Why 65% Margin on Service Calls Isn't Greedy - It's Survival

You quoted a homeowner $285 to replace an outlet and add a dedicated circuit. They balked. Said their "buddy" would do it for $150. So you dropped to $200 just to get the work.

You got the job. You also lost money.

The Real Cost of Underpricing Service Calls

That $200 outlet job took you 90 minutes on site. But here's what you didn't count: 20 minutes driving there. 15 minutes on the initial phone call and scheduling. 10 minutes writing up the invoice. Another 10 minutes on a follow-up call when they had questions about the breaker.

That's 2 hours and 25 minutes of your time for $200.

Your materials ran $45. Workers comp, liability insurance, and vehicle costs can easily run $25-35 per billable hour depending on your location and coverage levels. Let's use $28 as a working example. Your actual labor cost with benefits is $38 per hour.

Do the math: $45 materials plus $92 labor (2.4 hours × $38) plus $67 in overhead costs (2.4 hours × $28). That's $204 in hard costs. You actually lost money on a job that blocked out half your morning.

Your $200 "win" put you in the red.

Why Electricians Keep Making This Mistake

Most electrical contractors price one of two ways. Either they use "hourly rate plus materials" inherited from whoever trained them, or they guess based on what they think the customer will pay.

Both methods ignore the same thing: unbillable time.

Residential service calls often have 30-60 minutes of unbillable time built into every job. Phone calls, driving, paperwork, follow-ups, the small talk that builds trust with customers. You're paying for all of it. Your pricing should reflect all of it.

There's also the psychology problem. A 65% margin sounds obscene when you're standing in someone's kitchen. It feels like you're ripping them off. So you shave $50 here, $75 there, just to feel better about the quote. If you haven't raised your rates in years, that's a separate problem - check out how to write a price increase letter that keeps most of your clients.

Meanwhile, the plumber down the street charges $350 for a 45-minute water heater flush and sleeps fine at night.

How to Price Service Calls Without Guessing

Here's a framework you can use today. No software required, just honest math.

Step 1: Calculate Your True Hourly Cost

Add up these numbers for a typical month:

Technician labor including benefits and payroll taxes Vehicle costs including payment, insurance, fuel, maintenance Insurance for liability and workers comp Tools and equipment amortized monthly Office overhead including phone, software, admin time Your own salary because you need to eat too

Divide by billable hours. Not hours worked, hours you can actually bill to customers. For many residential service electricians, that's often 25-30 hours per week, not 40. Your mileage will vary based on route density and how tight your scheduling is.

If your total monthly operating costs are $12,000 and you bill 100 hours, your true hourly cost is $120 before you've made a dime of profit.

Step 2: Build Your Flat Rate Pricing

Take your true hourly cost. Add your average material cost per job type. Then apply the margin.

For a 65% gross margin, divide your costs by 0.35.

If your costs on that outlet job are $204, your price should be $583. Not $200. Not $285. $583.

That feels insane until you realize it leaves you with $379 gross profit. After all your monthly overhead gets covered (marketing, admin, rent, callbacks, the jobs that go sideways) you might keep $85-100 of that. A 15% net margin on residential service work is healthy. It's not greedy.

Step 3: Create a Price Book

Build a menu of flat rate prices for common service calls. Stop calculating on the fly in the customer's kitchen.

Example price book entries (your market may vary):

• Outlet replacement, standard: $175
• Outlet replacement with dedicated circuit: $550
• Panel inspection and report: $225
• GFCI installation, per location: $195
• Ceiling fan installation, standard height: $285
• Ceiling fan installation, high ceiling: $425

Flat rate pricing tends to convert better than hourly quotes. Customers want certainty. They're not comparing your hourly rate. They're comparing the final number. When they know exactly what they'll pay, they're more likely to say yes.

Step 4: Practice the Conversation

The hardest part isn't math. It's saying the number out loud without flinching.

"Mr. Johnson, to add that dedicated circuit for your home office with a new 20-amp outlet, the investment is $550. That includes all materials, labor, permit pulling where required by local code, and a two-year warranty on the work. I can have it done by Thursday."

Notice what's not in there: apologies, justifications, or opening the door to negotiation. State the price. State the value. Offer a timeline.

If they push back, you have options:

"I understand that's more than you budgeted. If you'd like, I can do just the outlet today for $175 and we can schedule the circuit upgrade when it works better for you."

You're not dropping price. You're adjusting scope.

What Happens When You Price Correctly

In one case, an electrical contractor raised his service call prices significantly over six months. He lost some leads, but his revenue went up and his profit margins improved substantially.

The customers who left were the ones who'd been draining his time anyway. The ones who stayed valued quality work and didn't nickel-and-dime every invoice. And yes, he was still busy - being booked solid doesn't mean you're profitable if your pricing is wrong.

The same principle applies to capturing every service opportunity that comes in. If you're properly priced, you can afford to invest in answering every call, following up on every lead, and providing actual service.

It also changes how you quote. When you have confidence in your pricing, you stop second-guessing every estimate. You send quotes faster because you're not doing mental gymnastics trying to figure out the lowest number that won't insult the customer.

When Automation Makes Sense

Manual pricing works fine when you're doing five service calls a week. But once you're running a crew, inconsistency becomes expensive.

Your senior tech charges $550 for the outlet job. Your new guy, trying to be helpful, charges $350. You just lost $200 because you don't have a system.

That's where pricing automation comes in. Not to replace your judgment, but to enforce consistency across your team. Automated quoting can pull from your price book and deliver consistent margins based on the job categories and options your team selects, though you'll need to keep your pricing and material costs updated to stay accurate.

Some contractors use it for instant text-back quotes on tightly-scoped common jobs. Customer texts "need outlet added in garage." System responds with the flat rate, books the appointment, and confirms the deposit. All before the customer starts Googling your competitors. This works best when the scope is clear and you have proper terms and exclusions in place.

The 65% Margin Is the Floor

Here's the uncomfortable truth: 65% gross margin is survival mode. It's not thriving. It's covering your costs and making enough to stay in business.

The contractors making real money, the ones taking vacations and building crews and eventually selling their businesses, often target 70% or higher on residential service.

They got there by understanding their real costs. By pricing for the unbillable time. By creating systems that deliver consistent quotes across their entire operation.

They stopped apologizing for charging what the work is worth.

Your skills took years to build. Your license required substantial training and apprenticeship hours depending on your state. Your insurance protects the homeowner's property. Your warranty gives them peace of mind.

That's worth $550 for a dedicated circuit. And if someone wants their buddy to do it for $150, let them. You'll be the one they call when the buddy trips a breaker and can't figure out why.

The Bureau of Labor Statistics tracks electrician employment and wage data, and their numbers confirm what you already know: skilled electrical work commands premium rates because it requires premium training and carries real liability. Meanwhile, resources from the National Electrical Contractors Association can help you benchmark your pricing against industry standards.

If you're running the numbers and realizing your pricing needs work, that's the first step. If you want help building systems that enforce those prices consistently across your team, let's talk.