How to price commercial electrical work

You have got your first proper commercial enquiry. A unit, an office, a small factory, maybe a pub. The job is four or five times the size of anything you normally do, and you are sat at the kitchen table at nine at night trying to work out what to put on the bottom of the quote.

This is where a lot of good electricians either throw a number at it and lose money for three weeks, or panic, add a pile on top and never hear back. Pricing commercial electrical work is not harder than domestic. It is just a different set of things you have to account for, and nobody shows you them.

Here is how I would approach it.

Price the scope, not the job

The single biggest difference between domestic and commercial is that in a house the customer knows what he wants, and in a commercial building nobody is entirely sure who decided what.

So before you price anything, write down exactly what you are pricing. Circuits, points, fittings, containment, distribution boards, testing, certification, who is doing the builders work, who is making good, what the drawings actually show. If something is not on your list it is not in your price, and you say that on the quote.

That one habit will save you more money than any clever pricing. Commercial jobs do not usually lose money on the rate. They lose it on the twelve small things that nobody agreed, which somehow all became yours.

What commercial work costs you that domestic does not

Work through this list before you price, because every one of these is time or money and it is easy to forget the lot.

• Access and hours. A shop that cannot lose trading hours means evenings or a Sunday. A warehouse with a live production line means working around it. Restricted hours are the most commonly missed cost in commercial pricing, and they can double a day.
• Site rules. Inductions, permits, sign in, RAMS, someone walking you to the cupboard with a key. That is real time and it happens every visit.
• Paperwork. Risk assessments, method statements, O&M information, as fitted drawings, asset lists, test results in a format somebody else will accept. Domestic certification is twenty minutes. Commercial documentation is not.
• Specification. Metal containment, fire rated systems, emergency lighting, isolation and shutdowns, equipment with lead times. The material cost is one thing, the waiting is another.
• Who else is on site. You can be the best organised spark in Kent and still lose days because the ceiling grid is not in. Programme risk is a cost and it belongs in the price.
• Getting paid. Thirty days is normal, sixty happens, retention exists. If you are funding materials and labour for two months, that is working capital out of your pocket.

Build the price up in layers

Do not try to feel your way to one big number. Build it, so that when somebody asks a question you can answer it without unpicking everything.

• Labour. Hours or days per section of the job, costed at what your time has to earn. If you do not know that number, work it out first, because every quote after this one depends on it. The free Minimum Charge Calculator does the sum.
• Materials. Priced off a real wholesaler quote for anything significant, not off memory. Ask for a project price and a lead time while you are at it.
• Access, hours and site time. Out of hours work, inductions, travel, the extra visits nobody counts.
• Testing, certification and documentation. As a line, with its own hours. It is work, so it gets paid for.
• Contingency. A sensible percentage because something will not be as described. On a refurbishment with existing wiring, more than you think.
• Your margin. Profit is not what is left over at the end if you are lucky. It is a line you put in on purpose.

Then present it as one price for the job with clear sections, not an hourly rate. Commercial customers are buying certainty. They want to know what it costs, when it is finished and that the paperwork will be right.

Stage the money

On a job of any size, do not do all the work and then ask for all the money. Agree a deposit or a materials payment up front, stage payments at agreed points, and the balance on completion with the certification handed over.

Say it in the quote, plainly, as how you work. It is completely normal in commercial work and the people who do this for a living will not blink. The ones who will not agree to any of it are telling you something useful about how they pay, and you should listen.

Make sure you know who the customer actually is, too. The man on site is rarely the man who pays. Get the company name, the purchase order and the person in accounts before you start, not after the invoice goes unpaid.

Quote variations as you go

Something will change. It always does. The moment it does, price it in writing and get a yes before you do the work.

This feels awkward the first couple of times, and then you realise the site manager does it with every other trade all day long. Extra work done quietly and billed at the end is the fastest way to turn a profitable commercial job into an argument.

Do not win it on price

If you get the commercial job because you were the cheapest, you have bought yourself three weeks of hard work for no money and a customer who will drop you the moment someone cheaper appears.

What commercial buyers really want is the job done without it becoming their problem. Turn up when you said, keep them informed, hand over paperwork that is right first time, and leave the place tidy. Do that on one job and the next one often does not go out to three quotes at all, which is the whole point of commercial work in the first place.

Start with the scope

If you take one thing from this: write the scope down before you write the price. Then build the number in layers, stage the payments, and quote every change as it happens.

Pricing properly is most of what we work on inside My Electricians ToolBox, along with how to get in front of the people buying commercial work in the first place. A few hundred self employed electricians, all working out the same things.

So before you send that quote. Could you point at the line that says what is not included?