As an electrician, you provide vital services that support and power modern infrastructures and maintain safe electricity usage. Whether you're an electrical contractor or a small business owner, you want to ensure that your business is profitable and reflects the quality and intensity of the work you put into each electrical project.
Once you’ve taken the steps on how to become an electrician the next step is to set your prices. Fair pricing can help your business flourish while ensuring that it remains profitable. This guide to electrical pricing will walk you through setting your prices as an electrician and offer tips to help you fine-tune your prices for your local market.
Step 1: Research your market
One of the best marketing tips for electricians starts with knowing your market. Since the market in which you offer your electrical services can heavily influence your pricing decisions, invest time in research. Ask yourself the following questions:
What services do other electrical businesses offer, and how much do they charge?
Start by researching the other electricians in your area to see which services they offer and their going rate for those services. Compare your skills and offerings to those. For example, do you have a niche electrical skill, or are you able to complete a wide variety of jobs? If so, you may be able to price these offerings at a higher rate.
Some of the typical electrical services you may want to evaluate include:
- Home inspections
- Upgrading an electrical panel
- Installing a generator
- Repairing or changing electrical outlets
- Installing new light fixtures or ceiling fans
- Adding new wiring to a house
- Installing smart home features
Meanwhile, you can gain an edge by offering more niche electrical work as well, such as:
- Installing home theaters and entertainment systems
- Setting up outdoor home lighting, such as for decks, pools, and patios
- Providing electrical services for events and holiday displays
Understanding what services other electricians in your area offer, what they charge, and how you can expand on those offerings can help you to stay competitive with your pricing. It will also help you understand how you can provide more value to your client base.
What advantages can you offer?
After you’ve done some research, you should have a fair idea of what customers are willing to pay for specific electrical installation services in your area. To be competitive, price your work similarly.
To set your electrical business apart even further, focus on the advantages you can provide for your future customers, such as:
- Faster service
- Volume discounts
- A wider variety of services
For example, Allen Electrical Services in Louisville, KY, offers customers same-day electrical services for emergency repairs. By doing so, they offer an advantage to customers who need fast electrical service or who may be facing electrical hazards at home.
Don’t forget that exceptional customer service and communication can be advantages for customers, too. To heighten your advantage, find new ways to connect with your community, such as utilizing a Nextdoor Business Page to share updates, offer deals, and connect with your potential clients in your neighborhood.
Step 2: Outline your pricing structure
Whether you’re an independent electrical contractor or you run your own small electrical business, you can choose to bill your electrical services in several different ways. The best option for you depends on the services you offer, the number of electricians you employ, and your operating costs.
When setting up your pricing structure, consider the following easy-to-calculate options:
- Hourly rate – Some electricians choose to bill each electrical job on an hourly basis. For example, if you bill your services at $100 per hour and anticipate a job will take five hours to complete, you’d quote your customer $500. There are pros and cons to the hourly rate method, as it doesn’t take into account delays or unexpected equipment costs. However, compared to other methods, this pricing structure is relatively easy for customers to understand.
- Flat rate cost – You can also choose to bill your customers a flat rate based on the electrical service they need. For example, perhaps you always charge $150 to install a new light switch and $300 for a new light installation. Breaking costs down in this way also allows you to be transparent with customers and provide some peace of mind about the total cost. However, you might want to give yourself a little more of a cushion in case a job takes longer than expected or requires additional equipment.
- Installed material and equipment costs – Whichever method you use for pricing, you should always make sure to include the cost of materials and equipment used for the electrical project. For example, if you’re doing electrical installations like replacing aluminum wire with copper wire, that’s between $6 and $10 per square foot, including labor costs.
Along with these considerations, the price for an electrical job must factor in the number of workers needed to complete it. If you work alone, you only have to account for your own labor. However, if you employ a larger team of electricians, you’ll need to multiply the labor costs for all of the workers for an accurate price.
For example, let’s say you follow an hourly pricing structure and quote a job that will take three electricians four hours to complete. That means you must bill 12 total hours of labor, not just three. When you employ a full team, correctly calculating your pricing is especially vital, as it allows you to ensure that everyone is paid fairly for their work.
Step 3: Draft your list of prices
Next, to ensure that you're ready to provide quotes for any job that comes your way, you’ll need to draft your list of prices for the different services you offer. As you do, reference the research you’ve completed on the prices other local electricians charge for the same services.
However, there are also some loose national guidelines and averages you can begin with. For example, the average hourly rates for electricians range from $50–$100 per hour.
You can also take note of averages for specific services. For example:
- Home inspections typically cost between $200–$500
- Electrical panel upgrades range from $550–$2000
- New switches and sockets average $150–$250 each
- New electrical wiring costs more than $1,200 on average
- New or upgraded generators range from $1400–$7750
As you can see from the wide differences between some of these prices, the area in which you live and the size of the job can heavily influence what you should charge for your services. This is why it’s critical to spend the necessary time researching local competitors when working on your pricing structure.
Step 4: Calculate your overhead costs
Of course, the cost of completing a job isn’t the only cost of running an electrical business. To ensure you can charge your customers fairly but not lose money in the process, you’ll also need to account for overhead costs.
Electrical Contractor Magazine outlines these additional costs to consider for the most accurate pricing:
- Rolling overhead – This is the cost of keeping yourself and other electricians who work for you out in the field. Calculate your costs for necessities such as uniforms, tools, service trucks, truck maintenance, and other operating expenses.
- Base overhead – Base overhead is the cost of support for you and any electricians you employ. You might have an office person who is responsible for handling calls, scheduling work, and invoicing. Base overhead also includes the costs of training, materials, supplies, office space, utilities, insurance, and communication expenses.
Building these prices into your electrical pricing allows you to stay profitable and maintain the necessities your business needs to thrive.
Step 5: Complete your electrical pricing structure
Once you have chosen a pricing structure, determined your prices for individual services, and calculated any overhead, you should be prepared to come up with a list of prices for your electrical services.
First, determine the income you need for your business to be profitable by adding:
- Estimates for rolling overhead
- Base overhead costs
- Salaries for salaried employees, if applicable
The sum of these three components is the bare minimum you must earn to keep your business running. As you complete your final pricing structure, compare this minimum income to your price lists and rates to ensure that you’ll be able to earn your desired profit, not just break even.
Step 6: Solicit feedback on your pricing and services
Once you’ve set up your pricing, don’t be afraid to ask for feedback from potential clients. You can use Nextdoor Business Posts to share updates and interact with your community. Ask customers right in your neighborhood if they think your pricing structure is fair and competitive.
You can also solicit recommendations from clients once you’ve completed a few jobs. Demonstrating the quality of your work is a key step in growing your business.
For example, check out this case study on Flowing Current Electric, a residential electric business in Clayton, North Carolina. This electrician was able to build a prospering business by:
- Visiting his Nextdoor business page daily
- Responding to his residential customers’ feedback
- Sharing pictures of his work with his neighbors
By staying in tune with your neighborhood’s needs and interacting with potential customers, you’ll be able to build valuable insights needed to craft a solid, fairly priced, truly local business.
Nextdoor: Your top tool for customer feedback and referrals
Calculating the costs of your electrical services can be a complex task. However, it’s a fundamental part of helping your electrical business grow and showing your community that you have their interests in mind.
Remember, however, that your price list doesn’t have to remain stagnant. As you take steps to advance your skills and service offerings, update your pricing to reflect these developments.
Whichever pricing method you choose, don’t skip using Nextdoor for your business. Our business tools are ideal for those trying to find their place in their local market. With Nextdoor, you can connect to your customers and share the most updated information about your pricing and services. Claim your free Business Page today to get started.
