Industry sector:

Electrician: Pricing policy

How will you decide on your prices?

Think about how you will charge for the work you do. For example, you might:

  • charge for your services on an hourly or daily basis, adding to this the cost of any materials that you supply
  • quote on a 'fixed price per job' basis; you might, for example, have a standard charge for wiring in a loft light and switch, installing a socket or providing an electrician's report for a home buyer

You may decide to use different methods of costing for different jobs, depending on the customer and the type of work.

It is very important that you set your charges carefully. You must make sure when deciding on what to charge that, assuming you get enough work, you will earn enough to cover all of your operating costs, including your drawings. Your charges should also reflect your skills and qualifications. Make sure when you set your prices that you will be working for a reasonable hourly rate. The same goes for any staff you employ - be sure that you will earn a reasonable margin for the business on top of the wages you pay them. Bear in mind, however, that the sector is very competitive and you are likely to have to have to price in line with your immediate competitors unless you are targeting a niche market that your competitors do not cater for.

Consider the following when setting your charges:

  • what do your competitors charge for similar work
  • do you aim to win business away from your competitors with attractive pricing
  • will you vary your rate depending on the type and complexity of the work involved
  • will you make a profit on any of the goods and materials that you supply, or will you pass these on at cost
  • will you make a call-out charge for some types of job
  • will you charge a higher rate (for example double time) for out of hours emergency work

Quote or estimate

If you give a quote for a job, that is a fixed price. Once it has been accepted by the customer the price can't be changed, even if there is a lot more work to do than you realised when you prepared the quote. So your quotes should give precise details of what is covered and make it quite clear that any variations or extras not covered by the quote will be charged for as extras.

An estimate is not a fixed price, it is just your best guess of what the job is likely to cost. You are not bound by it. It is perfectly acceptable to provide several estimates, each taking into account different circumstances from best to worst case scenario.

Where necessary explain to customers what could lead to the price for a job having to change - for example a whole circuit that needs up-rating before a new appliance can be installed. And if the customer asks for extra work, such as additional sockets, to be done during the course of a job, be clear about how this will affect the overall cost.

It is usual to provide estimates and quotes free of charge on a no-obligation basis. You might, though, decide to make a charge for more complex and time consuming consultancy work - perhaps you will refund this charge if it leads on to a substantial contract.

Trade rates

Clients that are other businesses might expect you to offer them a special 'trade rate'. Large organisations that invite firms such as yours to tender for contract work will also expect your rates to be very competitive, as will insurance companies.

Be aware that many of your clients will get quotes from several different electricians so you need to be able to quote accurately and competitively. Do remember though that many people value good, efficient service and are prepared to pay a realistic price for it. Above all, make sure that you don't end up working at a loss because your quote was too low.

Special guides are available to help you when pricing electrical work. They give up to date advice on what rates to charge for particular types of work and the likely cost of the materials required. One example is Spon's Mechanical and Electrical Services Price Book - visit the CRC Press website to find out more.

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