Why published averages are the wrong starting point
The hourly figures homeowners find online blend apprentices with masters, rural with metro, unlicensed handymen with insured contractors carrying bond and permit overhead. Anchoring your rate to that blend guarantees you are either leaving money on the table or losing work you should have won.
Use averages as a sanity check at the end, after you have built your own number. If your calculated rate lands far outside your local market, the answer is usually a cost problem or a utilisation problem, not a pricing one.
Start with loaded labor cost per electrician
Take the wage, then add payroll taxes, workers' compensation — which is not cheap in electrical work — general liability, health contributions, paid time off, licence and continuing education costs, and the phone and small tools you supply.
The loaded cost typically lands 35-60% above the raw wage. That is the real cost of an hour of that person's time before the business has earned anything.
- Wage plus payroll taxes and workers' compensation.
- Liability insurance and bonding attributable to the person.
- Licence renewals, CEUs, and safety training.
- Phone, small tools, PPE, and consumables.
Add the truck
A service van is a rolling warehouse with a payment, fuel, insurance, tyres, maintenance, and stocked inventory that ties up cash. Total its annual cost and divide it across the hours that van actually produces revenue.
Vehicle recovery is one of the most commonly omitted inputs in electrical pricing, and on a stocked service truck it is rarely a small number.
Divide overhead by billable hours, not paid hours
Office rent, software, accounting, advertising, the person answering the phone, permit runners, warranty callbacks, and your own admin time all have to be recovered from billed hours.
This is where most rates break: a full-time electrician rarely bills 2,080 hours. Between drive time, shop time, supply house trips, training, holidays, and slow weeks, 1,200-1,500 billable hours is a realistic planning figure. Dividing overhead by the optimistic number is how a busy shop stays unprofitable.
- Total annual overhead, including your own non-billable time.
- Estimate billable hours honestly from last year's timesheets.
- Overhead per billable hour = total overhead ÷ billable hours.
- Re-run the number whenever headcount or the office changes.
Choose a margin and convert it correctly
Add loaded labor, vehicle recovery, and overhead recovery to get your break-even hourly cost. Profit goes on top as a deliberate margin — the money that funds equipment replacement, absorbs a bad quarter, and pays you for carrying risk and licence liability.
Convert with division, not multiplication: divide the cost by (1 minus your target margin). Marking cost up by 25% produces a 20% margin, not 25%, and across a year of service calls that gap is a real number.
Price the service call separately
Diagnostics are a service in their own right: the drive, the truck stock, and the expertise that finds the fault in twenty minutes instead of two hours. Charge a service call or diagnostic fee that covers the visit, and state clearly whether it is credited against the repair if the customer proceeds.
Publishing the fee before you dispatch filters out price-shoppers and protects the schedule for customers who intend to buy work.
Know when flat rate beats hourly
For repeatable residential work — a panel swap, a ceiling fan, adding a circuit, an EV charger install — flat-rate pricing from a price book is usually better for both sides. The customer gets certainty, and you stop being punished for being fast.
Keep hourly, time-and-materials pricing for genuinely unpredictable work: troubleshooting, old wiring, and remodels where what is behind the wall decides the day. Build the flat rates from the same hourly arithmetic, using your real average times.
- Flat rate: common, repeatable installs and replacements.
- Hourly: troubleshooting, service upgrades on unknown systems, remodels.
- Either way, build the number from loaded cost, not a competitor's price.
- Track actual hours against quoted hours and correct the price book quarterly.