly.
Some sections of the market may decide they want to pay less and less and they will get the type of work done they deserve, but others will pay for quality work.
I don't cut my prices to compete with anyone but i do charge a fair rate for the job and i am never short of work, at the moment i am starting to book jobs in for September. I don't make vast amounts of money and have at the moment 3 employees.
People get, on the whole, what they pay for. Pay peanuts and you will normally get monkeys.