Why $69.89 is a floor, not a rate to quote
$69.89 covers wages with payroll costs and about $50,100 a year of overhead, and nothing else. There is no profit in it and no van or bucket truck, which the calculator charges to each job by the hours it runs.
Most of that floor is people, not overhead. The owner is the expensive hour, because he quotes, orders, answers the phone and chases inspections, so his pay is spread over the fewest billed hours. Getting billable hours right moves the rate more than trimming a phone bill does.
The formula is explained once in the true hourly rate guide. Put your own crew and bills into the free true hourly rate calculator to see where your floor sits.
Hourly rates electricians have named
The rates electricians name run from about $70 to $125 an hour, and each one covers something different. Read the "what it covers" column before comparing.
| A | B | C | |
|---|---|---|---|
| 1 | Who | Rate | What it covers |
| 2 | A small shop owner | About $70 to $75 an hour | Wage plus overhead, before profit |
| 3 | A service electrician | $125 an hour plus parts plus 20% | Time and materials billing |
| 4 | The same electrician | $95 should have been $120 | His view of a contractor who undercharged |
| 5 | An estimating trainer | $90 an hour, $720 of labour | A sample rate in an estimating walkthrough |
| 6 | A software vendor | $45 wage becomes $81.12 | A journeyman's cost once burden is added, commercial |
The vendor's presenter says his figures are not accurate for any one shop and that you have to work out your own. The same goes for every row here.
Turning a $45 wage into a $75 hour, one bill at a time
Take every monthly bill, divide it by the hours you work in a month, and stack the results on top of the wage. It is the same math as the spreadsheet, done by hand.
Liability insurance is a good first line: $500 a month divided by 160 working hours is $3.13 an hour. Fuel, the van payment, the phone, software and every other monthly bill go through the same division. For one small shop owner starting from a $45 wage, the total landed around $75 an hour.
That $75 pays the electrician and the overhead. It does not pay the business anything. You can be earning a fair wage personally while the company makes nothing, which is why profit goes on top as its own line. This method and the spreadsheet agree within a few dollars, a decent sign that the $70 range is a floor for a small shop with a crew, not a ceiling.
What markup do electricians put on materials?
A common starting point is 15 to 25%, and electricians who price in public land between 20% and about 40%. Materials are a large share of electrical work, often half the job or more, so a few points here is real money.
- A flat 20% on time and materials jobs. Parts go on the bill at cost plus 20%, next to the hours.
- Rounding up on fixed prices. One electrician puts $700 of parts on the quote as $1,000, about a 43% markup, because the customer only sees the total.
- Doubling the materials to estimate labour. One owner doubles the materials cost to cover labour, then adds 20 to 30% depending on how competitive the job is, and says anywhere from 10 to 40% depending on overhead.
- A markup on labour too. One shop marks labour up about 20% on top of its $70 an hour, so seven hours becomes $840 instead of $700.
The materials markup pays for the counter time, returns, storage and copper prices jumping between quote and install. If your wholesaler's quote has a copper-price clause, put the same clause in yours.
Electrician profit margin: what the sample keeps and what coaches aim for
The sample 200A upgrade keeps $1,873.09 on a $6,815.89 price, a 27.5% margin, which is a 37.9% markup on its cost. Markup is on cost, margin is on price, and mixing them up is how shops end up short; the markup vs margin guide has the full explanation.
| A | B | C | |
|---|---|---|---|
| 1 | Markup on cost | Margin on price | Where it shows up |
| 2 | 20% | 16.7% | A common labour or parts add-on |
| 3 | 37.9% | 27.5% | The sample upgrade, all in |
| 4 | 43% | 30% | Rounding $700 of parts up to $1,000 |
| 5 | 100% | 50% | A coach's gross profit target, before overhead |
The 50% gross target means doubling your direct costs. That is a gross figure before overhead, not what the owner takes home, so it is not comparable with the sample's 27.5% net line. How overhead and profit sit together is in overhead and profit.
Day rate, flat rate or time and materials?
A day rate is your floor times the hours you will really bill that day: at $69.89 and 8 billable hours, $559.09 before profit. Anything you drive or wait through that day has to be priced somewhere else, or it comes out of that $559.09.
Flat rate is where the rate underneath matters most, because the customer never sees it. One way electricians build fixed prices is to multiply their daily wage by 2.5 and round materials up. Time and materials hides nothing: rate, hours, parts and markup are all on the bill.
Arguing about price is time too. In one commercial example, hours spent negotiating a change order were billed at $95 up to $225 an hour, because they are work on that job, not overhead.
Change orders: why 10 and 10 falls short
Adding 10% overhead and 10% profit to a change order, the common commercial habit, does not cover what the change really costs. Writing it up, pricing it, getting it signed and re-ordering parts are all hours on that job, before the extra work even starts.
Some builders mark change orders up 35 to 45% and collect the full amount right away, instead of billing at the end when it is easy to dispute. How to write and price them is in change orders. To see these rates applied to a full service upgrade, read how much to charge for electrical work, or let the Electrical Pricing Calculator work out your own floor from your crew and costs.