How to estimate electrical work – Residential and commercial pricing

Electrical work is one home maintenance task homeowners should never DIY.

Not only are you required to have a permit in many states to do residential electrical work, but it is also incredibly dangerous if you don’t know what you’re doing.

Most homeowners recognize this risk, which is why they seek the help of a professional electrician to do the job right.

As an electrical contractor, a critical part of your business’ success is understanding how to estimate electrical work costs. 

Based on our observations, accurate residential estimates help determine job management, letting you seamlessly execute any electrical project.

Similar to any trades pricing guide, this post will teach you how to estimate electrical work in a way that ensures you’re offering competitive pricing and grows your business.

This guide shows you how to estimate electrical work in a way that wins the trust of your customers and grows your business.

Why estimates are so important

Estimates are a vital part of any trade work, from auto repair to construction. Residential electrical work, of course, is no exception. 

And since knowing how to estimate electrical work for residential properties is often a customer’s first impression of your business, you never want to mess up your initial estimates. 

You might need to provide an estimate for electrical work to:

• A homeowner.
• An organization for a bidding process.
• A general contractor.

As per our expertise, some of the benefits of knowing how to estimate electrical work include:

• A better understanding of the project scope.
• Knowledge of the materials and labor needed to complete electrical work.
• The ability to create a realistic budget.
• Turning a profit on every job.

Although the prices you outline in your estimate are subject to change, it reflects badly on your business if the project’s final cost is a lot more than your original estimate. As a result, it’s essential to present your customer with an estimate and not a quote.

The difference between a quote and an estimate

Based on our observations, two terms that people often mix up are quotes and estimates. While the terms are related, they do refer to two different concepts. The one you use depends on how you want to operate your electrical business. 

A quote is the exact price that your customer will pay for your services. When you give your customer a quote, you’re contractually obligated to fulfill the services at that given price. Quotes give customers peace of mind, and if you calculate the costs right, you shouldn’t worry either.

That said, learning how to quote electrical work accurately is more difficult than providing a general estimate. Estimates are not contractually binding and offer room for variation once the project is underway. However, once again, you don’t want the final price to deviate too far from your estimate. 

Make sure that your customer has a clear understanding of whether you’re giving them a quote or estimate before you start any of the work. Let’s discuss how you go about determining estimates and how to price residential electrical work.

How to bid an electrical job

Image credit: Xin via Unsplash

Whether you’re providing an estimate to a homeowner or you’re participating as part of a bidding process to wire a set of new builds, chances are residential electrical work will come in larger quantities than other kinds of electrical work. So, knowing how to estimate electrical work is an essential part of your business.

Learning how to estimate electrical wiring for a house can be a long process. But, it’s important to spend time to ensure accuracy before starting any electrical work. Making an error in the middle of the job ends up costing you more time and money than you expect.

Here are some steps outlining how to estimate electrical work for your customers.

Step 1: Choose the right jobs

Drawing from our experience, even though your goal is to bring as much revenue to your business as possible, you should not say yes to every electrical job that comes your way. 

Instead, you should be honest with yourself and your customers and not take any jobs in which you have limited experience or would be unable to estimate the costs accurately.

Stick to jobs within your scope and that you’re confident in until you acquire more resources and expertise. Spend time evaluating the needs of each job, and if you’re unable to complete it in good faith, let your customer know.

Step 2: Confirm the specifications

If you’re participating in a bidding process, be sure to review the specifications in the request for proposal (RFP). RFPs often use complicated language that is difficult to break down. But, analyzing the specifications of the RFP makes the difference between moving on to the next round of the process and instant disqualification.

To ensure the success of your RFP, make sure to fully study the current electrical circuitry (e.g., circuits, subpanels) of the house that you’ll be working on. If you notice anything out of the ordinary or a potential oversight, it’s key to highlight this in your proposal. 

It’s also important to ensure that you’ll be complying with building codes and state and local regulations when undertaking a project. Check for any legal considerations (e.g., contract disputes) that may come up.

Step 3: Review the drawings

There will often be drawings, blueprints, and graphics that come with the RFP in a bidding process. These visual representations are important as they give you the full scope of the job. If you’re dealing with a homeowner, ask if they still have the blueprint of their home. If not, conducting a site visit to assess the electrical needs is beneficial.

Even though you’re doing electrical work, you should still make sure you’re inspecting all of the architectural drawings you’re given. There are many other components of a house that may become obstacles to your work, such as:

• Specialized electrical systems (e.g., HVAC wiring).
• Plumbing fixtures.
• General layout of the home.

Reviewing these drawings is necessary to complete a material takeoff.

Step 4: Perform a material takeoff

A material takeoff is an important part of the estimating process for many construction projects. It serves as a sort of electrical material pricing guide. By using the blueprints for the house, you can build a list of materials necessary to complete the job. This list is referred to as a material takeoff list and helps you provide a detailed breakdown of costs. Typical materials in your materials takeoff list include:

• Circuit breakers.
• Electrical outlet and switch types (e.g., standard, GFCI).
• Emergency or backup systems (e.g., generators).
• Conduit Installation (if applicable).
• Energy efficiency upgrades (e.g., LED retrofits) and environmental considerations (e.g., energy efficiency).

When it comes to knowing how to estimate electrical work, this list helps you calculate material costs, which you should also break down in your estimate.

Step 5: Calculate labor costs

Once you know what kind of work you’ll be doing, it’s time to calculate your labor costs. The simplest way to charge for residential electrical work is by the hour, which makes it easy to calculate labor costs.

Our research indicates that the median pay of an electrician is $27.36 per hour, so you will likely pay your employees a wage similar to this amount. To get your overall hourly rate, figure out how many workers it takes to complete a job, then add up each of their hourly pay rates to get your total hourly labor rate. Then, multiply your hourly labor rate by the number of hours you estimate the job will take.

Hourly labor rate x number of hours = total labor rate

The above formula gives you an accurate view of labor costs for your estimate and can serve as the basis for your electrical work pricing guide.

Step 6: Create your estimate

Now that you understand the scope of the job and know how much material and labor you will need to complete it, you have everything you need to figure out how to estimate electrical work for that project.

As using high-quality materials is essential, make sure you include each of your materials as a line item in your electrical job estimate template. After putting it to the test, estimating using a template standardizes the process, which lets you complete your estimates faster for each new customer.

Step 7: Add overhead and profit

When you calculate your labor and materials costs, you only calculate how much the job will cost you. Charging these numbers alone, you are not making any profit from the job. In fact, you’ll lose money because you aren’t covering your overall expenses, such as transportation and the cost of your electrical equipment and tools. This is why you have to factor overhead costs into your estimate — to cover all the costs to operate your business.

Our findings show that overhead is usually 13–20% of your total sales cost, depending on your business expenses. 

The last element to add to your estimate is a markup for profit. Based on our observations, this markup depends on the average prices for electrical work in your area, and how much profit you want to make off of each job.

Step 8: Build your proposal

Through our practical knowledge, you’ll most likely have to present your estimate as part of an overall proposal for a bidding process. Before submitting your final proposal, review all of the requirements one more time to ensure that you’re in compliance. For example, requirements might include:

• Electrical box installation.
• Wiring layout and runs.
• Voltage requirements.
• Specifications for switches or the type of cord used.

Step 9: Double-check your numbers

Before handing over the estimate to your customer, make sure that you double-check that all of the information is correct and that nothing has changed since you started the process. Review the following information:

• Customer’s name and address.
• List of materials and costs.
• Labor hours and costs.
• Payment plans or financing options (if offered).
• Discounts or special offers (if applicable).
• Electrical troubleshooting and repairs (if applicable). 
• Overhead that considers any repair or maintenance work involved.
• Final total.

If necessary, you can redo some of the calculations to ensure that the final total you present to your customer is correct. Providing a warranty or guarantee is also useful in reassuring your customer about your service. Lastly, creating a timeline for approval gives both parties peace of mind and ensures you have an answer within a reasonable timeframe.

Leverage our free invoice generator, and instantly send out professional PDFs to your clients, keeping your cash flow moving.

Electrical estimating methods

Per-point method

The per-point method is often used for smaller or simpler projects. It means you factor in a fixed price for each point in the electrical system (e.g., pricing considers the number of electrical fixtures and outlets). This makes it easy to calculate the total cost as you itemize your list and account for each point.

Labor unit method

This method focuses on the labor involved in a job, estimating the time it will take to complete each part of the electrical work. It’s a more detailed approach that takes into account the complexity of the project, making it suitable for a variety of projects.

Pre-build

Pre-build is detailed in a written estimate or proposal before the actual construction begins. It means you need to investigate how the project is based on the square footage of the area and the resources needed, leading to more accurate budgeting.

Design and construct

This method combines both the design and construction teams as a single point of contact for the client. It is effective for complex projects where the design influences the electrical work significantly.

Guesstimate

Guesstimation is the least formal way when addressing how to estimate electrical work. Contractors typically use it for very small or informal jobs. Guesstimation is based on your experience and intuition for a quick idea of the cost.

How to estimate residential electrical work

Pre-bid planning and review

Your pre-bid planning and review stage is where you begin planning the scope of electrical work. You may need to consult with the customer to evaluate how the job accounts for potential challenges or obstacles, as well as what factors in the type of electrical systems involved.

Review the drawings

Analyze the job site’s architectural drawings to better survey the complexity of the project. This information helps you measure how to estimate electrical work involved in the project.

Material takeoff

Material takeoff involves listing all the materials required for the project. This step puts together a list of all necessary components so that the final estimate is transparent with itemized costs for clarity.

Calculate labor costs

At this step, you’ll examine the number of workers you need for the job. Make sure your rate adjusts for regional labor rates. Your labor cost reflects the experience of the electrician and may need to include sub-contractors. Using estimating software can simplify this process greatly.

How to estimate commercial electrical work

Review the electrical plans

A detailed review of the project’s electrical plans lets you quantify the specifics of the work, including:

• How the cost is influenced by the type and brand of electrical materials used.
• How the electrical system design considers the accessibility and layout of the work area.
• What you need to validate a job’s electrical code compliance.
• If the job site incorporates potential safety concerns or risks.

Remember that your estimate takes into consideration any warranties or guarantees offered by yourself or the manufacturer. Ensure any warranty or guarantee included is updated regularly to match market trends and industry standards.

Estimate cost of materials

The material cost in commercial projects varies greatly. Figuring out how to estimate electrical work for supplies requires an understanding of how your geographic location weighs the current market rates for electrical components.

Where you supply your materials from has a significant impact on your overhead costs. Building good electrical supplier relationships reduces how much you pay to source your materials.

Calculate hourly labor cost

The number of electricians involved in a job is influenced by the project’s timeline or deadline, and also varies based on residential or industrial settings (e.g., condo building vs. mechanic’s shop).

As a commercial project usually includes potential additional expenses for unforeseen issues and is impacted by any required permits or inspections, these hurdles often extend the time and duration of the project and require additional hours from your electricians.

Add overhead and profit

The final step when understanding how to estimate electrical work is to compile your costs. Your final amount includes a markup for profit and overhead. Your overhead includes labor and material costs, as well as all the less obvious costs associated with the project. Then, determine your profit margin by taking a percentage of that total cost you determine.

How should I create an estimate or quote?

Knowing how to estimate electrical work is only the first step of the job. Once you know how to estimate, you need to understand how to present it to your customer in a clear and easy-to-understand way.

No matter what method you choose, you should never create an estimate from scratch for each new job. With this approach, you end up doing a lot of manual and time-consuming work and waste time that you could otherwise use to bring in more revenue.

As per our expertise, a better method is to have an estimate template on hand to save you time and ensure that your estimates stay consistent.

How much detail does an electrical estimate need?

As a rule of thumb, you should include as much detail in your residential electrical work estimates as possible. Here’s what customers expect to see on an electrical estimate:

• Their name and address.
• The name of your business and contact information.
• A detailed description and breakdown of the work.
• The total price.

The breakdown of the work should summarize the total labor, materials, and any additional costs so that your customer can verify the final price.

Make sure you specify whether the total price includes taxes or not.

How to quote electrical work per point

Quoting per point means having a very good understanding of the project’s requirements, as mistakes directly cost you money. Assign a cost per point and tally them up to provide a clear, itemized list to your customer.

Your points should include things such as:

• Lighting fixtures and installation, including lighting types (e.g., recessed, LED).
• Outlet and switch installation, including surge protection, grounding and bonding.
• Wiring materials and types (e.g., copper, aluminum) and the material costs (e.g., wires, conduits).
• Electrical service panel upgrade or installation, including the electrical load calculation.
• Permits and inspections along with any licensing and certification needed for an install.
• Safety measures and precautions, including insurance and liability coverage.

Make sure your point system is based on previous similar projects for accuracy and is validated by cross-referencing with other estimates or quotes from local market rates. You should ensure that it is updated regularly to match industry standards as prices can change over time due to economic factors (e.g., inflation, material costs).

Electrical estimating tips

Building a good relationship with your customers is key to winning their repeat business and getting referrals. Over time, we found that customer consultation and communication before starting a job is a good way to better understand your customer preferences and budget.

For some examples of things to incorporate into your electrical work for happier customers, you can:

• Set up electrical panel labeling and organization.
• Expand the payment methods accepted to include online banking.
• Offer a warranty or service guarantee.
• Offer payment terms and schedule.

Of course, making your customers happy shouldn’t mean sacrificing your profitability goals. 

While customer experience is important, don’t hesitate to impose a fee for adjustments for change orders or scope changes in your contract. In addition, you should also address any difficulties with site conditions and accessibility or the complexity of the electrical work in your estimate or quote.

By outlining these details, any unexpected charge is subject to negotiation with the client or contractor before work begins.

Electrician estimate FAQ

Here are some additional questions that people have about residential electrical work.

• What are the three basic estimating methods?
• Which method is best for estimating electrical items?
• How detailed should an electrical estimate be?
• How soon should I send my estimate or quote?
• How do you calculate your electrical installation cost?
• How do you estimate electrical wiring for a house?

What are the three basic estimating methods?

When considering how to estimate electrical work, there are three basic methods.

The first is unit cost estimating, which involves breaking down a project into units of work that you can then measure and price individually.

The second is assemblies estimating, which involves estimating the cost of an assembled product, including all its smaller parts. A good example is installing a new electrical panel. An assemblies estimate looks at the potential cost of each finished panel, rather than all of its components.

The third is square foot estimating, commonly used in residential properties. This method involves estimating the cost based on the total square footage of the space.

Which method is best for estimating electrical items?

Unit cost estimating is the best method for calculating residential and commercial projects. It lets you calculate costs accurately for individual electrical items, such as:

• Wiring.
• Switches.
• Outlets.

As it’s the most granular, this method helps you ensure a comprehensive and detailed estimate to increase transparency with your customers. Using an electrical installation cost calculator further simplifies this process.

How detailed should an electrical estimate be?

An electrical estimate should be as detailed as possible to give both you and your customer an accurate picture of the project’s full cost and requirements. It should include all material, labor, and overhead costs. 

Drawing from our experience, a well-detailed electrical estimate builds trust regarding the customer’s perceived value of the services. This leads to positive customer reviews and testimonials.

How soon should I send my estimate or quote?

You should send your estimate or quote as soon as you have all the information needed to give one accurately. Knowing how to estimate electrical work quickly so you can get back to your customer first is often a deciding factor for whether they choose you or a competitor for the job.

How do you calculate your electrical installation cost?

You can’t know how to estimate electrical work without understanding how to calculate the overall cost of electrical work.

To calculate the price of electrical work, multiply your hourly labor rate by the number of hours the job will take to complete. If any extra materials are required for the job, be sure to add that to the total cost.

You should charge for electrical work by the hour based on the following elements:

• The amount of labor necessary.
• The materials required.
• Any additional costs associated with the job.

Drawing from experience, it’s important to keep in mind the scope and complexity of the job when recommending the costs and deciding how to estimate electrical work.

Take, for example, the task of installing a light fixture. Assessing this type of work is wildly different in terms of costs and labor when compared to evaluating existing wiring and electrical systems, for example.

And always, don’t forget to include overhead and markup for profit in your final estimate.

How do you estimate electrical wiring for a house?

To estimate electrical wiring for a house:

1. Review electrical wiring specifications and drawings for the house.
2. Confirm if the house is a new build or if you’re rewiring an older home.
3. Perform a material takeoff.
4. Calculate your labor costs.
5. Add in your overhead costs.
6. Add your profit margin on top of your materials, labor, and overhead costs.

Create your electrical estimate with this figure in mind.

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Remember that electrical wiring for a new build is considerably easier than rewiring an older home. Here’s why.

The wiring goes in before the walls, requiring less time and labor. For these jobs, you only have to estimate the labor needed to install the wiring.

For an older home, you must first remove the current electrical wires to replace them with new wires, which requires more labor and tools.

You might have to deal with several other additional factors while rewiring a home.

You may sometimes have to deal with difficult-to-reach spots or even remove drywall in some areas, which means you also have to charge your customer the cost of drywall installation and maybe even paint costs. Both of which you should include in your estimate.

Recap: How to estimate electrical work

Our findings show that estimates are an essential part of the success of any handyman business, from home repairs and upgrading to auto repairs. This is why it’s important to know how to estimate electrical work before starting any new job.

Whether you’re wiring a basement or recommending upgrades or repairs, you need to create an estimate so that both you and your customer are on the same page.

Electrical services require a high level of skill, and one error can not only put an entire job at risk — but it can also be dangerous for you and your team. Through our practical knowledge, spending the time to make sure your estimate is thorough prevents any such problem from arising.

Having an estimate template ready saves you time and ensures consistency with every estimate while decreasing errors.

Get your free residential electrical work estimate template to create great estimates every time.

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