You remember when you first became a licensed electrician, and you were just happy to receive a large electrical project from a new customer? As a result, you probably understated the average cost of common electrical services, so customers would choose your company over a flashier competitor with huge billboards all over town, or TV and radio ads blaring across the airwaves.

Your strategy was effective. After seeing your electrician rates and hourly rates, your customers hired you to install ceiling fans, replace light fixtures, and equip their smart homes. These low-ball cost estimates barely cover your operating costs for labor and materials, let alone provide enough to cover company overhead or help your business grow.

Your average prices for fixing a light switch or replacing a bad circuit breaker don’t cover what you need to do business, and probably never did. Your strategy was to break into a new market and attract new customers. Totally understandable.

Now is the time to reassess your company’s electrical pricing guides to make sure you’re charging the right amount for every electrical job and earning the full value of the work done. Start by switching to flat-rate pricing and equipping your technicians with an easy-to-use electrical pricebook. Below, we will tell you why.

Focus on safety first when pricing electrical jobs

Every time your electricians perform a job, do they assess electrical hazards? To make sure everything is up to code, will they inspect the home’s wiring and electrical panel? Provide homeowners with a membership agreement and periodic check-ups to ensure their electrical safety?

If an electrical contractor only fixes a reported problem, such as a faulty light switch or non-working outlet, without inspecting the entire electrical system, then customers can be at risk, and money can be lost.

A homeowner may call to find out how much your electricians charge, but it’s up to your technicians to educate them about electrical safety and explain the importance of hiring a master electrician or journeyman electrician who knows how to spot dangerous electrical problems. Customers with older homes with old wiring may be at risk of serious safety hazards.

However, putting safety first does not mean selling services to customers they don’t need. Electricians inspect the entire electrical system, so homeowners can identify issues now and possible fixes in the future.

To price right, you need the right tools

Your estimators and electricians can use a digital price book to communicate with customers in a more effective manner, since it serves to explain recommended services in simple terms and provides independent resources to validate. A price guide for electricians eliminates the inefficiencies owners face when making changes on the fly, because it consistently tracks everything, from time and material pricing to what goes into each task.

The electricians don’t upsell clients or try to entice them into paying for unnecessary services. Instead, they are able to use the various templates set up in the SAWIN app to easily bundle or sell add-ons specifically related to what the customer had called about.

Utilize electrical flat-rate pricing as a better cost guide

Consumers of today are accustomed to researching information online, such as installation costs for a new attic fan or amp requirements for more efficient air conditioning. On the web, they can find links to see how much their home improvement project costs on a national average, or even compare costs based on their local ZIP code.

However, those average prices may only tell part of the story, especially when they’re based on electrical contractors who use a time-and-materials model rather than a flat-rate pricing scheme.

To put it simply, the amount of labor hours and materials you need for a job should not be your only operating expense. Among your overhead expenses are utilities, rent, inventory, insurance, marketing, gas, and equipment maintenance and repair. You must know how much revenue you need to earn in order to increase your profit margins.

Including flat-rate pricing in your electrical work pricing guide gives your customers value, because they know the costs up front and pay a fixed rate for service that includes time, materials, overhead, and profit margins.

SAWIN Service Automation software offers the following benefits when combined with flat-rate pricing:

• Electrical estimating offering good, better, and best options at different price points to aid customers in their decision-making process.
• Increasing cash flow and efficiency through automated electrical invoicing.
• Estimates can be produced on a mobile tablet via a touchscreen interface, arranged by item category.
• A number of tools that electricians use to educate customers, such as pictures, diagnosis, and solutions.

A guide for pricing electrical work

Service contractors must follow four steps to set electrical prices accurately:

• Calculate your company’s operating costs.
• Confirm the scope of the job at the customer’s home or business.
• Determine how much material will be needed.
• Estimate the labor costs.

In addition to time and material, your operating costs include many other factors. Estimate your overhead costs each month (rent, utilities, insurance, etc.). Divide the total overhead cost by the total number of billable hours to determine the price per hour you need to charge to break even or grow your net profits.

Always inspect the problem in person before bidding on an electrical job.

Before you can get an idea of how much it will cost to rewire the building or to add new wiring and receptacles, you need to know its specifications and the scope of the work.

Outline all the electrical components, light fixtures, and outlets that you will need to complete the project and the types and quantities of each. Decide what needs to be ordered, where you can get your supplies, and when they can be delivered.

Calculating labor costs can be challenging.

• Calculate how many hours it will take to complete the project and whether you will need to hire additional help.
• Calculate your labor rate using a shop average (based on labor averages from the previous 12 months) or a job average (based on average wages and crew expertise).
• Calculate the true labor costs by multiplying the per hour labor rate by the estimated labor hours.
• In addition, include the costs of employee benefits, such as vacation pay, pensions, insurance, and payroll taxes.

With the easy-to-use tools in SAWIN Service Automation software, you can quickly determine if your electrical prices are within the right range by calculating gross margins and total revenue per job.