No matter the industry, scope of work or customer demands, business owners across the board will face challenges. Working electric the electrical business in the trade business is no exception. As a sole trader or business owner in this field, one of the most important aspects to get right from the offset is your pricing. Not only will this determine your profitability – therefore, your salary – it also determines how many customers opt for your services. Setting prices substantially higher than competitors in your area will drive potential customers away. On the other hand, prices seen as suspiciously low will also deter customers from your business, thinking of you as a ‘lower-quality, cheap’ option. To put it simply, your pricing strategy needs to be solid. So how do you do it? In this blog, we have set out a comprehensive pricing guide for your startup electrical business and sole traders looking to put a solid, accurate and sustainable pricing structure in place for long-term success.
Understand Costs
When setting a pricing strategy, start by calculating your overhead costs—it’s your essential first step. You need a clear breakdown of rent, utilities, insurance, and business licences in your cost outline. Include all outgoing payments such as salaries and job management software subscriptions in your calculations. Don’t forget to include your own salary, not just those of your current team members. Also factor in equipment maintenance, tools, monthly materials, supplies, and petrol for on-site travel.
Researching Your Market
Competitor understanding is a must. Take a look at other electrical trade businesses operating in the same area as you. When doing so, gather information on their going rates for various services they offer. It’s important to analyse if there is an ongoing pricing trend between these prices or if discounts are offered for service packages. If the demand for electricians is high in your area, this may result in slightly high prices. As a business owner, this will be an ongoing admin task as you will want to ensure your prices always align with others in the market.
Your Pricing Model
How you charge customers for your electrical business is entirely up to you as the trade business owner. You’ll decide whether to charge an hourly rate, a flat fee, or use a combination of both methods. If charging hourly, start by calculating what you should earn per hour, week, and month. This ensures you cover outgoings, general business costs, and reach your desired profit targets. When using flat fees, estimate the average time and materials needed for your most common jobs. Then add a margin that reflects your profit goals while keeping your pricing competitive and realistic.
Set Base Rates
What are you willing to charge as a minimum for your individual services? You will need to establish the lowest costs you can accept as a business to cover your basic costs – anything higher than that will be your profit. To start off, you should create a price list for your electrical business for your standard services, including inspections, outlet repairs, wiring installations and other generic, everyday tasks. When working on this pricing outline, include fees for emergency rates at antisocial hours (if applicable) and call-out fees if this is a part of your working module.
Value-Added Services
Are you set to just operating with basic, mainstream services? Are you considering all the ways in which you can make the most profit as an electrical business business? Adding additional and specialist services to your catalogue will optimise the cash flow for greater success. To do so, identify these extra services and offerings that may differentiate your business from others in your local area. These could be smart home installations or energy audits. Once you have these established, set your prices. These prices will be determined based on the value they provide to the customer, not just how much time it takes to conduct them. You may also want to add packages and maintenance contracts to your catalogue, as this guarantees ongoing income streams.
Continuous Monitoring
Now, your starting pricing structure is in place, you can add these to your website and relevant platforms for your customers to see. This in mind, you can then establish their reaction to these prices, collect feedback, and monitor if they feel your service quality and prices are of good value. With this data, you can then continuously adjust your prices when it is necessary to meet customer expectations and competitors. Keep in mind that changing your prices too often may put people off your services, seeing you as an unreliable provider.
Communication
Finally, always prioritise your customers. Offering clear, transparent, and easy-to-follow communication regarding your pricing will make a potential client more inclined to choose your services. You may also provide detailed quotes and invoices via an electrician trade management app, breaking down the costs for labour, materials, and any additional fees. Finally, always offer upfront details about any potential extra costs they may see; this helps when building trust with your clients.
So, what do we know? Pricing strategies are crucial to the success of any trade business, especially in the electrical field. It must be a top priority for those working in such a demanding and competitive environment. Carefully analyse industry standards for pricing to understand what works in your specific market. Establish the right pricing model for your business by considering value, competition, and customer expectations. Test your pricing approach with customers to ensure it meets their needs and your business goals. As a business owner, putting management processes in place can simplify your pricing administration. Use clear, personalised, and easy-to-digest paperwork, including quotes and invoices, to streamline customer communication.
