Electrician's Hourly Rates

[JohnW2]

My business costs last financial year were around £7k

Of course, the business also paid your pension contributions, your holiday pay, your sick pay, and your professional registrations.

£7k sounds surprisingly low, but the actual figure is irrelevant.

Whether they be £7k per year or £70k per year, your 'fixed overheads' should be included (by assuming a certain number of hours' work per year0 in the notional 'hourly rate' which you use as the basis (before adding on job-specific expenses) for calculating the total to quote to/charge a customer for a particular job.

Those fixed overheads ought to be pretty similar regardless of what part of the country you are in - the only appreciable variation I can think of being in relation to vehicle insurance.

Kind Reegards, John

 

[Murdochcat]

Of course, the business also paid your pension contributions, your holiday pay, your sick pay

none of those actually.

 

[Murdochcat]

That is unrelated, you must allow a certain amount for vehicle replacement every year, as that van wasn't free and it won't last forever.

£7k for everything seems implausibly low.

How could it be "implausibly low" ? Please expand - how much is yours ?

Retiring soon so no van replacement needed, and the one I have is only 6 years old so not needing replacing anytime soon

 

[DetlefSchmitz]

so no van replacement needed

This makes the business, in accountants language, 'not a going concern'. You are entitled to run it how you like, but can't really use it as a comparison with businesses that do have to pay their expenses.

 

[Murdochcat]

This makes the business, in accountants language, 'not a going concern'. You are entitled to run it how you like, but can't really use it as a comparison with businesses that do have to pay their expenses.

I could still be paying the loan off now but I chose to do it faster, which given how interest rates have gone up it was a good idea.

My accountant has never questioned my accounts or figures

 

[JohnW2]

This makes the business, in accountants language, 'not a going concern'. You are entitled to run it how you like, but can't really use it as a comparison with businesses that do have to pay their expenses.

Quite so but, as I recently wrote, the actual figures are irrelevant to what I've been saying.

Whether very high or very low, the 'fixed overheads' ought to be built in to the notional' hourly rare' one uses for calculating quotes/charges. Those fixed overheads will be the same regardless of the location of the customer, and much the same regardless of where the service provider lives (or is 'based').

The only true difference related to customer location are any location-specific expenses (e.g. travel-related) and, when they exist, should be added to the figure one calculates on the basis of the notional hourly rate (which already includes provision for all the 'fixed' overheads.

Kind Regards, John

 

[Murdochcat]

Whether very high or very low, the 'fixed overheads' ought to be built in to the notional' hourly rare' one uses for calculating quotes/charges. Those fixed overheads will be the same regardless of the location of the customer, and much the same regardless of where the service provider lives (or is 'based').

More total and utter nonsense.

Renting or buying a property in a poor area will ALWAYS be cheaper in a more affluent area (the same would apply to renting or buying commercial properties- so the basics of having a roof over your head could costs extremely different sums. You need to earn enough to put a roof over your head.

Then go out for a meal and the costs vary by area and so on

Then there are the variances in council taxes ....

Your utopia simply does not exist

 

[JohnW2]

More total and utter nonsense. ... Renting or buying a property in a poor area will ALWAYS be cheaper in a more affluent area (the same would apply to renting or buying commercial properties- so the basics of having a roof over your head could costs extremely different sums. You need to earn enough to put a roof over your head. ...................... Your utopia simply does not exist

...and nor does your utopia exist for millions of people, even if it does for electricians and some other tradespeople etc..

As I've said, whilst what you say is all true, countless people have no choice but to accept nationally negotiated/agreed rates of pay, regardless of how expensive an area they happen to (or choose to) live in - and, as I've also said, even unions generally oppose a situation in which some of their members get paid less than others for doing the same job. In such walks of life, there is sometimes a small gesture of 'London Weighting', but the amount of that is usually pretty trivial.

So, whilst I sympathise with those who struggle to live on what they earn because they live in 'expensive areas', I don't really see any reason why certain tradespeople should be 'exempt' from that problem.

If you worked as an electrician for the NHS, your pay would be the same anywhere in the country other than in London. In central London, you could get up to about £7.7k per year (about £4 per hour) extra, and on the 'fringes' of London up to about £2k per year (about £1 per hour) extra.

 

[Murdochcat]

...and nor does your utopia exist for millions of people, even if it does for electricians and some other tradespeople etc..

As I've said, whilst what you say is all true, countless people have no choice but to accept nationally negotiated/agreed rates of pay, regardless of how expensive an area they happen to (or choose to) live in - and, as I've also said, even unions generally oppose a situation in which some of their members get paid less than others for doing the same job. In such walks of life, there is sometimes a small gesture of 'London Weighting', but the amount of that is usually pretty trivial.

So, whilst I sympathise with those who struggle to live on what they earn because they live in 'expensive areas', I don't really see any reason why certain tradespeople should be 'exempt' from that problem.

If you worked as an electrician for the NHS, your pay would be the same anywhere in the country other than in London. In central London, you could get up to about £7.7k per year (about £4 per hour) extra, and on the 'fringes' of London up to about £2k per year (about £1 per hour) extra.

Most of this is irrelevant and you are changing your position

No where have I suggested trades have any right to earn more, we charge what the local market will tolerate and for the record I know many sparks who charge more than me and VAT.

 

[JohnW2]

Most of this is irrelevant and you are changing your position

It's not irrelevant to what I've been talking about, and I have never 'changed my position' (which has been unchanged for decades). Early in this discussion (in the original thread) I wrote:

....... many things in Islington are (for justifiable reasons) more expensive than they would be in Wales, there is probably an expectation (and 'acceptance') of the fact that incomes need to be higher in Islington in order to achieve the same 'standard of living' - i.e. that every tradesman needs to 'make more profit' in Islington than he/she would have to make in Wales. ..
.... because they know (and accept) that (for justifiable reasons) they have to pay more in Islington for their pint of beer in a pub, restaurant meal or consultation with a solicitor etc. etc., they also 'assume' (always dangerous ), without much thinking, that the same is justifiable for the services of an electrician etc.

No where have I suggested trades have any right to earn more, we charge what the local market will tolerate ...
No-one has suggested that people do that. They charge whatever customers are prepared to pay (i.e. "what they can get away with charging"), and (as per the above quote) 'unthinking' customers undoubtedly assume that because many things are (often for justifiable reasons) more expensive in 'expensive areas', so is it reasonable/justifiable for a tradesman to be paid more for a certain amount of their time in that area than they would elsewhere. If the customers didn't think that way, they presumably would not 'tolerate' paying more for an hour of a tradesman's time than people in other parts of the country would pay.

 

[ebee]

There are so many variables for so many different reasons and so many different rates quoted that actually may up up to around the same total price for the finished job , an hourly rate quote can sometimes be quite ac”red haddock”
Example - a contractor as me my hourly rate andvI told him - he said “flipping heck, my current electrician only charges (quite a bit less) “. I said “ok (common example for a house retire of x,y,z) how much?” . He told me. I then asked him to turn over a paper I had just overturned. Then I said “which price is more expensive? Mine or his?” He got the point.

 

[JohnW2]

There are so many variables for so many different reasons and so many different rates quoted that actually may up up to around the same total price for the finished job , an hourly rate quote can sometimes be quite ac”red haddock”

As I keep trying to explain (but few people seem to have fully grasped) I am not talking about 'hourly rate quotes', not the least because few customers will be particularly interested in that.

Rather, I have been talking about the notional 'hourly rate' (which includes 'fixed overheads') which the tradesman uses to calculate the total quote for the job (which is all that matters to most customers).

Maybe it will help some people to understand if I explain this 'backwards'. Per how this discussion started, consider two electricians, one working in Wales and the other in central London, who have given 'total' quotes for doing the same job (and taking the same number of hours to do it). For each of those quotes, subtract any location-specific costs/expenses (primarily travel-related, including some provision for 'travelling time', if appropriate), to end up with the figure for the actual 'payment for doing the job' (including 'fixed overheads'). If you want, you can then divide that amount by the number of hours of work to get an 'hourly rate'.

If you ended up with roughly the same figure for "actual payment for doing the job (including fixed overheads)" for the two electricians, then I would have nothing to say. However, I strongly suspect that the figure would be appreciably (maybe considerably) higher in the London case - particularly if the customer in London was 'two minutes walk' from the electrician's home/base, such that there were few if any, location-specific expenses to subtract!

Kind Regards, John

 

[robinbanks]

someone else's post that I was quoting, which I didn't want to edit

That was my point; you can (and good forum etiquette is you should) edit down the block of text you're quoting to just the salient point you're responding to. In the old days when forums just reproduced the entire text visibly as one massive block it made wading through threads very tedious. You'll note now that massive blocks of text are hidden behind a fixed height fade-out so there isn't any point quoting more than the fade height's worth of text anyway; no one will expand it to read it

the question is "Why?"

Why will London clients find £50 an hour acceptable while Lincoln clients will prefer £25? Because London clients are used to it, in proportionate scale to everything else in their life; they earn £200 an hour trading on the stock market, live in a reasonably sized house that cost 5x more than the same house in Lincoln and pay as much for a parking space as some folk do for a house. The electrician that does their work will be in a similar boat locally and have to charge £50 an hour just to afford his life. Bully for you if you can live in an area that means £25 an hour lets you live your life and pay for it; you can either make bank charging the same rates and suffer a long commute or staying away from home, or you can massively undercut the London spark. Another psychological effect steps in there though; if you're too cheap, (in particular) affluent clients will assume something is wrong with your ability and hire someone else. Buy cheap, pay dear

clients will often not have a clue as to where the service provider does live

In the case of contract hire, that is true, but in a permanent role the company will know where the employee lives. There is a middle ground to be struck whereby an employee in a cheaper area can make an earnings improvement over local roles but still be a cheaper hire for the remote co, which is an advantage

that there were few if any, location-specific expenses to subtract

Is the London-dwelling electrician's dwelling not a "location specific expense" to extract? Cockney spark still has to pay their own mortgage on their ridiculously-more-expensive-than-the-same-thing-in-wales house, and eat more expensive food, have more expensive nights out

 

[Murdochcat]

Maybe it will help some people to understand if I explain this 'backwards'. Per how this discussion started, consider two electricians, one working in Wales and the other in central London, who have given 'total' quotes for doing the same job (and taking the same number of hours to do it). For each of those quotes, subtract any location-specific costs/expenses (primarily travel-related, including some provision for 'travelling time', if appropriate), to end up with the figure for the actual 'payment for doing the job' (including 'fixed overheads'). If you want, you can then divide that amount by the number of hours of work to get an 'hourly rate'.

If you ended up with roughly the same figure for "actual payment for doing the job (including fixed overheads)" for the two electricians, then I would have nothing to say.

So you think in your Utopian world that the pay rates should be the same the whole country over ? Really?

To be clear I know you are wrong. This is never going to happen.

 

[davelx]

Isn't this is just an example of market pricing? You charge as much as your market will bear without losing out to competitors too much. This is nothing new, surely.