Electrical Contractor Hourly Rate: How to Calculate What to Charge
A competitor rate cannot tell you whether your own costs are covered. Build your estimated rate from wages, employer costs, realistic billable hours, overhead and your target margin.
Build the rate in five steps
- Start with wage per paid hour, including a realistic equivalent for owner field work.
- Add employer labor costs to get loaded cost per paid hour.
- Divide by billable efficiency once.
- Add overhead per billable hour, calculated across the whole crew.
- Divide the total by (1 - target margin).
Formula: Target hourly rate = ((wage x (1 + burden rate) / billable efficiency) + overhead per billable hour) / (1 - target margin). This formula assumes burden is expressed as a wage percentage and each cost is included once.
Worked example
These are illustrative assumptions, not industry averages. Three field electricians each have 2,080 paid hours and 1,560 billable hours annually. Wage: $32.00 per paid hour. Burden: 30%, or $9.60. Loaded wage: $41.60. Efficiency: 75%. Loaded labor per billable hour: $55.47. Annual overhead: $120,000. Total crew billable hours: 4,680. Overhead per billable hour: $25.64. Estimated break-even: $81.11 per billable hour. Target margin: 15%. Target selling rate: about $95.42 per hour. Keep full precision during calculation and round the quoted rate up, for example to $96, to preserve at least the modeled 15% target.
Margin is not markup
Adding 15% markup to $81.11 gives approximately $93.28, with about 13.04% margin. To target a 15% margin, divide by 0.85. The example assumes all relevant labor and allocated overhead costs are captured; actual results depend on hours, costs and collections. Materials and other separately priced job costs still need to be covered.
Frequently asked questions
What hourly rate should I charge?
Calculate your cost-based target, then consider scope and market conditions rather than copying another shop.
Should drive time be included?
Recover unbilled driving time through your efficiency assumptions. If billed separately, account for that consistently and avoid recovering it twice.
How often should I update the rate?
Review at least annually and when wages, insurance, vehicles, staffing or billable hours change.
Does the workbook replace judgment?
No. It is an estimating aid that helps compare costs and pricing assumptions.
Download the free True Job Cost Checklist before your next bid. For job-level pricing, the $79 downloadable Excel Profit & Pricing System combines company assumptions with job costs, break-even and recommended selling prices.