Why do some electrical contractor price lists lose money on every job?

What to take away

This article covers electrical-contracting business practice. It does not cover code, licensing, permits, or energized work. It also does not cover tax or legal advice. Requirements vary by province, state and site. Confirm them with your authority having jurisdiction and a licensed electrician.

Why a price list bleeds on every job

A price list loses money when it charges for the work a customer can see and not for the work around it. The quoted hours cover installation. They rarely cover the permit application, the supply-house run, the second trip when the wrong breaker arrives, or the wait for an inspector.

The pattern repeats across service calls, panel upgrades and small build-outs. The list looks reasonable per hour and per device. The jobs still come in under.

Most losing lists share one root cause: they are built from a wage figure and a material markup, with nothing for the work that happens off the tools. Labor units copied from memory, burden left out of the rate, and travel absorbed into the hourly number all push the same way. Each quote looks fine. The month does not.

The five gaps that eat the margin

Permit and inspection time. Someone files the permit, meets the inspector and returns for the correction. That time is real labor and it is almost never a line on the quote. Residential permit fees commonly run $150 to $500 in most markets, and plan review pushes commercial permits well past that.

Travel and windshield time. A service call forty minutes out is eighty minutes of driving that no price list bills. The IRS standard business mileage rate for 2025 is 70 cents a mile, so a 30-mile round trip carries about $21 in vehicle cost before the technician's time.

Lockout and de-energization planning. Planning a safe isolation, arranging the utility disconnect and documenting it takes a qualified person off the tools. NFPA 70E calls for an energized electrical work permit and an arc flash risk assessment before that work starts. The customer sees none of it.

Testing and rework. Continuity, insulation resistance and torque checks are part of the job. An insulation multimeter such as the Fluke 1587 puts a megohmmeter and a DMM in one hand tool, and it retails in the high hundreds of dollars. The callback after a failed inspection adds another unbilled visit. Neither fits a per-device price.

Payroll burden. A journeyperson wage is not the cost of a journeyperson. FICA adds 6.2% for Social Security up to the annual wage base and 1.45% for Medicare. FUTA adds 0.6% on the first $7,000 of wages, and state workers' compensation for electricians typically runs $3 to $8 per $100 of payroll.

Canadian shops add CRA payroll costs on top: CPP, EI and withholding. Loaded rates commonly land 25% to 60% above the bare wage, depending on state or provincial rates, benefits and how much non-billable shop time the crew carries.

Material markup leaks separately from labor. Truck stock, supply runs and wrong-part returns eat a margin that was set years ago, and the fittings sitting in the van were paid for long before they were billed.

What a losing price list looks like

Build the same table with your own numbers. Two or three rows usually carry most of the loss, and in service work it is travel and callbacks rather than the device price.

Pricing models and what each one hides

Tiered packages and agreements are where most contractors set a price once and never revisit it. The electrical contractor services and packages guide walks through how those bundles are usually structured.

How to find your own gaps

Pull the last twenty jobs by service family. For each one, list quoted hours, actual hours, quoted materials and actual materials. The difference is your leak, and it is usually concentrated in two or three families.

Then check three outside sources. The Internal Revenue Service: What kind of records should I keep? sets the recordkeeping standard: the system is the owner's choice, provided it clearly shows income and expenses and keeps the documents behind purchases, sales, payroll and assets.

The Federal Trade Commission: Advertising FAQs: A Guide for Small Business holds advertised prices and claims to a truthful, supported standard, and expects endorsements to reflect honest experience.

For labour, the U.S. Bureau of Labor Statistics: Occupational Employment and Wage Statistics Tables give wage estimates by occupation, industry, state and metropolitan area. Use them as one input, not as your cost. Median annual pay for electricians lands in the $60,000s in most states, with wide variation by metro.

Fixing it without rewriting the whole book

Give one person authority over the price book. Every override gets a reason written next to it, and the reasons get reviewed monthly. Prices that drift one quote at a time are the ones that quietly stop covering cost.

Load the labor rate with burden before it goes in the book. Add a travel line and a permit line rather than hiding them in the hourly rate. Quote testing and inspection attendance as its own item so the customer sees what they are paying for.

Refresh labor units once a year from a published source: the NECA Manual of Labor Units or RSMeans Electrical Cost Data, adjusted against your own actual hours. Compare both against your callback rate, because a unit that is too tight shows up as rework, not as savings.

Then watch two numbers: days to collect and callback rate by service family. If callbacks climb after a price change, the change cut something the job needed.

Common questions

Why does a price list lose money on jobs that looked profitable?

Because the quote covered installation hours and materials, not permit filing, travel, lockout planning, testing or rework. Those costs land on the job and never on the invoice. Two hours of driving and a two-hour inspection window can erase a day of billed hours.

What is payroll burden and why does it matter?

It is everything you pay on top of a journeyperson wage: FICA and FUTA, state workers' compensation, CRA payroll costs in Canada, and non-billable shop time. Vacation pay and benefits sit on the same pile. Pricing from the bare wage understates the labor line on every job, often by 25% to 60%.

How often should the price book be reviewed?

Monthly for overrides and callback rates, and after any change to wages, insurance or material costs. Published labor units from NECA or RSMeans get refreshed when new editions come out, usually once a year. A price list set once and left alone is the one that starts losing money.