Properly estimating job costs can make the difference between success or failure for electricians. If your estimates are too high, you'll have difficulty getting customers; if they’re too low, your profit margins won't be adequate to keep your business afloat. Here are 9 secrets of accurate estimates for electricians.
- Carefully review the job site or plans. If you will be working on new construction, examine the architectural, electrical and mechanical drawings and blueprints. If you will be working on an existing building, examine the space and find out as much as you can about the current electrical system. This step helps you identify any potential challenges that could add to the cost of the job, such as accessibility or limits on what hours you can work on site.
- Make a detailed list of materials you'll need. Walk through the plans or site and create a takeoff list of everything needed, from outlets and wire to light fixtures and switch panels. It's a good idea to include this list in your estimate so customers can see exactly what they're getting. Keep records of the price for supplies and materials you use most often. Using the same suppliers on a regular basis can help you generate more accurate estimates because you’ll know how much your supplier charges for each item. If using a new supplier, find out the current prices before creating your estimate. Be sure to account for material waste — about 10 percent is a good rule of thumb.
- Know your man-hour labor rate. Your labor rate will vary depending on:
- The skill level required for the job: It's a good idea to create an average man-hour labor rate for commercial electrical work and a separate one for residential electrical work, since commercial jobs typically require more skilled laborers.
- The average pay for laborers in your area with those skills: Depending on the part of the country or region of your state where you operate, average pay can range greatly.
- Other labor costs: If you are using your own employees for the job, you will need to factor in taxes, insurance, bonds, employee benefits, payroll expenses, union fees and other labor costs outside the employee's actual wages.
- Estimate the man-hours required for the job. Obviously, the more experienced you are in the long you've been in business, the easier this will be. If you're new to the business, you’ll need to make an educated guess. Multiply the man-hour labor rate by the number of man-hours.
- Include costs of any subcontractors. If you plan to use subcontractors, get a firm quote from them before creating your estimate.
- Include the cost of permits. if your company is handling permits for the customer, be sure to build this cost into the estimate.
- Plan for the unexpected. Few electrical jobs go exactly as you think they will, so add in a contingency of about 10 percent to cover the cost of unexpected materials expenses, overtime and delays.
- Decide how much profit you want to make. What profit margin will make the job worthwhile? It may be worth taking a lower profit margin if the job has the potential to generate lots more business with this customer. If you can sense that a customer will be high-maintenance, on the other hand, you may want to raise your profit margin.
- Be professional. Once you’ve run the numbers on your estimate, boost your chances of winning the job by presenting it in a professional manner. An estimate that looks professional will help “sell” the customer on your services. Field service management software like Lighthouse 360 can help.
With Lighthouse 360, you can easily create estimates for electrical work and share them with your prospects and customers. Lighthouse 360 gives you access to all past information about a customer or job, wherever you are, so you always have the information you need to generate an estimate. Once the customer approves the estimate, all it takes is one click to convert it into a job—and when the job is done, one click converts the job to an invoice.