Why Most Electricians Underprice Their Work
Pricing electrical work is one of the hardest skills to get right when you're running your own business. Price too low and you're essentially paying yourself below minimum wage once your real costs are counted. Price too high — or worse, price inconsistently — and you lose work to competitors who look more confident and professional.
The root cause of underpricing is almost always the same: electricians price based on what they think a client will accept, rather than what the job actually costs to complete profitably. This guide gives you a simple, honest framework to fix that.
Step 1: Know Your True Hourly Cost
Before you can price a job, you need to know what it costs you to show up. This isn't your take-home wage — it's the full cost of running your business for an hour, including time you can't bill.
Start by listing all your annual business costs:
- Vehicle costs — fuel, insurance, registration, maintenance, loan payments
- Tools and equipment — purchases, repairs, and replacements
- Insurance — public liability, tool insurance, income protection
- Licences and registrations — trade licence, business registration, local permits
- Phone, software, and admin costs
- Accounting and bookkeeping
- Advertising and marketing
Add those up to get your annual overhead.
Next, estimate your billable hours per year. If you work 48 weeks and average 6 billable hours per day (the rest goes to driving, quoting, admin, and sourcing materials), that's roughly 1,440 billable hours.
Now work out your minimum hourly rate:
Minimum rate = (Annual overhead + target annual income) ÷ billable hours
If your overhead is $30,000/year and you want to take home $70,000, you need to recover $100,000 from 1,440 billable hours — that's roughly $70/hour just to break even. Add your profit margin on top.
Don't Forget Self-Employment Tax
As a solo operator, you pay both the employer and employee sides of your self-employment contributions. Factor that into your target income — it's easy to forget and it's a significant number.
Step 2: Price Materials Correctly
Never pass materials through at cost. When you buy materials, you're spending time to source them, transport them, store them, and handle returns when something's wrong. A standard markup of 15–30% on materials is reasonable and widely accepted in the trades.
Some electricians charge a flat materials handling fee instead. Either approach is fine — what matters is that you're recovering the real cost of materials management, not just the invoice price.
Step 3: Account for Job-Specific Costs
Every job has costs that don't show up in your hourly rate:
- Drive time — if the site is 40 minutes away, that's 80 minutes round trip you need to account for
- Waiting time — if you're waiting on another trade, you're still on the clock
- Permit fees — these should be passed through at cost (or with a small handling fee)
- Waste and off-cuts — especially on larger cabling jobs
Build these into the estimate, not into your base rate. That way your rate stays consistent and clients can see exactly what they're paying for.
Step 4: Add Your Profit Margin
Overhead recovery and your own wage are not profit. Profit is what funds your business growth — new tools, slow months, and eventually stepping back from the tools.
A healthy profit margin for a solo trades business is typically 10–20% on top of total costs. Some jobs warrant more (complex, high-risk, tight-timeline work). Applying it consistently is more important than the exact figure.
Common Pricing Mistakes to Avoid
Quoting from memory instead of a price book
When you build every quote from scratch in your head, you're inconsistent. You might charge one client $300 for a job and another client $250 for the same job three weeks later. A price book — a list of your standard services with pre-set prices — keeps you consistent and speeds up quoting dramatically.
Discounting without a reason
Dropping your price when a client pushes back signals that you were overcharging in the first place — or that you lack confidence in your value. If you need to offer a discount, tie it to something specific: early payment, a larger scope of work, or a repeat customer. A discount with a reason maintains your credibility.
Forgetting the deposit
Always quote a deposit — typically 25–50% of the total. It covers your material costs before you start work, and it filters out clients who aren't serious. Clients who refuse any deposit are often the same clients who dispute the final invoice.
Not reviewing your rates regularly
Your costs increase every year. If you set your rate two years ago and haven't reviewed it since, you're probably undercharging. Build a reminder into your calendar to review your pricing annually.
Putting It Together: A Simple Estimate
Here's what a properly priced estimate looks like in practice:
- Labor: 4 hours × your hourly rate
- Materials: itemized list at your purchase cost + markup
- Drive time: 1 hour at your rate
- Permit fee: passed through at cost
- Subtotal + your profit margin
- Deposit required: 30%
When a client sees an itemized estimate like this, they understand what they're paying for. That transparency builds trust and reduces negotiation.
VoltEstimate's price book lets you store your standard rates and tap them into an estimate in seconds, so you can build a quote like this while you're still at the job site — and send it before you leave the driveway.