Quick Answer
What markup should an electrical contractor use?
The markup an electrical contractor needs to hit a target margin, the conversion table between the two, and where markup-based pricing loses money.
The short answer
- Markup and margin are different numbers; confusing them is the most common electrical pricing mistake.
- Markup = margin ÷ (1 − margin). A 40 percent margin needs 67 percent markup.
- Decide the margin you need, then convert to markup — never the other way around.
- Service work needs a higher markup than new construction because it carries more overhead per dollar.
The conversion you need on a card in the truck
Margin is a share of price. Markup is a share of cost. These pairs match.
- 20% margin = 25% markup
- 25% margin = 33% markup
- 30% margin = 43% markup
- 35% margin = 54% markup
- 40% margin = 67% markup
- 45% margin = 82% markup
Start from the margin you need to survive
Your required margin comes from overhead plus target profit, not from what feels normal. If overhead is 16 percent of revenue and you want 10 percent net, you need roughly a 26 percent margin before job-level risk — and more on service work.
Different markup for material and labor
Many electrical contractors mark material lower than labor because labor carries the risk and the supervision. That is fine, as long as the blended result still hits the margin you need.
Where markup pricing goes wrong
Marking up a bad cost estimate just multiplies the error. Fix loaded labor cost first, then apply markup, then check actual hours against estimated hours after the job.
What you see inside LedgerDude
This is the page you get each month once your books are closed — the numbers behind every answer on this site.
In one sentence
For a 40 percent margin you need a 67 percent markup on cost. Pick the margin first, then convert: markup = margin ÷ (1 − margin).
Find your electrician hourly rate
Put in what one electrician really costs you per hour, how much of their time you can actually bill, and the margin you need. We show the rate to charge and the numbers your books should be watching. Nothing is saved unless you save it.
Base pay before taxes and benefits. A licensed electrician is often $28 to $38.
Payroll taxes, benefits, van, tools and insurance added on top of the wage. 60% to 85% is normal.
Share of paid hours you can actually invoice. Drive time, shop time and warranty eat the rest. 65% to 75% is typical.
Annual overhead (office, advertising, insurance, owner pay) divided by annual billable hours. Often $20 to $35.
Profit you want as a share of the rate. 35% to 45% for service, 18% to 28% for new construction.
Effective rate to charge
$166
Total cost per billable hour divided by (1 − target margin). This is your number.
Profit per billable hour
$58
What each billed hour pays you after all cost.
Target margin
35.0%
Profit as a share of the rate. Healthy electrical service usually lands 35-45%.
Loaded cost per paid hour
$56.00
Wage plus labor burden. This is what one hour truly costs you before billing.
Cost per billable hour
$80.00
Loaded cost spread over the hours you can actually bill.
Overhead per billable hour
$28.00
Your share of office, insurance and advertising recovered each billable hour.
Numbers your books should track
Markup on cost
53.8%
How much you add on top of total cost. 54% markup gives you a 35% margin.
Gross profit per billable hour
$86
Rate minus labor cost. This has to cover overhead before you keep any.
Cost lost to unbillable time
$24.00
Extra cost per billable hour from drive time, shop time and warranty.
Rate vs wage
5.2x
A $32 wage usually needs a 4x to 5x rate. If it is under 3x you are likely losing money.
Cost share of rate
65.0%
Share of the rate that is pure cost. The rest is profit. Healthy work keeps this under 70%.
Break-even rate
$108.00
Charge below this and the hour loses money. No profit, just cost covered.
What if costs move?
Slide these to see what happens to your rate if labor burden or overhead changes and you keep the same margin.
Burden is now 75% instead of 75%.
Overhead is now $28.00 instead of $28.00.
New effective rate
$166
Same target margin, higher cost.
Rate change
$0
Dollars added to or taken off your hourly rate.
Profit per hour then
$58
If you hold the old rate instead, this is what each hour really pays you.
Bid an electrical job
Put in the hours, the parts, the equipment and the margin you want. We show the price to bid, what you keep, and the point where the job stops making money. Nothing is saved.
Total hours all electricians will spend on site.
Wages plus payroll taxes, insurance and benefits — not what you charge.
Wire, panels, devices, fixtures — what you pay the supply house.
What you add on top of parts. 15-25% is common.
Lifts, trenchers, generators, permits and any other job-only cost.
Trucks, office, advertising and insurance spread over your billable hours.
Share of the bid left after labor, parts and equipment. 30-45% is typical.
Price to bid
$9,226
Your costs plus the margin you asked for.
Profit you keep
$2,626
After labor, parts, equipment and overhead.
Gross margin
38.0%
Bid minus labor, parts and equipment.
Profit margin
28.5%
What is left after overhead too.
Bid per hour
$230.65
Sanity-check this against your normal service rate.
Profit per hour
$65.65
What each hour on this job actually pays you.
Where this job stops making money
This is your break-even line. Bid under it, or run past these hours, and the job costs you money.
Break-even price
$6,600
Bid below this and there is no profit left at all.
Break-even hours
77.5 hrs
Pass these hours at your bid price and profit is gone.
Hour cushion
37.5 hrs
Extra hours you can absorb before the job breaks even.
Room to negotiate
$2,626
Most you can cut from the bid and still break even.
Overhead on this job
$880
Gross profit has to cover this before you keep anything.
Labor share of bid
20.8%
Climbing here usually means jobs run longer than you bid.
How to write it on the proposal
Materials line
$4,440
Parts with 20% markup, plus equipment.
Labor line
$4,786
The rest of the bid, shown as labor.
Total bid
$9,226
What the customer signs.
What if the job runs long?
Slide these to see what happens if hours or parts go over and your bid price stays the same.
Now 40.0 hrs instead of 40 hrs.
Now $3,200 instead of $3,200.
Profit at those costs
$2,626
Same bid price, higher costs.
Profit margin then
28.5%
What the job would really pay you.
Cost change
$0
Dollars added to this job.
Related answers
Straight answers to the other questions electrical owners ask us.
What should an electrician charge per hour?
Most electrical contractors need $95 to $175 an hour. Take loaded labor cost per billable hour, add overhead recovery per hour, then divide by one minus your target margin.
How do you bid electrical jobs?
Count material, estimate labor hours at your loaded labor cost, add overhead recovery, then divide the total by one minus your target margin.
What is a good profit margin for an electrical contractor?
Electrical service work should run 45 to 55 percent gross margin, project and new construction work 22 to 32 percent, with 8 to 12 percent net profit.
What is labor burden rate and how do you calculate it?
Labor burden is everything an employee costs beyond wages — taxes, insurance, benefits, vehicle and tools — and it usually adds 25 to 60 percent on top of the hourly wage.
How do contractors manage cash flow?
Forecast cash weekly for thirteen weeks, invoice the day work is complete, collect deposits on material-heavy jobs, and keep a cash floor equal to six to eight weeks of outflow.
Run a different trade?
Questions people ask
Is a 20 percent markup enough?
Almost never. A 20 percent markup is only a 16.7 percent margin, which usually does not cover overhead for an electrical contractor, let alone profit.
Should I show markup to the customer?
For flat-rate work, no — quote one price. For cost-plus and time-and-material contracts, the markup is normally stated in the agreement.
Does markup replace overhead recovery?
Only if the markup was calculated to include overhead. It is cleaner to add overhead recovery to cost first, then apply the margin divisor.
What does this cost?
One flat monthly price. No hourly bills, no surprises. Founding plans start at $149 a month, and your rate stays locked.
Keep reading
What is a good profit margin for an electrical contractor?
Electrical service work should run 45 to 55 percent gross margin, project and new construction work 22 to 32 percent, with 8 to 12 percent net profit.
How do you bid electrical jobs?
Count material, estimate labor hours at your loaded labor cost, add overhead recovery, then divide the total by one minus your target margin.
What should an electrician charge per hour?
Most electrical contractors need $95 to $175 an hour. Take loaded labor cost per billable hour, add overhead recovery per hour, then divide by one minus your target margin.
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