Pricing electrical work so the margin survives the job

Underquoting an electrical job almost never feels like underquoting at the time. It feels like being competitive. The margin disappears later, in the parts of the job nobody priced: the extra visit because the site wasn't ready, the diagnostic hour on a fault that wasn't in the scope, the certification and paperwork after the van has left.

Pricing electrical work well is mostly about counting things that don't look like work. This post covers the 3 places margin leaks on an Adelaide electrical contracting business (the domestic and commercial split, quoting volume with a low strike rate, and maintenance work that never gets sold) and how to price against each. It sits under the wider guide on what changes as an Adelaide trade business grows.

Price is a margin decision, not a rate decision

An hourly rate is an input to a price. It isn't the price, and treating it as the price is the root of most underquoting.

A price has to cover 4 things: the labour hours actually consumed, the materials at what you paid plus a handling margin, the share of overhead that job has to carry, and the margin the business needs to keep existing. Miss any of the 4 and you've quoted a number that loses money slowly enough that you won't notice for a year.

The hours are where the counting goes wrong. On an electrical job, the billable-looking time is the time on the tools. The rest is real and nobody bills it: travel between sites, the supplier run, the site meeting, the call with the builder about access, the testing and certification, the photos, the invoice. On short domestic jobs that non-tool time can be a large share of the day.

Start by measuring it rather than estimating it. A fortnight of honest time recording, split into on-tools, travel, supplier, admin and unpaid rework, tells you what proportion of a paid day is actually productive. What a tradie should charge per hour works through the cost-per-productive-hour logic that comes out of it.

Domestic and commercial are 2 different businesses

Electrical contractors routinely run both and price them as though they behave the same way. They don't.

Domestic work is short, frequent and scheduled tightly. Margin per job is usually healthy in percentage terms, but travel and setup eat a big share of every day, the customer often decides on the spot, and getting paid is normally quick. The risk is volume: lots of small jobs means lots of small quotes, lots of small invoices, and an administrative load out of proportion to the revenue.

Commercial work is longer, larger, and paid on terms. Margin per job in percentage terms is usually thinner, but the overhead recovery per day on site is far better because the crew stays put. The risks are different too: variations, extended payment terms, retention on larger contracts, and a project manager whose delays become your cost.

Price them separately, cost them separately, and look at gross margin per division rather than a single blended number. A blended margin hides the case where the commercial work is quietly subsidised by the domestic work, or the reverse. That distinction is what job costing exists for, and the job costing habit that makes fixed pricing safe covers how to run it without a finance department.

Quoting volume with a low strike rate

Here's the trap that catches busy electrical businesses. Quoting is unpaid work, and the more quotes you write, the more unpaid work you're doing.

Do the arithmetic on your own numbers. If a quote takes 45 minutes including the site visit, and you write 20 a month, that's 15 hours. If 1 in 5 converts, then every won job carried the cost of 5 quotes: nearly 4 hours of unbilled time before the first cable is run. That cost belongs in the price of the work you do win, and in almost every business it isn't there.

There are 3 sensible responses, and they work together.

• Quote less, better. Qualify before the site visit. Budget, timeframe, decision-maker, whether they've asked 4 other contractors. A short call filters more than people expect.
• Speed up the response. In domestic work especially, whoever quotes first often wins. A same-day quote from a template beats a perfect quote 5 days later.
• Charge for the heavy ones. A detailed scope on a complex job is design work. Charging a fee that's credited against the job if it proceeds filters out the tyre-kickers and pays for the ones that don't.

What a low strike rate is actually telling you

A low conversion rate is information, and the useful move is finding out which kind.

If you're losing on price consistently to the same competitors, you're either in the wrong segment or your cost base genuinely is higher, and the answer isn't dropping the price. It's changing what you sell or who you sell it to.

If you're losing after a long delay, it's speed, not price. If you're losing without ever hearing back, the quote itself is the problem: too little detail, no explanation of inclusions, no clear next step.

And if you're winning nearly everything you quote, the price is too low. That isn't something to be pleased about: it means the market would have paid more for the same work.

The habit that makes this work is asking. A short message to a customer who went elsewhere ("no problem, would you mind telling me what decided it?") produces better information than any amount of guessing, and most people answer. Quoting a job properly as a tradie covers what a quote needs to contain so it stops losing on presentation.

Recurring maintenance: the revenue that doesn't need re-selling

The structural weakness of contracting is that revenue resets to 0 every month. Maintenance work is the standard answer, and most electrical businesses are sitting on it without selling it.

Testing and tagging, emergency and exit lighting checks, switchboard inspections, thermal scans, periodic checks on commercial sites: this is scheduled, repeatable work with a known duration on sites you already attend. It fills the quiet weeks, it's quoted once and delivered many times, and it puts you on site regularly, which is where the larger jobs come from.

There are 3 things that make it work commercially.

• Sell it as a schedule, not as a job. An agreed annual plan with fixed visit dates, priced per visit or per annum, beats a reactive call every time.
• Schedule it into the trough. Put the maintenance visits in the weeks that are historically quiet, so it fills capacity rather than competing with project work.
• Price it on the real duration. Maintenance is often quoted from optimism. Time a full round properly, including the reporting, before it goes on a fixed price.

The businesses that get past the boom-and-quiet cycle almost always have a base layer of this underneath the project work. It doesn't make the business exciting. It makes it predictable, and predictable is what lets you hire.

The 3 checks before a quote goes out

A short discipline, applied every time.

1. Have I counted the invisible hours? Travel, supplier runs, testing, certification, paperwork, and a realistic allowance for the return visit.
2. Does this job carry its share of overhead? Vehicle, insurance, tools, phone, software, administration, the owner's own non-billable week. Overheads don't attach themselves.
3. What does the last comparable job say? If a similar job ran well over the estimate, that overrun is the estimate, not the optimistic version.

Do those 3 for a quarter and the pattern shows up: the job types that consistently blow out are the ones to reprice, restructure, or stop quoting altogether.

Where to start if the numbers aren't there yet

If you can't answer "what did that job actually cost", pricing is guesswork with a nice font. Start with the costing on the next 10 jobs: quoted hours against actual hours, quoted materials against actual materials, and any rework. That's a fortnight of mild annoyance and it changes every price you write afterwards.

For the sector-specific version, the electrical business coaching page sets out the problems Adelaide electrical contractors usually bring to a first conversation, from the domestic and commercial split to the quoting load.