How do I price my jobs as an electrical contractor?
Pricing electrical work profitably starts with knowing your actual costs. Most electrical contractors who struggle with pricing aren’t bad at estimating. They just don’t have accurate data on what their jobs actually cost.
Start with your labor rate. Not your electrician’s hourly wage, but your fully burdened rate. Take what you pay per hour and add employer payroll taxes, workers’ comp, health insurance, paid time off, and any other benefits. An electrician making $30/hour might actually cost you $42-48/hour when you factor in the burden. If you’re pricing jobs at $30/hour for labor, you’re losing money before you even buy materials.
Materials need markup. Ordering, picking up, staging, and managing materials takes time and creates risk. Most electrical contractors mark up materials 15-25% depending on the job. Some mark up higher on specialty items they have to source. If you’re passing materials through at cost, you’re working for free on that part of the job.
Overhead has to be recovered somewhere. Your truck, tools, insurance, licensing, shop rent, phone, software, and office time all cost money. Add up your annual overhead and divide by your expected billable hours. If overhead is $60,000 per year and you bill 1,500 hours, that’s $40 per hour you need to recover just to break even on overhead. This number shocks most contractors because they’ve never calculated it.
After covering costs, add your profit margin. Profit isn’t what’s left over. It’s what you intentionally build into every job. Most electrical contractors target 10-20% net profit depending on job size and complexity. Without a deliberate profit margin, you end up working constantly and wondering why there’s nothing left at year end.
Check your price against the market. If your cost-based price is way above market rates, you have a cost problem, not a pricing problem. Either your overhead is too high, your labor efficiency needs work, or you’re going after the wrong type of jobs. If your price is below market, you have room to increase margins.
The contractors who price most accurately are the ones tracking actual costs against estimates on every job. When you know that you consistently underestimate rough-in labor by 15%, you can adjust future bids. When you can see which job types make money and which don’t, you bid accordingly. This is where job costing pays for itself. A contractor bookkeeper in American Fork who understands electrical work can set up your books so you see real profitability by job, not just a bank balance.
The pricing formula is simple. The hard part is having accurate inputs to put into it.
Utah's Construction Bookkeeping Specialists
The Next Step:
A 15-Minute Call
We'll ask a few questions about your business, figure out what you need, and give you a straightforward price.
More Questions
How do I set up QuickBooks correctly from the start?
Start with three decisions before creating your company file: accounting method, fiscal year, and entity type. Then customize your chart of accounts, set up items for what you sell, connect your bank accounts, and configure job tracking if you need to see profitability by project.
Read answerWho handles contractor bookkeeping in Orem Utah?
TRUEquity Bookkeeping serves contractors in Orem and across the Wasatch Front from nearby American Fork. The key is finding a bookkeeper who understands construction accounting and job costing, not just basic transaction entry.
Read answerHow do I track equipment hours by job?
Use daily equipment logs or telematics systems to record hours by job. Then calculate an hourly equipment rate that includes ownership and operating costs, and apply those hours to each job in your cost reports.
Read answerHow do I account for holding costs on investment properties?
Track holding costs by property and decide whether to capitalize them into the property's cost basis or expense them. The treatment depends on what type of investor you are and what you plan to do with the property.
Read answerHow do I account for change orders in my books?
Record change orders as separate line items from your original contract, tracking both the additional revenue and the associated costs. This keeps your job costing accurate so you can see true profitability on the original scope.
Read answerWhat bookkeeping challenges do HVAC companies face?
HVAC companies struggle with tracking profitability across different work types, managing parts inventory, capturing costs from technicians in the field, and handling seasonal cash flow swings. Job costing is essential but rarely set up correctly.
Read answer
