Growing your electrical business comes down to seven fundamentals: pricing correctly, knowing your margins, specialising your services, structuring your team, maximising productivity, tightening your scheduling, and getting paid on time. I have coached over 600 businesses across Australia, and the electrical contractors who grow fastest are the ones who get these foundations right before chasing more work. Here is what I tell every sparky who walks through my door.
Key Takeaways
- Your charge-out rate should be minimum three times your employee’s wage to protect profitability
- Residential electrical businesses need 50-65% gross profit margins; commercial needs 40-55%
- Specialists compete on value while generalists compete on price
- Hire a qualified tradesman first; maintain 1.5 to 2 tradesmen per apprentice
- Geographic job scheduling reduces wasted movement and lifts effective hourly rates
- These strategies map directly to Sam Harrop’s Get, Do, Keep framework: Get the work, Do the work, Keep the cash
Why Do Most Electrical Businesses Get Pricing Wrong?
Here is where most electrical businesses go wrong from day one. When people start their own business, they think: “I was getting paid $50 an hour as an employee, so I can charge myself out at $100 an hour.” This thinking will kill your business before it starts.
Most tradies don’t have a work ethic problem. They have a structure problem. And pricing is the first piece of structure that needs to be right.
Your charge-out rate should be three times your employee’s wage, minimum. You need to understand the true cost of your team: wages, superannuation, vehicles, downtime, and those occasions when you have to go back and fix a job. By setting the correct hourly rate, you are setting yourself up for profit instead of just buying yourself a job.
Charge for travel properly. For example, the first 30 minutes are charged at your standard hourly rate plus parts, then continue on an hourly rate from there. This approach significantly increases your effective hourly rate.
I worked with Peter at Queensland Air Compressors on exactly this. Once we fixed his pricing and tightened his systems, he tripled his weekly turnover with just two extra staff and went on to open a second branch in Townsville. Pricing was the unlock.
How Should I Mark Up Materials in My Electrical Business?
People get confused between markup and margin. Markup is how much you add on top; margin is what you are left with. Always mark up on the wholesale rate, not your special rate.
For easy-to-compare items, keep prices just above or at retail. For hard-to-compare items, much higher margins are acceptable, and you can generally achieve this with smaller components and specialty parts. If your pricing is wrong and you start growing, it will hurt you and you will not make any money.
What Profit Margins Should an Electrical Business Achieve?
If you are running a residential electrical business, your gross profit margin should be between 50-65%. For commercial work, target 40-55%, ideally aiming for the upper end. You want to be tracking your gross profit margins weekly, monthly and quarterly.
Watch for the silent killers that erode your margins:
- Overtime costs from poor scheduling and rostering
- Unbilled hours when work is not being tracked properly
- Missed materials that do not get charged to the job
This is the “Keep the cash” part of my Get, Do, Keep framework at Business Maximiser Coaching. You can get all the work you want and do it brilliantly, but if the cash is leaking out through unbilled hours and missed materials, growth just means losing money faster.
Understanding these fundamentals is crucial for sustainable growth. My Ultimate Tradie Business Transformation Program helps electrical contractors master these financial basics and build systems that protect their margins.
How Does Specialising Help You Grow Your Electrical Business Faster?
If you want to grow fast, you need to specialise. This means defining your niche, not being all things to all people. Is it residential? Commercial? Work for builders? Real estate maintenance? Focus on getting the right clients, doing the right work that is right for your team, at the right pricing.
Generalists compete on price. Specialists compete on value and win every time. When you are clear around your target market, you can position your marketing precisely, which means you spend less money to get better results.
Align your team strengths with the work you pursue. Look at what your team is really good at and develop systems, processes and people around that capability.
Sy and Amber at Sy Dolphin Electrical are a great example of what happens when you get clear on your focus. They had been in business 15+ years but were struggling when a tourism downturn hit their local market. Once they got clarity on their priorities and tightened their systems, they came out the other side stronger. Their words: “It was the best decision we have ever made for our business.” Focus is what made the difference.
How Should I Structure My Electrical Team for Growth?
For small electrical businesses growing, your first hire should always be a fully qualified tradesman. People hire apprentices too soon. Apprentices require supervision, and as a general rule, you want 1.5 to 2 tradesmen per apprentice. This takes care of downtime when they are at TAFE.
Remember: if pricing is wrong, adding staff will just make things worse. Balance your team properly with one admin person for every four to five tradesmen. Initially, you may be doing admin work yourself, but hire an admin person first as you grow, then come back off the tools.
Use subcontractors carefully. They are expensive but flexible, which can help bridge gaps as needed. According to the
The Australian Bureau of Statistics reports that the construction industry has some of the highest subcontracting rates in Australia, making strategic workforce planning essential.
Laurie at Queensland Training Services is proof of what good team structure delivers. Over 14 months they increased turnover by 32%, profit by 191%, and successfully recruited three more team members. The systems they put in place even allowed the family to take four weeks off overseas while the business kept running profitably. That does not happen by accident. It happens when you get the right people in the right seats and have systems to support them.
Growth without structure creates chaos. That is why my Recruit Right Programme helps electrical businesses build their teams systematically and avoid costly hiring mistakes.
How Do You Maximise Productivity on Every Electrical Job?
Make sure you have complete information before starting any job. This means having all the right equipment, tools and parts. But very importantly, after completing the job, complete all the paperwork during job time, not after hours. At the job site, this administrative work is part of the job.
Track billable hours for each team member. This way, you will see which team members are more productive than others and can introduce simple incentives around productivity. What gets measured gets improved.
Do the job right the first time. While we want productivity, we do not want callbacks because rework costs three times: the time doing the original job, time going back to fix it, and the lost opportunity of another job. Reduce callbacks and maintain quality control with clear communication to both clients and team.
This is the “Do the work” pillar. Productivity is not about working harder. It is about having systems that let your team work smarter on every single job.
How Can Better Scheduling Reduce Wasted Time in an Electrical Business?
Plan your jobs geographically. You do not want a hub-and-spoke operation where workers go to a job, return to the shed, go to another job, return to the shed. Concentrate in specific areas on specific days and move from one job to the next. This reduces downtime between jobs and increases your effective hourly rate.
Keep vehicles well stocked with inventory control and common parts on hand. This reduces wasted time going to wholesalers or hardware stores for odd parts, and you can deliver better value to customers.
The businesses I coach that get scheduling right typically see a measurable lift in daily output without adding a single extra person. It is one of the fastest wins in any trade business.
How Do I Make Sure My Electrical Business Gets Paid on Time?
Set clear payment terms upfront and be very clear about expectations. Get agreements before starting work, take payments on site where possible, and do not let invoicing drag out. Once a job is done, get that invoice out immediately and have a solid process for following up on payments.
You do not have a business if you do not get paid. I have seen too many sparkies with full order books and empty bank accounts. Cash flow is the oxygen of your business.
The Australian Taxation Office recommends clear invoicing practices and payment terms to maintain healthy cash flow.
Frequently Asked Questions
What should I charge per hour for electrical work?
Your charge-out rate should be minimum three times your employee’s wage. Factor in wages, superannuation, vehicle costs, downtime, and potential rework. Do not base your rates on what you earned as an employee. That is one of the fastest ways to buy yourself a job instead of building a business.
Should I hire an apprentice or a qualified electrician first?
Always hire a fully qualified tradesman first. Apprentices need supervision and you should maintain 1.5 to 2 tradesmen per apprentice to handle their TAFE time and training needs effectively. Getting this ratio wrong is one of the most common mistakes I see.
What profit margins should my electrical business achieve?
Residential electrical businesses should target 50-65% gross profit margins, while commercial work should achieve 40-55%. Track these margins weekly, monthly and quarterly to maintain profitability. If you are not tracking, you are guessing.
How do I reduce travel time and increase productivity?
Plan jobs geographically to work in concentrated areas on specific days. Move from job to job rather than returning to base between each job. Stock vehicles with common parts to reduce trips to suppliers. This alone can add hours of billable time back into your week.
What is the biggest mistake electrical businesses make when growing?
Getting pricing wrong from the start. If you are not charging correctly and try to grow by adding staff, you will just lose money faster. Fix your pricing and systems before scaling up. This is exactly what my Get, Do, Keep framework addresses.
Does Sam Harrop only coach businesses in Queensland?
No. While I am based in Cairns, I coach tradie and service business owners right across Australia. My Business Maximiser Coaching programme includes weekly group calls, one-on-one coaching, and access to 659+ resources on the members’ site. Location is no barrier. I work with electricians, builders, plumbers and service businesses in every state and territory.
If any of this sounds familiar, book a Business Breakthrough Meeting with me. It is a free, obligation-free chat to talk through your situation and work out the best path forward for your electrical business.
