Why Electricians Are So Expensive Today

Have you been trying to hire an electrician for your project, but their charges are high? Learn why electricians are so expensive.

Electricians are the specialists who make sure our homes and businesses stay lit, powered, and safe.

And to get such service doesn’t come cheap.

If you’ve ever received a quote from a residential electrician and what you saw shocked you, it’s not strange to want to know why electricians are so expensive.

Electricians usually charge based on their location.

The standard charge is done per hour, and it’s usually around $95-$125.

This does not include the cost of parts used on a project. Rather than feeling bad, first understand why they cost that much.

This will help you prepare and plan whenever you need their services.

In this article, we’ll explain why they cost that much to hire them.

Table of Contents

How Much Does it Cost to Hire an Electrician?

According to Forbes magazine, in 2018, some electricians earned an average salary of $54,940 ($26.93 per hour, based on a 40-hour work week).

The cost of an employee to a business is more than the wage paid to the employee.

Businesses must share in paying payroll taxes (FICA & FUTA) and often provide other benefits, such as vacation, uniforms, or paid training.

A rule of thumb used by most businesses is that an employee will cost the business 1.25 to 1.4 times their annual salary.

The true cost to a business hiring an electrician at $54,940 is somewhere between $68,675 and $76,916 ($33.66 – $37.70 an hour).

Electricians are among the top five highest-paid non-degree professions.

For years, society has funneled high school students towards college.

With fewer people entering the skilled trades, it has become increasingly difficult for businesses to hire qualified workers.

A lack of skilled labor has led to higher wages. It’s simple supply and demand.

Maybe it’s time to teach our children that there is nothing shameful about working with their hands and that people entering the trades can earn as much money as those with college degrees, but without the associated college debt.

How Electricians Have Evolved Over Time

Today’s electrician is not the electrician of your grandfather’s time, who went to the job location in a rusty truck, pulled a little wire, and made up an outlet or a switch.

However, today, almost everything an electrician installs is a “smart” device that can be controlled remotely or via a phone app.

This means it must be programmed.

Back then, before you could become an electrician, you’d need to have a strong mathematical background.

These days, electricians must have a basic understanding of computer programming and are constantly learning new technologies, from installing solar panels to operating generators.

If you still think it’s hard to wire a three-way switch in your home, maybe you should try troubleshooting a complex control system.

What It Takes to Become a Licensed Electrician

Electricians do not require a four-year degree.

But they are required to complete either a four-year on-the-job apprenticeship or a combination of two years of advanced technical schooling and a two-year apprenticeship before taking the test to become a licensed Journeyman.

Apprentices are paid a salary during their apprenticeship.

But it takes several years of training before they can qualify as a fully qualified electrician.

We prefer to call it a “Field Degree.”

What it Costs an Electrical Contractor to Operate in the Field

Paying an employee is not the only cost to a business.

Your electrician likely arrived in a specially designed, shiny service vehicle, which costs somewhere between $32,000 and $45,000 to purchase.

If payments are $7,200 a year ($600 a month), the vehicle costs the business around $3.50 an hour, based on an average of 2,080 hours of use per year.

In addition to wages and the price of purchasing service vehicles, electrical contractors must calculate their “rolling overhead.”

This term refers to the cost of keeping a service truck operational in the field, excluding the price of the truck itself.

These expenses include fuel, maintenance costs, taxes, GPS tracking, insurance, signage, racks, tools, test equipment, and a large inventory of parts.

A service truck can carry, on average, $10,000 in inventory.

A typical rolling overhead cost per vehicle is easily in the $700–$1,000 a month range, or around $4–$6 per hour of operation.

What it Costs an Electrical Contractor to Run Office Operations

Calculating the rolling overhead isn’t all about the calculation. There’s more!

Now your electrical contractor will have to calculate their “base overhead.”

This is simply the cost of running their office.

Here are the typical expenses:

Cost of maintaining a shop, including the monthly mortgage
Repairs to the building
Insurance
Taxes
Uilities
Administrative office staff salary and benefits
General liability insurance
Website
Landline and cell phone expenses
Advertising
IT support
Desks
Furniture
Computers
Internet
Cleaning
Credit card fees
Licenses
Customer management and accounting programs
Professional fees
Association fees
Collection fees
Basic office supplies such as paperclips and pens.

The largest expense a company typically incurs is its base overhead. If you’re a business owner, you might be shocked the first time you calculate your “base overhead,” because of the figure.

The base overhead can cause your electrical contractor to spend within the $40–$60 per hour range in expenses.

So, if your electrical contractor charged you asa high as $100 an hour, remember that he probably gets to keep $6 to $11 after making his expenses.

Of course, this is per employee/service truck.

A sole proprietor working out of his house with one truck is simply working for a low wage.

And due to a competitive market, he’ll end up working very long hours to make a livable salary.

According to SERA, the average net profit margin for an electrical contractor is typically between 5% and 10%.

It also states that electricians make a profit margin of around 2% to 3%. It’s no wonder so many businesses fail.

Conclusion

Why electricians are so expensive at first glance is because people don’t understand the details that make up the fee they charge.

Understand that various factors, like safety, training, tools, and materials required, expertise, and the quality of their service, determine their rates.

Consider the value an electrician brings in terms of safety, reliability, and expertise.

Don’t be tempted to cut corners on electrical work because of cost. It can lead to dangerous consequences.