A Pricing Guide For An Electrical Business

No matter the industry, scope of work or customer demands, business owners across the board will face challenges. Working as an electrician 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 guide for startup electrical businesses and sole traders looking to put a solid, accurate and sustainable pricing structure in place for long-term success. 

Understand Costs

When establishing a pricing strategy, your first port of call should be overhead costs. To do this, you will need to have a clear outline of your rent, utilities, insurance, and business licences, as well as other outgoing payments like salaries and job management software subscriptions. Always remember to include your salary within these numbers, not just those of your current team; you should also factor in the cost of your equipment maintenance, tools, monthly materials and supplies and petrol prices required to travel to different on-site locations.

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 your customers will be entirely up to your preference; you are the trade business owner, after all. It will be your decision whether your services are charged at an hourly rate, flat fee or a combination of both. For those who charge at an hourly rate, you should initially conduct some calculations to see which you should be earning per hour, per week and per month to cover your outgoings and general business costs and to achieve your desired profit. When integrating flat fees into your payment strategies, estimate the average time and materials needed for common jobs before adding in a margin for your profit goals.

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 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 a 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

With your starting pricing structure now in place, you can add these to your website and relevant platforms for your customers to see. With 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 incredibly important for the success of any trade business. However, it has to be a priority for those operating in the demanding and competitive electrical field. When doing so, carefully analyse the industry standards for pricing, establish the right pricing model for your business, and test these amongst your customers. Finally, as a business owner putting management processes in place, you can streamline your pricing admin with clear, digestible and personalised paperwork, including your quotes and invoices. With a well-thought-out approach, you'll be better positioned to attract and retain customers while ensuring the financial health of your business.