Getting your pricing right is a critical part of your whole branding strategy – and new research from Master Electricians Australia highlights the things to consider.
In this Article:
- Charge-out rates
- Key trends
- Industry concerns
- Charge-out calculator
There is no ‘right’ answer when it comes to how much an electrical contractor should charge. Long term success requires an understanding of your costs, mark-up, and desired profit margin.
Master Electricians Australia (MEA) has surveyed electrical contractors over many years and tracked the charge out rate trends. In 2020 we surveyed more than 600 electrical contractors from different sectors, different states, from capital cities and country towns, and of all different sizes.
The MEA 2020 Industry Benchmark Report is a fascinating read. The survey shows how the electrical contracting industry is changing and includes the following findings.
Key trends in charge-out rates
• Tradespeople and sole traders increased their charge-out rates, but the rates of apprentices have declined.
• Across most industry sectors there was an increase in charge-our rates including for sole traders, tradespeople, and supervisors and managers.
• The rates for trade assistants, apprentices and administration and clerical staff declined.
Top business challenges for contractors
Despite the challenges the coronavirus pandemic and lockdowns have presented to business across the country, safety was rated as the most important challenge. Controlling finances was the second most pressing business challenge, and economic conditions the third most pressing concern.
The survey revealed major trends in charge out rates and what drives prices. Contractors are certainly aware of their competitors pricing with 72 per cent of respondents listing this as important.
Profit margin was listed as very important, important, or somewhat important for 98 per cent of all electrical contractors who took part in the survey. This is a good sign for small business sustainability, to achieve a profit margin you must first have a thorough knowledge of your business costs.
The survey found apprentice charge-out rates declined across the board, and in some areas up to six per cent. This was likely due to Federal Government COVID-19 response schemes that covered 50 per cent of the cost of an apprentice.
“The MEA 2020 Industry Benchmark Report found apprentice charge-out rates declined across the board — in some areas up to six per cent”
Charge-out calculator
MEA provides its members with free access to a Charge-Out Rate Calculator, it has the inbuilt smarts, so you don’t have to do the work. Simply enter your business costs and the calculator does the math, calculating the charge-out rate for a single electrician. It’s only a guide, but certainly a good starting point.
