Matierial mark up and Hourly rate?

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mdshunk said:
I think a flat 20% markup isn't being fair to yourself. I'm not sure where the magic *20%* number came from
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This 20% is average for me. As I've posted before, I don't do a lot of T & M, but I do base my mark-up at 20%. More on some items, less on others.
 
mdshunk said:
Right! Thank you for that.

This was my point in posting that multiplier list. I hoped people wouldn't get too wrapped up in the exact numbers. Electricians are lagging behind the plumbers and HVAC guys when it comes to markup and profit, and how to run profitable service calls. I read all the plumbing and HVAC stuff on these topics I can get my hands on, because it simply doesn't exist in a quality form for electricians. Sooner or later, some person needs to rise to the top to take charge of marketing for electricians, in much the same way Mike Holt has done for grounding and bonding and Joe Tedesco has done for safety. If someone knows who that up and come-er is, please share.
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Would you use that type of multiplier list for a large T&M job? say around $40,000? or is it just for service work? I'm getting ready to start a residential remodel using T&M and I'm looking to mark up more than 20%. It would be nice to know that lots of other electricians make more than 20% on materilas but nobody else is saying they do.
 
mkgrady said:
Would you use that type of multiplier list for a large T&M job? say around $40,000? or is it just for service work? I'm getting ready to start a residential remodel using T&M and I'm looking to mark up more than 20%. It would be nice to know that lots of other electricians make more than 20% on materilas but nobody else is saying they do.
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Don't use my numbers for anything. Let's just start with that. I posted it only as a seed for further discussion and as an example of a sliding scale markup. I use it for service. I call T&M work service also, because that's the guys I use on T&M work. I can just barely comprehend that you have a 40K T&M job, but good for you. I'm not the business guru that you should be asking your question of. I'm not sure who that person is, actually, but it's not me. I just put black on brass and white on silver like everybody else.

I'm not sure that "lots" of other electricians make more than the flat 20%, but I hope that will change in the coming decade.
 
20% is a little on the low side if I can add input.

I shoot for the 30-35% range for a year end total.

Small things get marked up alot more than the big stuff.

If your selling 100K in materials every yr, that's a 30K profit on top of your hourly rate.
 
emahler said:
good tradesmen don't always make good businessmen. Read any electrical forum, guys are too proud of their technical knowledge and make fun of the "business guys"

I know my code well enough to get me through any job we do. I can find the answer to any question I have. There are plenty of guys in the world who know the code better than me, but what good does it do them? Do they make more money because they can recite the code and I have to look it up?

But what about business principals? There is no one book to read. No one place to get the right answers. So, IMO, too many guys just don't want to be bothered.
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In my 16 years in this trade, I have worked for 5 companies. Only 2 are still in business. Good electricians, bad businessmen. Sad to see them work so hard to lose it. If I wanted, I could go out on my own, but I know I would struggle with the $ end. "Mans got to know his limitations"
 
bradleyelectric said:
what would your overhead and profit markup be to sell this item? and the price to the customer would be?
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Depending on my perception of the competition, the amount of time I put into it, my work load, and the amount of work involved in handling the order, I use a multiplier of 15% to 20% of the cost (plus tax) as the selling price. Now, for me these multipliers apply to my wire orders for the larger jobs I do.

It is not uncommon for me to have more than $50,000 in wire cost for a marina. If my work load is getting low, I would be very happy with making $5,000 on $50,000 of material costs verses sitting at home or chasing new work at a higher price. I make more money working everyday at modest markups than I do chasing work (which is non paid work until you get a job) at higher margins.

Let's consider overhead. Let's say you are working along and paying (WAG) $15,000/month in overhead. You get a call about a high dollar item that you will have to spend 2 hours on getting the item ordered and delivered. You will have ancillary materials to markup at your normal rates, plus your labor to install all of this at your normal rates. Is your overhead going to go up significantly (or even at all) by buying and selling this item? I'd say no. Your overhead is covered already by all of the "normal" work you do. So this one high-dollar item could be considered overhead free (or close to it).

JMO, it's not a black/white thing. In business, there is a lot of gray.
 
One more thing, the amount you are able to markup an item may be somewhat controlled by how well you are buying. If your competition is buying at 5% better than you, then you are starting at a disadvantage.
 
mdshunk said:
Right! Thank you for that.

This was my point in posting that multiplier list. I hoped people wouldn't get too wrapped up in the exact numbers. Electricians are lagging behind the plumbers and HVAC guys when it comes to markup and profit, and how to run profitable service calls. I read all the plumbing and HVAC stuff on these topics I can get my hands on, because it simply doesn't exist in a quality form for electricians. Sooner or later, some person needs to rise to the top to take charge of marketing for electricians, in much the same way Mike Holt has done for grounding and bonding and Joe Tedesco has done for safety. If someone knows who that up and come-er is, please share.
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Marc, when we stop referring to eachother as competition, we may be able to stop undercutting eachother.

As long as we view eachother this way, it will never get better for electrician. Most towns have a group of plumbers or HVAC guys that get together for dinner once a month and discuss business. These guys are friendly competitors. We usually don't have that in electrical. We are in such a rush to get the job, that we don't have time to talk to the other guy.

I was reading one of Sonny Lykos' posts where he was talking about a 'reverse auction'. That's what electrical seems to be as a whole. We just keep trying to cut ourselves down more and more, so that we can give the customer a lower price than our "competition"

Good luck.
 
hardworkingstiff said:
Depending on my perception of the competition, the amount of time I put into it, my work load, and the amount of work involved in handling the order, I use a multiplier of 15% to 20% of the cost (plus tax) as the selling price. Now, for me these multipliers apply to my wire orders for the larger jobs I do.

It is not uncommon for me to have more than $50,000 in wire cost for a marina. If my work load is getting low, I would be very happy with making $5,000 on $50,000 of material costs verses sitting at home or chasing new work at a higher price. I make more money working everyday at modest markups than I do chasing work (which is non paid work until you get a job) at higher margins.

Let's consider overhead. Let's say you are working along and paying (WAG) $15,000/month in overhead. You get a call about a high dollar item that you will have to spend 2 hours on getting the item ordered and delivered. You will have ancillary materials to markup at your normal rates, plus your labor to install all of this at your normal rates. Is your overhead going to go up significantly (or even at all) by buying and selling this item? I'd say no. Your overhead is covered already by all of the "normal" work you do. So this one high-dollar item could be considered overhead free (or close to it).

JMO, it's not a black/white thing. In business, there is a lot of gray.
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Are you speaking of service work or bid work? I generally look for 10% overhead and 10% profit on bid work, and my labor rate is a lot different for bid work verse service work. I was under the impression that we were discussing a chart for single item service work. We just recently completed T&M project that took over a year to complete. I now have a mercedese 500sl, a F550 with pickup bed, and various other items for sale. Just kidding. I generally markup service material 100%. On a $50K item that needed to be done immediately and I had to find and have delivered, I would certainly consider getting as much as I thought I could for it. 20%-30% would not be out of the question.
 
We do a huge amount of T&M work and are not bashfull about marking up materials. I use i2e (biddle) col III which usually is a 100-300% mark-up. We sell service, depenability, and excellance rather than a low price. I would rather go for a hike in the local forest than to work cheap just to stay busy. That's easy to say now that I've been at this for over 3 decades and I don't blame a newcomer for "giving it away" (that's how I started). So mark it up or sell it for a loss, I really don't care. Just please do clean, decent, code compliant work.
 
Back to the original basic question with a basic answer.. $92.00 per hour for myself, Master electrician, almost 20 years experience, 12 in solo business. Average 30-35 percent markup. $75.00 per hour in the Boston area sounds way too low.
 
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