Electrician's Hourly Rates

[JohnW2]

I have moved a discussion, which arose as a tangential spin-off from another thread [ which can be be found (here) ] into this new thread to please at least one forum member. The most recent pertinent post in that thread was ......

I apologies for the length of this! I need not tell you that brevity of writing is not one of my conspicuous virtues

t's not so much 'findings' as 'the way it has been (dictated by clients) for decades and, perhaps more important, the way in which all those with whom I have been 'competing for work' have done things. I have, however, somewhat over-simplified how things work for me (see below).

As above, it has not really been 'by choice', even though it has seemed pretty reasonable ('very fair') to me.

I pretty much work the same way by starting with my day rate but look at the 'predicted additional costs' and simply add them on to reach the rate for a job

Whether or not 'evening out' is a practical and reasonable way of doing things probably depends a lot upon the nature and extent of the work, and the extent to which overheads are fairly consistent across jobs..

As above, I have oversimplified 'my world'. As with any self-employed person (or company running a business), my 'charge out rate' takes into account all the standard, fairly predictable, annual overheads, translated into a 'per hour' figure on the basis of an estimated number of hours work per year - which is why those 'charge out rates' are so much higher than the hourly pay rates that an employee would expect for doing the same work. Those 'built-in overheads include (for a person like me) such things as insurance, provision for holidays and sickness, part of NIC, heating/lighting of 'home office', (part) provision/maintenance of a vehicle, telephone costs, cost of maintaining/replacing IT etc. equipment, 'office supplies' etc. etc. and a provision for 'reasonable amounts' of travel (including 'travel time')

Whilst ('over-simplifying') I have said that I explicitly re-claim the cost of 'expenses' from a client, that only relates to expenses beyond those which are already built into my 'hourly charge'. This is usually reflected in the contracts, which generally specify rates of reimbursement for mileage beyond some specified figure (commonly 25-50 miles per day) and also payment for 'travelling time' beyond some specified figure (commonly about 2 hours per day) - so, in reality, I do not have to claim extra for 'travel' all that often - since most of my 'overheads' are covered by the figures 'averaged-in' to my hourly charge.
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That pretty much sums up my methodology except I also include the specific costs

I'm sure that the situation varies a lot according to the nature of the work and the trade/profession concerned. In my world, one of the very first questions one almost invariably gets asked is about one's 'hourly rate', and if someone based in central London quoted a much higher figure than, say, a person based in rural Cornwall or Wales, they simply would not get any work!

If that rate is calculated 'reasonably' that's fair enough. Customers/clients in London will undoubtedly expect and accept a much higher rate than they would in some different places "because that's how it is" - but that doesn't stop me asking whether "that's how it should be", at least in some contexts.

Despite what you and others may think, I am not being awkward or argumentative for argument's sake but, rather, genuinely am interested to know the answer to the "Why?" question - since I suspect that, at least in some cases, the answer may be "because that'show it is"! As I've said, there are certainly situations in which the cost of services, and maybe goods, is justifiably appreciably higher in places like London - particularly when 'premises' are involved, but I'm far less convinced in some other contexts (trades/professions).

The 'total' is obviously the most important bottom-line for a customer/client, but everything depends on how 'reasonably' your (differing) totals were calculated.

If you merely took the 'hourly rate' you would charge for work within walking distance if you lived in, say, rural Wales and added to it a genuine estimate of travelling costs and some reasonable amount of remuneration for 'travelling time' and 'being away from home time', then I think that would be fine, and fair to everyone. However, I suspect that a good few people in that position would charge a higher hourly rate for work in an 'expensive' place (like London), before adding on those legitimate 'addons' - solely because "rates are higher in London".

As a matter of interest, to help my understanding, if you lived in an expensive part of London and worked as a full-time in-house (no travelling) employee at a site within walking distance of your home, would you expect a higher hourly rate of pay than if you were in exactly the same situation, other than living in some very rural part of the UK? Similarly, what if you were self-employed and (largely as is the case for me these days, although not in the past), virtually all of your work was undertaken 'remotely' ('from home') - would you then feel that you should charge appreciably more if you were doing it from your home in central London than if your home were somewhere very rural and 'cheap'?
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I would include my running costs regardless of where I'd be based, ie if I worked from home in an expensive location my fee would by necessity be higher than from a cheaper location.

In other words, I suppose what I'm really asking is whether your 'London rates' are much higher than they would be elsewhere simply because you have added a genuine estimate of travel-related overheads etc., or is it at least partially because 'London is an expensive place'?

Kind Regards, John

I personally always try to be genuine with my customers as I want them to come back. No I don't simply add a London weighting, I base it on expected costs.

As a silly example I quoted a contractor a day rate to attend a site in Finsbury Circus and included 80 miles, parking etc. That was simply my 'standard' London rate. When he asked me to build a panel in his workshop 15 miles from home it was within my basic 'home' rate and without negotiation I invoiced the lower rate, it was never commented on, nor was the London rate. Both were regularly intermixed on my weekly invoices.
However another subby invoiced the higher rate for working in the workshop (he lived much closer) and negotiations followed for further employment.

So, responding to the main points in that ....

I pretty much work the same way by starting with my day rate but look at the 'predicted additional costs' and simply add them on to reach the rate for a job .... That pretty much sums up my methodology except I also include the specific costs

I'm starting to suspect that I may be having this discussion with the wrong person since, if I understand you correctly, you do very much the same as I do, which is not only the way I am expected to do it but is also, in my opinion, the method which is fairest to both the provider and recipient of services.

If I understand you correctly, when calculating the total price for a piece of work (which, as we are agreed, is what matters most to the customer), you start with your estimate of the number of hours involved and your 'hourly rate' (for actual work) - which is designed to cover the 'fixed overheads' involved in running your business (insurance, telephone, tools etc.) but which is the same no matter where in the country the work is undertaken (and would be exactly the same regardless of where you lived). To that you add any estimate of any significant additional costs specific to that job (much of which will be travel-related) and, of course, the cost of materials, in order to get your total quote. Is that roughly correct?

If so, that seems fine, fair and essentially what I do (and am expected to do). However, unless I'm misunderstanding, that is not how most people work.

I've apparently exceeded a 10,000 characters limit for forum posts (because of the length message quoted above) .. so will post the final bit of this in a second message......

 

[JohnW2]

.... continued ...

If I ask Mr Google about 'hourly rates' for UK electricians, there are countless sites offering figures. The very first hit I looked at (here) lists hourly prices for 196 towns in the UK. Goodness knows how 'correct' the figures are, but they ("excluding VAT and Callout Charges") range from £22/h in Belfast and £25 in a town in Lincolnshire) to £48 in London and £49 in Conway (ironically in Wales, which makes me wonder about these figures!!).

I'll ignore NI and 'Conway', but the implication seems to be that an electrician living within easy walking distance of the work site in London would charge about double what they would charge for the same work if they lived within easy walking distance of the work in Lincolnshire.. If that's the case, then it would seem very hard to justify and certainly does not correspond with what I do or, what I think you're telling me you do.

As I see it, there are two main problems ('unfairnesses') with trying to simply add the average of estimated job-specific expenses to the hourly rate one would expect in the absence of those expenses. Firstly, in reality, those expenses will vary considerably between jobs and, per the above example, should be zero, or near-zero if the work is very close to one's home, even if one lives in central London. Secondly, even when there are such expenses, if they appear simply as an 'average' incorporated into one's hourly rate, whether one gets paid roughly the right amount for those expenses, or far too little or far too much will depend upon how many hours' work are involved.

I would include my running costs regardless of where I'd be based, ie if I worked from home in an expensive location my fee would by necessity be higher than from a cheaper location.

We may again be saying/doing the same, IF the 'running costs' you refer to really are 'fixed overheads' of running your business (e.g. insurance, required subscriptions to organisations, business telephone, tools and equipment etc.). However, if you mean that, if you worked from home, your would raise your hourly rate if you had chosen to live in an 'expensive area' (in terms of property/rent prices and 'cost of living'), then I would regard that as 'wrong'.

!I personally always try to be genuine with my customers as I want them to come back. No I don't simply add a London weighting, I base it on expected costs.

As above, it sounds as if you may well be doing things the way I personally feel they should be done, and essentially the same as I do (and am expected to do). If I (working primarily from/at home) chose to move from Lincolnshire to the most expensive part of London and, as a consequence, told my clients that my hourly rate had doubled, I know what they would say

Kind Regards, John

 

[Murdochcat]

Point 1 - this variation is NOT just electricians - so you'll find something similar with most trades = regional (and even local) variations

Point 2 - what is it you do ? I doubt we're trying to compare apples with apples

 

[Adam_151]

Point 2 - what is it you do ? I doubt we're trying to compare apples with apples

Thats a very important point to make, a lot of this is down to what is generally accepted as acceptable for a market or region, even when it seems like it should be similar to something else.

The chaps who work behind the counter at electrical wholesalers are generally on more money than those at builder's or plumber's merchants, probably no reason why this should be the case, other than they are separate markets which have evolved over the years, and there is a lot of ingrained knowedge of products learnt through time on the Job which means that folk cant swap and change easily, so it resists wage parity

 

[robinbanks]

because of the length message quoted above

You're allowed to edit it down

told my clients that my hourly rate had doubled, I know what they would say

Where are the clients though? Tell your London client your rate is £50 an hour, and their response will probably be the same as telling your Lincoln clients your rate is £25 an hour

My job can largely be performed remote, and London companies that hire for it typically pay a different rate depending on where the worker lives/incurs costs.. There is still an advantage to living outside London and working for the lower rate, I feel

 

[johnny2007]

Unless you're talking about a big company like pimlico, why would an independent trader price a job and tell the customer how much they charge per hour?
That's a calculation that you do in the background to give a quote.
Personally I don't want the customer to check on me whether I'm answering a call, have my sandwich or resting my feet.
I price the job and give them an idea on how long it's going to take.
If I finish earlier than expected, I don't want arguments about my hourly rate.
They pay for the job, regardless of how many hours I worked on it.
And I think most traders do the same.
Then you have big companies charging by the hour, but their rates are extortionate.

 

[flameport]

from £22/h in Belfast and £25 in a town in Lincolnshire)

Utter fiction, anyone charging those per hour is paying themselves/employees less than minimum wage.

Persons that demand hourly rates are usually the same ones that want extensive detailed lists of every single component and consumable.
After that, they will want to provide all of the supplies themselves to 'save money', and probably want discounts for cash payment as well.
Then they end up on forums like this complaining they can never find anyone to do whatever it is they need doing and it's impossible to find good tradespeople, and those they can find never bother to quote for anything.

If someone wants a quote for something, that is what they get.
If people insist on hourly rates, they get an expensive rate because those always end up as a pile of problems.
If someone wanted work doing in an expensive and inconvenient place such as London then the quote would be significantly increased to cover the additional costs of parking, wasted time in traffic and so on. The actual rate per hour probably won't change, but the number of hours taken and the other costs will.

 

[SUNRAY]

Utter fiction, anyone charging those per hour is paying themselves/employees less than minimum wage.

Persons that demand hourly rates are usually the same ones that want extensive detailed lists of every single component and consumable.
After that, they will want to provide all of the supplies themselves to 'save money', and probably want discounts for cash payment as well.
Then they end up on forums like this complaining they can never find anyone to do whatever it is they need doing and it's impossible to find good tradespeople, and those they can find never bother to quote for anything.

If someone wants a quote for something, that is what they get.
If people insist on hourly rates, they get an expensive rate because those always end up as a pile of problems.

If someone wanted work doing in an expensive and inconvenient place such as London then the quote would be significantly increased to cover the additional costs of parking, wasted time in traffic and so on. The actual rate per hour probably won't change, but the number of hours taken and the other costs will.

 

[opps]

Unless you're talking about a big company like pimlico, why would an independent trader price a job and tell the customer how much they charge per hour?
That's a calculation that you do in the background to give a quote.
Personally I don't want the customer to check on me whether I'm answering a call, have my sandwich or resting my feet.
I price the job and give them an idea on how long it's going to take.
If I finish earlier than expected, I don't want arguments about my hourly rate.
They pay for the job, regardless of how many hours I worked on it.
And I think most traders do the same.
Then you have big companies charging by the hour, but their rates are extortionate.

Pimlico's prices are silly, but they pay a lot for advertising and have to recoup that money. I generally try to steer my customers away from using them.

 

[Notch7]

Artisan electrics have raised their prices from £80/hr+ vat to, £93.50/hr+ vat

thats not the first hour, that’s per hour rate

from 22mins in

 

[opps]

Wow, that is £112.2 ph inc VAT

 

[Notch7]

Personally I don’t think hourly rates are that helpful

if a job takes say 6 hours, I would say that should be charged as 1 days labour…what you gonna do for the last 2 hours.

if a job takes an hour, then a “minimum 1 hr call-out “ should apply

if an electrician gets called out to fault find, that might be priced hourly as its unknown how long it would take.

if its say a new board or wire an extension - it should prob be a fixed price.

 

[Notch7]

Wow, that is £112.2 ph inc VAT

It does seem an awful lot, I would think most electricians are lower than that

 

[Murdochcat]

Wow, that is £112.2 ph inc VAT

BUT you have to remember he’s running a team and the costs for that will be higher AND then there is provision of workplace pensions

 

[JohnW2]

Point 1 - this variation is NOT just electricians - so you'll find something similar with most trades = regional (and even local) variations

I've acknowledge that. It applies to virtually all trades and, indeed, to the majority of self-employed people in all walks of life.

Point 2 - what is it you do ? I doubt we're trying to compare apples with apples

What I do is not relevant. I've merely been using my own situation as an example of how I think it probably should be done, again i all walks of life.

Kind Regards, John