Electrician How-To Lesson · Electrical contractors and owners preparing to grow
Before you price the next electrical job, understand what it costs to keep your business operating. Separate one-time setup costs, recurring overhead and costs tied to particular jobs. Then use your own records to build a monthly baseline you can explain.
That is where I start. We talk with contractors in California, on the East Coast and across the country. Their prices vary. Copying another company's rate does not tell you whether your own costs are covered. I work backward from costs, labor burden, overhead and the profit target we want to plan toward.
This lesson is the first part of that process: knowing what the business is committed to before deciding what a customer should pay.
Picture a hypothetical electrical contractor with two busy crews. The owner can tell you which jobs start Monday and which materials need ordering. Ask what the business costs each month, and the answer becomes a list from memory: payroll, trucks, insurance, a few subscriptions.
Then another charge appears. A renewal, a repair or a service the office still uses. It was missing from the owner's mental picture.
You do not need a perfect forecast to start. You need a complete enough picture to see what you know, what you estimated and what still needs an answer.
Our original May BULD workbook asks contractors to separate one-time startup costs from recurring overhead, recognize fixed and variable costs, and calculate a monthly burn rate.
Start with these groups:
The categories need to match your records. A vehicle used across several jobs, for example, needs a consistent treatment. Ask your bookkeeper how it is recorded rather than changing categories whenever a different answer looks better.
Use records from a recent, representative period rather than guessing from your bank balance.
For each cost, write its name, amount, frequency and source. Mark whether the amount is actual or estimated. An annual charge can be shown as a monthly planning equivalent while its actual payment date stays visible separately.
That distinction matters. A monthly planning allowance does not change when the bill must be paid. Likewise, cash leaving the account and an accounting expense are not always the same thing. Have the person who maintains your books help reconcile the view.
Include owner responsibilities, too. If you handle estimating, coordination and paperwork, those hours do not disappear just because you do the work yourself. Record the responsibility and discuss how its cost belongs in the model.
As you connect this baseline to pricing, watch for overlap. An employee's wage and employer labor burden are related inputs. A loaded labor figure may already include both. Adding the wage again would overstate the cost.
The same issue can happen with overhead. If a cost has already been assigned to a job, do not also recover that exact cost a second time without understanding the allocation.
Your goal here is a model you can explain, not the biggest possible total. The next step is to connect those costs to the work your business can realistically complete and sell. Our cost-based electrical pricing lesson continues that process.
Download the original BULD May Workbook. Turn to Module 1 on page 4 and use the notes and questions pages that follow.
The printed assignment is to list your operating costs and calculate your monthly burn rate. To work through it, add these headings to your notes:
Those headings are this lesson's suggested activity, not a new form inside the original PDF. Finish by choosing one missing cost to confirm and one assumption to review with your bookkeeper.
The workbook retains its original 2025 course context. Its software list and tax-planning topics are historical teaching references, not current product recommendations or individualized tax advice.
No. It is an input to your pricing model. Workload, realistic capacity, job costs and your intended profit margin still need to be considered. Another contractor's hourly rate cannot answer those questions for you.
It does not establish that by itself. You need a clear view of all relevant costs and the selling price. Our markup and profit margin lesson explains the difference between adding to cost and measuring margin against revenue.
Keep the variation visible. Compare actual periods, identify the reason for larger changes and update the assumptions. The baseline should help you ask better questions, not hide fluctuations inside one permanent number.
Before your next estimate, explain your monthly baseline to someone else. Where did the figures come from? Which commitments continue without a new job? Which costs move with the work? If you cannot explain a line, that is the next item to investigate.
This is the kind of practical business work we develop through BULD by Energize Us EDU.
I’m Wilson Matthew Betances, and my mission is simple: Building the People Who Build Things. Take one thing from this lesson and put it to work. If it helped, keep learning with us.