How to Price Electrical Work: A Guide for Contractors
Welcome back to the channel! Today, we’re diving into a topic that’s critical for anyone starting their own electrical business: how to price electrical work properly.
Let’s get into it.
Don’t Charge by the Hour
When starting out, one of the biggest mistakes you can make is pricing your work by the hour. It may seem like a safe bet, but quoting a flat price for the job is far better — for both you and the customer.
Quoting gives your customer peace of mind by letting them know exactly what they’ll pay. It also gives you confidence that the job will be profitable.
How to Quote Effectively
Here are some key steps to quoting correctly:
1. Put Everything in Writing
Every quote should be detailed and on paper. Include terms and conditions, such as how long the quote is valid (typically 30 days). This protects you if the client comes back six months later expecting the same price.
2. Be Specific
Be clear about what the client is paying for and what they’ll receive. This helps you and your customer stay on the same page and allows you to issue change orders if they deviate from the original scope of work.
3. Do a Thorough Walkthrough
When giving a free estimate or quote:
- Review the scope of work with the client.
- Check panel access and whether there’s room for more circuits.
- Determine if a subpanel is needed.
- Assess how much wiring is involved.
- Check if local permits or inspections will be required.
- Evaluate whether the property is finished and if access requires cutting holes in drywall (and who will pay for those repairs).
Make sure your quote clearly states that you’re not responsible for patching holes unless agreed upon.
4. Don’t Supply Fixtures
Avoid supplying customers with light fixtures or offering an allowance — let them pick their own. The only exception might be LED pot lights (wafer style), which are standard and widely accepted.
How to Price Your Quote
Now let’s talk numbers. Here’s a basic formula to follow:
- Create a rough materials list and total the estimated cost.
- Double that amount to account for labor. For example, if your materials cost $2,000, double it to $4,000.
- Add a markup of 20–30% to cover overhead and profit. Your final quote might be around $5,200–$5,600, depending on how competitive you want to be.
Keep in mind:
- Profit margins vary — some companies operate at 10%, others at 40%, depending on overhead.
- Consider the number of trips required, inspections, and how long the job will take to complete.
- If you’re essentially financing the job (waiting months to get paid), increase your markup to cover the financial burden.
Progress Billing and Deposits
For larger jobs:
- Set up draws or progress billing.
- For new clients, always ask for a deposit. If they hesitate, that’s a red flag.
- For regular clients with a solid history, you may have the flexibility to start without a deposit.
You need to protect your company, your assets, and your team — don’t be afraid to insist on terms that do that.
Revisit Old Quotes
If a customer comes back months later ready to proceed, revisit your quote before confirming. Prices for materials and labor rarely go down — they usually increase due to supply and demand issues.
Always reserve the right to adjust your pricing if too much time has passed since the original quote.
Flat Quotes vs. Time & Materials
You’ll always come out better with a flat quote rather than billing by time and materials. If the scope changes, you can adjust the quote accordingly.
But be careful — some customers will drag out jobs or continuously make changes. If things become too confusing, you may have to switch to a time and materials model mid-job to protect yourself and keep things manageable.
Once you set that boundary, most clients will fall in line and better organize their end of the project.
Final Advice
Always do your due diligence. Don’t skip walkthroughs or try to quote via FaceTime. You’ll miss details. Physically visit the job site whenever possible.
Take the time to price accurately, be transparent with the customer, and protect your business. It’s worth it in the long run.
Thanks for tuning in! Don’t forget to like and subscribe, and we’ll see you on the next one.
