Who pays for quality?
I am assuming that you have researched the job in hand and don’t go to the wholesalers just looking to buy the cheapest goods you can find. So, who is paying the extra premium for better quality and specification?
We all know of course that it should be the customer, but do you ever find yourself ‘absorbing’ it in the overall price for the sake of offering a lower quote than the next electrician? After all, once you’ve invested time in going out to see a job, scope it and quote for it, losing it for the sake of an extra tenner each on decent lights can hurt.
We don’t need to go over old ground here: that quality counts, buy cheap buy twice etc. Install the wrong spec or second-rate goods, and you can expect to be called back to put a bad job right. But does the customer really get that – and value it?
If not, then the options you are left with are either to compromise on quality and brand assurance or to absorb the cost and cut the wage you pay yourself.
Here’s an alternative approach:
• Write it all down as an itemized quote – not just a price for the job.
• Explain why you are recommending an item, as well as where you are happy to use the basics to save them money.
• Be willing to tell the customer what the goods cost.
• You don’t need to share the details of your wholesaler discount, but most manufactures will have a trade price list.
• It will put the costs of goods vs labour into perspective.
• Tell them what component of the price is your time.
• If they raise an eyebrow at how much you are “paying yourself” explain the difference between a comfortable salary and the costs of running a small business or operating as a sole trader.
• Explain that your daily rates have been properly calculated, maybe even be open about what you pay yourself after paying for equipment, and that you invested time in training for years etc.
• Maybe even tell them what is works out at per annum in comparison with the average for an electrician (see below).
• If they are still sceptical you may decide that they aren’t going to be worth the candle!
Show them what you want to install – take one of our boxes along as there ae all the images and information you need on the box. There’s no need to open it so you can take it back if they disagree with your choice of size or colour, for instance,
We all need a steady stream of work, but we need to be selective. It’s taken you a lot of time and effort to get wehre you are today. You deserve a fair day pay for your work and not to be beaten down. You are worth it.
The Office for National Statistics puts the median salary for an electrician at £30,765 – median is not a simple average, it means that half of you will be making more than that, half of you less. It’s not skewed by a few very high or very low earners.
Most people working as electricians are either self-employed or contracting, and it is not easy to gather data on how much they charge or earn. According to training provider Tradeskills 4U, it is very realistic for an established electrician to charge £45 per hour or £300 per day in the South East and London. Further North this amount may drop.
It is more likely that you will charge a set rate for a job, rather than an hourly or day rate, but you do need to relate that back to a realistic pro-rata hourly or day rate. Smart working and marking up on materials such as sockets, cables and consumer units can make a real difference to what you need to charge and your competitiveness. However, the two have to go together: using cheap goods is not smart! It will come back and haunt you.
As a self-employed individual, you must understand your daily rate as it allows you to control your annual income. Work out how much you need – or want – annually to pay your bills (including income tax), keep up with your mortgage and maintain your current lifestyle. On top of that, many financial planners recommend that you save 10% to 15% of your income for retirement, starting in your 20s.
Now consider how many days you will work in a year. 22 days personal and 8 days public holidays is about a month of no earnings. This month out is equivalent to 9% of your earnings potential – in practice you are only working 238 days a year (1785 hours @ 7.5 hours per day). Then there’s National Insurance, business insurance, tools, training and all the time you spend just winning a job in the first place.
You don’t need to tell customers all your private information, of course, bit do make sure they are fully aware that they are paying for a highly-skilled work and that you are indeed a professional installer. Researching and choosing quality products is a mark of that professionalism.
This article first appeared in Professional Electrician, January 2018.