If you run an established electrical business, you already know this: plenty of pricing advice online is written for brand-new tradies or generic small businesses. It tells you to charge “what the market will bear” or to “know your numbers” without actually showing the maths.
That is exactly how many electrical contractors end up pricing on gut feel.
Maybe you charge what a competitor seems to charge. Maybe you round up what feels fair. Maybe you add a bit extra and hope there is enough left at the end. The problem is that small pricing mistakes do not stay small. They quietly eat into your margin on every labour hour, every fitting and every quoted job.
If your pricing is not built from an actual charge-out rate, materials margin and GST treatment, you can stay busy and still wonder where the profit went.
This guide walks through the numbers plainly.
SEO meta description: Electrician pricing explained for Australian contractors: work out your electrician charge-out rate, materials margin and GST without guessing.
Stop mixing up markup and margin
If you sell materials, this is one of the fastest ways to undercharge.
Markup is what you add to your cost.
Margin is the gross profit inside the final selling price.
They are not interchangeable.
Use a real materials example
Say you buy a power point for $8.
If you apply a 50% markup, the maths is:
- Cost: $8
- Markup: $4
- Selling price: $12
That does not mean you made a 50% margin.
To work out the margin:
- Selling price: $12
- Cost: $8
- Gross profit: $4
- Gross margin: $4 ÷ $12 = 33.3%
So:
- 50% markup = 33.3% margin
- Not 50% profit
That distinction matters because many contractors say they want “50% on materials” when what they are actually doing is applying a 50% markup. The result is a much lower margin than expected.
If you want a true 50% margin, do this instead
If your cost is $8 and you want a 50% margin, your selling price needs to be:
$8 ÷ 0.50 = $16
That gives you:
- Cost: $8
- Selling price: $16
- Gross profit: $8
- Gross margin: $8 ÷ $16 = 50%
Why does this matter? Because if your materials pricing is wrong, every job is underquoted before you even start looking at labour.
Build your charge-out rate from scratch
Your hourly rate should recover more than a wage.
It needs to recover:
- Base wage
- Superannuation at 12%
- Leave entitlements
- Workers compensation and other insurance
- Van costs
- Tools and equipment
- Admin time
- Quoting time
- Software, phones and overheads
- A profit margin for the business
And there is one point many electricians miss: not every paid hour is billable.
You might pay someone for 38 hours a week, but you cannot invoice 38 hours a week. There is travel, quoting, ordering, meetings, rework, training, annual leave, sick leave and gaps between jobs.
That is why your wage cost per billable hour is much higher than the hourly wage on paper.
Start with the base wage
Assume you pay an electrician:
- Base wage: $30 per hour
At first glance, you might think charging $60 to $70 an hour gives you plenty of room.
Usually, it does not.
Add the direct employment costs
Using a simple worked example, start with:
- Base wage: $30.00
- Superannuation at 12%: $3.60
- Leave loading, annual leave, personal leave and public holidays provision: $5.00
- Workers compensation and insurance allowance: $1.50
- Payroll-related admin and compliance allowance: $1.00
That brings the employment cost to roughly:
$41.10 per paid hour
Add vehicle, tools and operating overheads
Now add the costs that sit around that worker:
- Van, fuel, servicing and registration allowance: $5.00 per hour
- Tools, test equipment and consumables allowance: $2.00 per hour
- Phones, software, bookkeeping and office overhead allocation: $3.00 per hour
Now you are at about:
$51.10 per paid hour
Then adjust for billable utilisation
This is the part that changes everything.
If that worker is only billable 75% of the time, you need to recover the full cost across fewer chargeable hours.
The formula is:
True cost per billable hour = total paid hourly cost ÷ billable utilisation
So:
$51.10 ÷ 0.75 = $68.13
That means a $30 wage can easily turn into about $68.13 per billable hour before you have added any real profit margin.
Even if your exact numbers differ, the key point is the same: a $30 hourly wage is not a $30 hourly cost, and it is usually not even close.
The practical takeaway
If you are setting labour rates by doubling the wage or copying what another contractor charges, ask yourself:
Have you actually recovered all employment costs, overheads and non-billable time?
If not, your labour rate is probably too low.
Get GST in the right place
GST creates a separate pricing trap, especially when your business grows past the registration threshold.
In Australia, you generally need to register for GST when your GST turnover reaches or is expected to reach $75,000 in a 12-month period.
The problem is not registration itself. The problem is what happens when you cross that threshold but keep quoting the same dollar figures as before.
The trap
Before GST registration, you might quote a job at:
- $1,000
If you were not registered, that full $1,000 was your sales amount.
After registration, if you keep charging $1,000 total instead of $1,000 plus GST, the GST has to come out of that amount.
The ex-GST figure becomes:
$1,000 ÷ 1.10 = $909.09
GST payable is:
$1,000 – $909.09 = $90.91
So the same “$1,000 job” now only nets you about:
$909.09 before income tax
That is a drop of roughly 9.1% in sales income on the same quoted price.
What should happen instead?
If your required selling price is $1,000 ex-GST, then once registered you should quote:
- Job price ex-GST: $1,000
- GST: $100
- Total inc-GST: $1,100
That way, your business still receives the intended $1,000 ex-GST sale amount.
Why this catches electricians out
This often happens when:
- you cross the threshold faster than expected
- you have old price lists still being used
- you quote rounded figures without stating ex-GST or inc-GST
- you absorb GST to avoid awkward customer conversations
But if you absorb GST instead of passing it on, the money usually comes out of your margin.
And if your margin was already tight, that can create cash-flow pressure by the time your BAS is due.
Put it all together on a real quoted job
Here is a simple combined example.
Assume your electrical business has worked out that:
- Your labour charge-out rate needs to be $120 per hour ex-GST
- You want a proper margin on materials, not just a rough markup
- You are GST-registered
Now say a job includes:
- 3 labour hours
- A power point that costs you $8
- Other materials costing $92
- Total materials cost = $100
Step 1: Price labour correctly
Labour:
- 3 hours × $120 = $360 ex-GST
Step 2: Price materials with margin in mind
Assume you want a 33.3% gross margin on materials.
That means a $100 materials cost needs to sell for:
$100 ÷ 0.6667 = about $150
So your materials sell price is:
- Materials cost: $100
- Materials sell price: $150 ex-GST
That includes the power point example we covered earlier:
- Power point cost: $8
- Sold at $12
- That is a 50% markup
- Which is only a 33.3% margin
Step 3: Add labour and materials
Subtotal ex-GST:
- Labour: $360
- Materials: $150
- Total ex-GST: $510
Step 4: Add GST
GST:
- $510 × 10% = $51
Total quoted price:
- $561 inc-GST
That is a properly built quote because it accounts for:
- the real labour recovery rate
- the actual materials margin
- GST added on top, not absorbed into the price
Check what your current pricing is really doing
If you want to test your pricing quickly, ask yourself:
- What does one billable hour actually cost my business?
- Am I using markup when I think I am using margin?
- Have I adjusted my prices properly for GST?
- Do my quoted prices leave room for profit after wages, overheads and BAS obligations?
If you cannot answer those clearly, that is usually the warning sign.
A quick note before you rely on these numbers
This article is general information only. It is not personal tax advice, financial advice or a substitute for advice tailored to your business structure, pricing model or tax position.
Want a second set of eyes on your numbers?
If you run an electrical business and want help reviewing your charge-out rate, GST setup or job pricing, you are welcome to chat with us about our Complete Financial Management service.
We work with established businesses that want their bookkeeping, BAS, reporting and tax kept current so pricing decisions are based on real numbers, not guesswork. You can contact CA Accounting Solutions if you would like to talk through your own figures.
Sometimes a short conversation is enough to spot where margin is leaking out of your quotes and whether your current pricing still works once wages, superannuation, overheads and GST are properly accounted for.
