How to price electrical jobs so you actually make money

Ask ten electricians how they set their prices and nine will tell you what the other sparks in the area charge. That is not pricing, that is copying, and it is why so many good electricians are flat out and still short at the end of the month.

Your price has to cover the hours you cannot bill, the van, the tools, the insurance, the training, the quoting, the chasing, the tax, and then leave you a wage worth getting up for. Here is how to work it out properly.

The hour you charge for is not the hour you work

Start with the honest arithmetic. In a normal week you are not on the tools for forty hours. You are quoting, buying materials, driving, invoicing, chasing money and doing certificates.

So if you want to earn a wage across fifty hours of effort, that wage has to be recovered across thirty two billed hours. Anyone pricing off a forty hour week is already twenty percent light before a single overhead is counted.

Work out what an hour has to earn

Add up what the business costs you in a year before you take a penny. Van, fuel, insurance, public liability, scheme membership, calibration, tools, phone, accountant, software, workwear, training. For most one man bands it lands somewhere between £9,000 and £16,000.

Then decide the wage you want, not the wage you are used to. Add the two together, add tax, and divide by your billable hours for the year. Say forty six working weeks at thirty two billable hours, which is 1,472 hours.

That is the floor, not the target. It has no profit in it, no allowance for a quiet month, no van replacement fund and no holiday beyond the six weeks already taken out. Put your own numbers in and see what falls out. Most electricians get a shock, and the shock is the useful part.

Have a minimum charge and say it out loud

A twenty minute job is never a twenty minute job. It is a phone call, a drive, a parking space, a diagnosis, a part, a certificate and a drive back. If your minimum charge does not cover the first hour plus the travel each side, small jobs are costing you money to attend and you are making it up on the big ones.

Set it, publish it, and say it on the phone before you go. Customers are fine with a minimum charge. What they hate is a surprise.

Quote, do not estimate

An estimate invites a negotiation. A quote is a decision. Write down exactly what is included, what is not, how long it will take and what happens if you open a wall and find 1970s rubber cable. Then there is nothing to argue about later, because it is on paper.

Give the price with no apology in your voice. The most expensive habit in this trade is the little discount you offer before the customer has even asked for one.

Give three options, not one

Send one price and the only decision available is yes or no. Send three and the decision becomes which one, which is a much easier conversation.

• Do the job. Exactly what they asked for, done properly.
• Do the job and the obvious extra. The board that is on its way out, the outside socket while the floor is up.
• Do the lot. Everything you would do if it were your own house.

Plenty of customers pick the middle one. Almost nobody picks the top one, and it still helps, because it makes the middle look sensible instead of expensive.

What to do with price shoppers

Somebody who opens with what is your best price is not buying an electrician, they are buying an hour. You are allowed to be busy. The polite version is: I am not the cheapest, I am booked because people know the job gets done right, here is what it costs.

Half of them come back. The half that do not were going to be your worst customers anyway, chasing you over £30 and calling on a Sunday.

Put the price up, carefully

If your number is well under where it should be, do not double it on Monday. Take the next ten quotes out at the new rate and watch what happens. If you win eight of ten, you were too cheap and you still are. Somewhere around six or seven of ten is a healthy place to sit. Winning everything is the clearest sign in the trade that you are underpriced.