How to Price Electrical Work Without Guessing

To price electrical work, build your rate from your real costs (loaded labor, overhead, and vehicle costs divided by the hours you can actually bill), then add the profit margin you chose on purpose. Every other method is a guess. Copying the shop across town is a guess about their costs. Charging what you charged five years ago is a guess that nothing has changed. The cost-up method takes one afternoon with a spreadsheet, and once you have done it, every quote you send stands on a number you can defend.

This guide walks the full build: true hourly cost, the billable-hour reality that surprises almost everyone, margin targets, why the trade underprices as a whole, and how to present and raise prices without bleeding customers. The math uses US dollars with a section on UK day rates, because the arithmetic doesn't care which side of the Atlantic your van is parked on.

Start with your true hourly cost

Your true hourly cost is what one hour of a technician on a job actually costs the business (wages, employment burden, overhead, and the truck), and most electricians have never calculated it. The wage is the visible part. A tech on $30 an hour feels like a $30-an-hour cost, so a $90 rate feels like a fat margin. It is nothing of the sort.

First, burden. Payroll taxes, workers comp, liability insurance allocated to labor, health contributions, paid holidays, tools, and training typically add 25 to 40 percent on top of the wage. A $30 wage at 30 percent burden is a $39 loaded cost before the tech has touched a wire.

Second, overhead, meaning every cost that exists whether or not anyone is on a job. Shop or storage rent, office help, software, phone, accounting, marketing, licensing, uniforms. For a small service shop this commonly runs $6,000 to $12,000 a month. Third, vehicles: payment or depreciation, fuel, insurance, and maintenance usually land between $1,500 and $2,500 per van per month. None of that appears on a quote, and all of it has to come out of billable hours or it comes out of your pocket.

Here is the build for a two-person shop: you and one technician, both on the tools, both costed at a market wage even though one of you owns the place. Paying yourself a wage in the math matters: a business that only works when the owner works for free is a job with extra paperwork.

The per-hour overhead figures divide by 2,288 billable hours: two people at 2,080 paid hours each, billing 55 percent of them. That percentage is doing enormous work in this table, so it gets its own section next. The headline lands now, though: this shop breaks even at $102 a billable hour. At an $85 rate (a rate plenty of two-person shops charge) every hour on the tools loses $17, and the busier the shop gets, the faster it loses. At $128, the shop clears a 20 percent net margin: money for slow months, a truck that dies, and growth that doesn't require a loan.

The billable-hour reality: 50 to 60 percent

A full-time electrician bills roughly 50 to 60 percent of the hours you pay for, and pricing that assumes anything near 100 percent is how good shops go broke while fully booked. The gap is structural. Out of 2,080 paid hours a year, subtract holidays and time off, then drive time between jobs, quoting and site visits that go nowhere, supply house runs, callbacks you eat, paperwork, and training. What survives is typically 1,050 to 1,250 billable hours per tech, and that is for well-run service shops. Shops drowning in admin do worse.

Two consequences follow. The first is arithmetic: every billable hour has to carry roughly one unbillable hour on its back, which is why the overhead-per-hour figures above look high and are correct. The second is operational: moving billable percentage from 50 to 60 is worth more than a 10 percent price rise, because it adds sold hours without adding cost. The levers are boring and effective: tighter routing so the van drives less, quotes built from a price book instead of composed from scratch each time (our price book guide covers the build), and office admin that runs itself instead of eating your evenings.

Margin targets: markup and margin are different numbers

A healthy electrical service business runs a gross margin of 50 to 60 percent on labor, marks up materials 30 to 50 percent, and keeps a net margin of 15 to 25 percent after everything, including a market wage for the owner. Shops living below 10 percent net have no shock absorber; one bad month, one blown transmission, one slow January, and the business is borrowing from the owner.

Before setting targets, untangle two words the trade constantly swaps. Markup is what you add to cost; margin is what remains of price. A 50 percent markup on $100 of materials gives a $150 price and a 33 percent margin. To get a 50 percent margin, you need a 100 percent markup. Plenty of electricians believe they earn 50 percent on materials when the real figure is 33, and the missing points are the difference between a profitable year and a confusing one. When you want a margin, divide by one minus the margin: cost of $102 at a 20 percent target is $102 ÷ 0.80 = $127.50. Adding 20 percent on top ($122.40) silently hands away a chunk of the target, on every single job.

Materials deserve their markup, by the way. You sourced them, fronted the money, warrantied them, and drove them to site. The homeowner comparing your breaker price to a big-box shelf tag is welcome to buy their own breaker and find someone willing to install unwarranted customer-supplied parts.

The underpricing epidemic

Most electrical businesses underprice because they set rates by copying competitors who also guessed. Nobody in the chain ever did the cost math, so entire markets settle at rates that quietly lose money, and every shop in them wonders why being fully booked feels like drowning. The pattern has a name among trades accountants: busy and broke. The calendar is full, the bank account is flat, and the owner concludes he needs more jobs, when what he needs is a price that survives contact with his own overhead.

Underpricing also filters your customer base in the wrong direction. Price shoppers churn, haggle, and leave three-star reviews about a $95 rate they'd also have left about a $75 rate. Customers who chose you for competence barely notice the rate line. Ten years of quotes across the trades point the same way: the cheapest shop in town owns the customers nobody else wanted.

One structural note: everything in this guide produces your cost-correct hourly number, and that number works whether you bill by the hour or roll it into fixed job prices. Which of those to present to customers is its own decision with its own tradeoffs (flat-rate generally sells better and rewards speed, time-and-materials is simpler to run), and our flat-rate vs time-and-materials guide takes that question on properly.

A note on UK day rates

UK sparks mostly quote day rates, and the same cost math applies with the exchange rate swapped. A £300 day rate across much of England sounds respectable until you divide: eight hours on site is £37.50 an hour, and after van, insurance, tools, certification costs, software, and unpaid quoting evenings, plenty of sole traders on £250 to £300 days are earning less per hour than they did employed, with all of the risk and none of the holiday pay. Run the two-column exercise: everything the business spends in a year, divided by realistic on-site days (200 to 220 once quoting, holidays, and no-shows are honest). For most one-van operations the breakeven day sits far closer to £400 than folklore admits, and London materially higher.

Communicating price: good-better-best

The strongest way to present an electrical quote is three options (good, better, best) because it changes the question in the customer's head from whether to hire you to which version to buy. A single number invites a yes-or-no verdict and a comparison shop. Three numbers invite a choice, and buyers presented with three tiers pick the middle one more often than anything else, which is exactly where you place the job you wanted to sell anyway.

• Good. The code-compliant fix for the problem they called about. Honest and complete, with no padding. This is your price floor, and it must still carry full margin.
• Better. The fix plus the things you genuinely recommend: the whole-home surge protection while the panel is open, the extra circuit while the wall is open. Priced with the same margin discipline, sold on one-truck-roll logic.
• Best. The forward-looking version: the 200-amp upgrade sized for the EV and the heat pump, the panel work done once instead of twice. Some percentage of customers always takes it, and that percentage is pure information about what your market will pay.

Two mechanics make this work at quote volume. First, options come from a price book, never from fresh arithmetic in the driveway: pre-built, pre-margined line items you assemble in minutes. Second, the quote gets followed up, because a three-option quote that dies in an inbox earns the same as no quote; our quote follow-up guide covers the sequence that recovers those. Present the options in person or on a call when the ticket is large. The tier structure does the selling; you just have to not mumble through it.

Raising prices without losing the base

You can raise prices 10 to 15 percent and keep nearly all of your customers, because almost nobody hires an electrician on price alone. They hire on trust, and you already have it with your base. The math is heavily in your favor. Suppose you raise rates 15 percent and lose 10 percent of customers, which is a pessimistic assumption for a shop with a good reputation. At the cost structure from the table above ($102 cost against a $128 rate) revenue barely moves while profit per hour jumps by more than half, and the hours freed by the departing price-shoppers get resold at the new rate. Losing the bottom slice of the customer list is a feature of the exercise.

1. New customers first. Quote the new rate to every fresh inquiry starting today. New callers have no anchor; they never knew the old price existed. Objection rates on new-customer pricing are the cleanest read on how far under market you were.
2. Existing customers with notice. A short, plain message: as of the first of next month, rates change from X to Y; anything already booked stays at the old price. Skip the apology paragraph. Businesses that apologize for pricing teach customers the price is negotiable.
3. Grandfather deliberately, briefly. Service-agreement customers or genuine top clients can hold the old rate for six months as a stated courtesy. That converts a price rise into a loyalty gesture for the accounts that matter.
4. Pair the rise with visible proof. Rate increases land soft when the evidence of quality is public: recent five-star reviews, licensing, photos of clean work. If your review engine is running, the new rate reads as market correction. If your online presence looks abandoned, fix that first.

Then repeat annually. Small yearly rises pass without comment; a panicked 30 percent correction after five frozen years is the version that generates angry calls. Put a rate review in the calendar for the same month every year, rerun the cost table with current numbers, and let the spreadsheet make the decision. That is the whole method: costs up, margin on purpose, options presented well, and a base that pays what the work is worth because you finally asked.