There’s a lot that goes into determining how to fairly and accurately price an electrical service. The estimated cost must cover all project expenses, from labour and material costs to indirect expenses and earnings, while still being competitive and low enough to outbid other contractors. So, let’s look at some top tips for electricians who are looking to improve their pricing estimation process.
1. Be selective with the projects you take on
Don’t accept every project that comes knocking on your door just to keep the money coming in. Figure out your niche and area of expertise, whether it’s residential, commercial, industrial, or a combination of all three types of electrical construction jobs.
Focus on tasks that you know you can successfully execute while exceeding client expectations. Accepting jobs that are outside of your scope of experience can harm your reputation, your income potential, and your brand.
2. Critically evaluate the client’s requirements and expectations
Make sure you check requirements and expectations of the job with the client first. Are there any irregularities or mistakes in their scope? What does the client anticipate if you are selected as the winning bidder?
You can’t determine the quality of the work you’re supposed to produce unless the specifications are accurate. Without clarity, you may end up underquoting or overestimating. Ask questions of the client, as being crystal clear about the specifications will enable you to deliver a precise and honest quote.
3. Examine the plans
As an electrical contractor, you should access blueprints, illustrations, and drawings to establish a clear understanding of the work. In addition, don’t forget to note the wiring for the HVAC and plumbing systems that are currently in place on the property.
What happens if no blueprints are provided? Plan a site inspection to determine the extent of the job, and request that the scope of electrical works be amended if needed.
Your ability to correctly obtain the supplies needed for the task in the right quantity will decide how accurate your estimate will be. Typically, a supplies list would cover all components that you will use for the electrical project, from the number of electrical outlets, panels, and switches to circuit breakers, light fixtures, and receptacles.
4. List the materials that are required
Typically, a supplies list would cover all components that you will use for the electrical project, from the number of electrical outlets, panels, and switches to circuit breakers, light fixtures, and receptacles.
5. Determine labour costs
Once you have a good understanding of the project’s scope of work and materials required to deliver the electrical component, it’s time to evaluate the project’s labour requirements. How many employees, both on and off site, would you require? How much will you need to pay them?
Keep an eye out for unintentional damage and overtime hours. This process will enable you to obtain an accurate labour cost for the job, which will allow you to itemise and increase the credibility of your electrical estimate.
6. Include your profit and expenses
You are running your own business, which means in order to survive you need to turn a profit. As such, you must include both your profit margins and operating expenses when making your price predictions.
Recommended reading: 14 steps to increase your business profit
Once you’ve calculated the overall task cost, add the desired profit mark-up to each project. Make sure the mark-ups are in line with the going rates in your industry. In addition, include your company’s overhead expenditures, such as business insurance, to the estimate.
7. Produce the estimate
It’s time to put everything you’ve assessed and calculated about the project’s scope, labour requirements, material requirements, and associated costs into an estimate. You might wish to use electrical estimating software to prepare and produce your formal estimate.
8. Draft your proposal
Electrical estimates are typically a minor component of the bigger proposal you submit for the bidding process. So, once you have the total sale price, create a polished proposal. It should clearly describe every small aspect of what your estimate includes and excludes, as well as any terms and conditions.
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