I apologise for the long rant. I have little better to do at the moment.
I can't understand why so many electricians are so keen to under-price themselves in comparison to other trades.
Plumber: £1000 on a 1 day boiler swap and £350 to sit and watch a flushing machine for 2 hours
Garage mechanic: £60 per hour + £££ in profits on parts that are rarely needed
Drain "technician" £180 per hour, most of which is spent holding a hosepipe to fill his tank
Plasterer £50 per metre (ceiling). = 1 minute 35 seconds
Taxi driver can charge £30 per hour just to sit and wait
Kitchen/Joiner £40 per hour - and he usually does his own electrics.
I don't think a business can run by charging just "wages". Prices also have to include overhead contributions. This is my guesstimate of typical overhead costs for a self employed domestic installer supervising his or her self, working for just JIB wages of approx 30K /year or £120 per day before tax.
Non-productive days per year
sick pay 5 (no SSP)
holiday pay 22 (2 weeks + bank holidays) if I'm working, I deserve holidays.
down-time pay 50 ,(approx average total of 7 hours of quiet or non-productive time per week)
TOTAL 77 non productive days per year.
Annual costs (Typical guesstimate for a 1 man outfit).
Insurances 200
vehicle depr'n 1000
fuel 500
phone internet mobile 1000
subscriptions, NIC/ECA 500
accounting IR 200
tools plant access R&R 500
banking 200
training 300
office heat & light 100
advertising 3000
office supplies& equip 100
taxes (NIC class 4) 1000
waste material 1000
waste disposal 300
bad debt 500
TOTAL £10,400
Max working days per year 253
Non productive working days 77
actual earning days 176
To earn employee wages and £10.5K in costs in 176 earning days
the daily charging rate would be need to be
£230 per day.
This is just to work for employee's wages and would not produce ANY profit, contingency or investment and assumes 30K per year for life is considered to be a 'desirable' wage.
This also assumes the self employed electrician is perfectly happy and willing to come home after a hard day's work and devote several hours most evenings and weekends to the business end of book-keeping, estimate call outs, estimate preparations, certification. filing and preparing drawings just for the love of it.
A more realistic target figure would be £350 per day.
There is no satisfaction whatsoever in running a business for the same wages that business would pay an employee. The owner of such a business would be better off working for someone else for 37 paid hours per week on the tools, and also unpaid evenings and weekends for estimating, accounting, meeting clients and catching up on work that was falling behind. By offering these extra 40 or so free hours they would almost certainly get a job. They would also be sure of getting paid holidays, sick pay, pension contributions and promotion prospects. They would not be at risk of losing their family home either. In fact, I would take them on myself, but somehow, I don't think I would get many applicants. I suspect it would work out below minimum wage, and outside the working time directive, so I'd be breaking the law by doing so.
It took me some time to realise that there are no promotion prospects for the self employed, The self-employed person is the boss from day one to the day they retire or go bust. Potential earnings will never rise above inflation without expanding the business and becoming more profitable. This needs money in the bank and regular profit. A business already running at minimum overhead cost and maximum efficiency can only increase profit by charging more. It is easier to charge more from the outset and keep prices constant than to charge low at first in the misguided hope the customer will happily pay more for the same thing later down the line. As the banks won't lend to a one man band who isn't making a profit a self employed electrician charging wage rates can never afford to employ anyone in order to expand and therefore never earn any more than they did on day 1.
Many people seem to believe that if they are working every possible hour, they are making money. So , in order to win enough work to do this they often cut their prices to become more 'competitive'. But a business that cuts it prices to win work can only sustain this if it is already profitable. If it is already profitable it won't need to cut prices. Cutting prices to win work is surely therefore then the first step down the very short and steep slope to insolvency and bankruptcy.
This site is really interesting and very revealing:
Electricians: how much should you pay? - Which? Local
The average rate charged by 100 surveyed electricians seems to be between £40-£50 per hour.
