Electrical How-To & Lessons · Contractor Owner
How do you price electrical work? Start with the cost of delivering the job: loaded labor, materials, job-specific expenses and a consistent share of overhead. Then calculate the selling price needed for your chosen margin. Another contractor’s rate can provide market context, but it cannot tell you whether your business is covering its costs.
Learning objective: Build a job price from your own costs and distinguish markup from margin.
In this lesson: Labor cost · Overhead and capacity · Selling price · Complete estimate · Original download · Common questions
Work through this lesson with our original Pricing Blueprint for Home Service Providers. Download the handout, then use your own numbers. Its sample percentages are teaching examples, not national rates.
Download the original Energize Us EDU Pricing Blueprint (Home Service Providers).
Important clarification: This is the original handout, preserved unchanged. Its percentages and sample rates are illustrative. The worksheet's wage × 1.30 already includes the wage; do not add that wage again in the subtotal. Adding 30% to cost is markup, not a 30% margin. Use actual cost categories without double counting and review tax treatment with your CPA. Being below a sample rate does not, by itself, prove underpricing.
In conversations with contractors in California, on the East Coast and on the West Coast, I hear different prices for electrical work. That variation is exactly why I do not start by copying another contractor’s rate. I reverse engineer the price from what my business must cover.
The first question is not “What is everybody charging?” It is “What will this scope cost us to deliver?” I need to understand wages, employer labor burden, direct job costs and overhead before choosing a target profit margin. Covering those costs establishes a planning floor. It does not create profit by itself, and an estimate still depends on accurate scope and realistic hours.
That is the cost-first lesson I want contractors to take from my Jobber pricing conversation: know your own numbers and review the classifications with your accountant. A price that works for another company, crew or region may not cover yours.
Imagine winning an electrical job that looks straightforward. Then access takes longer than expected. A material pickup interrupts the crew. Closeout takes another visit.
This is an illustrative situation, not a client story. But it shows the weakness in a price built only around installation time. The work around the work still consumes capacity.
Before calculating a number, write the scope. Include quantities, access, equipment, expected results, exclusions, and conditions that still need verification. Identify the process for approving changes. The customer and the crew should be looking at the same job, not two different interpretations of a short description.
A clear scope will not eliminate uncertainty. It gives you somewhere to put it instead of hiding it inside a hopeful estimate.
Build labor-hours by task and role. Two people working eight hours represent 16 labor-hours, not eight. Include relevant planning, travel, setup, testing, and documentation time under a consistent estimating method.
Start with the employee’s wage as an input to loaded labor cost. Add the employer labor costs your business assigns to that labor, such as applicable payroll taxes, benefits or insurance, using your own figures and consistent accounting classifications. Loaded labor cost already includes the wage: do not add the wage a second time after calculating the job’s costs. Count owner labor too.
Next, allocate overhead once. If an expense is already included in loaded labor or a direct job cost, do not count it again in overhead. Divide planned overhead by realistic recoverable capacity under a consistent method, then apply the appropriate share to the job. Your accountant can help keep the categories consistent.
Add current material costs and the job-specific items: rentals, subcontractors, delivery, disposal, and applicable project fees. Office support, software, insurance and vehicles also need to be covered under the overhead method you have chosen; include each expense in its assigned category only once.
Once the planned cost base is complete, choose and calculate the amount you intend to leave above it. Cost coverage and profit are different steps. There is no universal national hourly rate in this process—there is a cost picture for your business, your crew and this scope, followed by an intentional pricing decision.
An hourly wage is one input. Employer costs assigned to labor, such as applicable payroll costs, benefits and workers’ compensation, can add to that input. Use actual records and a consistent accounting method. If an expense is included in loaded labor, do not add it again in overhead.
Paid time and billable time are not always the same. Spreading costs across every paid hour while recovering revenue through fewer hours can leave a shortfall.
Simplified single-technician illustration—not a recommended rate:
This is an illustrative labor-and-overhead component, not a complete quote. Materials, additional job-specific costs and separately applicable tax still require consistent treatment. Planned margin here is not a promise of company net profit. Because total paid labor has already been spread across recoverable hours, do not add those same nonbillable wages again. Multi-person businesses must allocate across actual crew capacity consistently.
This distinction matters when you turn that cost picture into a selling price.
Markup measures the amount added as a percentage of cost. Margin measures the amount remaining as a percentage of the selling price.
If the cost base is $1,000 and you add 20%, the price is $1,200. The $200 difference is 16.7% of that price. It is not a 20% margin.
To leave 20% of the selling price above the same cost base, divide $1,000 by 0.80. The price is $1,250.
Always identify what the cost base includes. A margin measured against direct costs is different from the amount remaining after allocated overhead. Neither automatically equals your company's final net profit.
These numbers are entirely illustrative, not a real job or a recommended rate:
To leave 20% of the selling price above that planned cost base, divide $2,500 by 0.80. The resulting price is $3,125, before any separately applicable sales tax.
The planned difference is $625: a 25% markup on cost and a 20% margin against that same cost base. It is not guaranteed profit. Actual hours, costs, and overhead still determine the result.
Our original Pricing Blueprint for Home Service Providers addresses the nervousness that leads new contractors to guess. It is a teaching handout for identifying the categories around an hourly service price, not a universal rate sheet.
After closeout, compare estimated and actual labor-hours, materials, and other costs. Record what changed and why. Then update the assumption that missed, rather than repeating it on the next estimate.
The goal is not a number that sounds confident. It is a price you can explain, a scope you can deliver, and a review process that makes the next decision better.
For support connecting pricing, customer follow-up, operating routines, and team responsibilities, explore BULD by Energize Us EDU.
Use market information for positioning, not as a replacement for your cost calculation. Establish required recovery, then evaluate scope, service, efficiency and customer value.
No. $1,000 cost plus 20% is a $1,200 price and 16.7% margin against that cost base. A 20% margin requires $1,250.
Not if loaded labor already includes it. Wages plus employer costs assigned to labor form loaded labor. Count each cost once.
When wages, overhead, materials or recoverable capacity change, and against actual results after completed jobs.
Take one completed estimate and one upcoming estimate. Record paid-labor assumptions, recoverable labor-hours, materials, other direct costs, overhead allocation and intended margin. For the completed job, replace estimates with actuals. Identify one assumption to correct before the next quote.
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.
Download the original Energize Us EDU Pricing Blueprint (Home Service Providers).
Important clarification: This is the original handout, preserved unchanged. Its percentages and sample rates are illustrative. The worksheet's wage × 1.30 already includes the wage; do not add that wage again in the subtotal. Adding 30% to cost is markup, not a 30% margin. Use actual cost categories without double counting and review tax treatment with your CPA. Being below a sample rate does not, by itself, prove underpricing.
Keep learning: Plan an electrical bid with clear scope.