Electrical, Management, Productivity, Operations, Business Tips, Pro Features

The Electrical Contractor Price Book That Maximizes Profitability

ServiceTitan January 15th, 2021

A growing number of electrical contractors have been switching from the traditional time and materials model for creating estimates and billing customers in favor of a flat-rate pricing system. 

Flat rate price electrical shops generally use a pricebook: a comprehensive document that lists everything a company buys and sells, their labor costs, job types, markups, and all of the materials and equipment associated with their work.

A well-designed flat rate pricing book has been shown to make contractors more efficient and more attractive to customers. It also tends to dramatically improve their average ticket price — and their bottom line. By continuing to bill as a function of time and materials, electricians are increasingly putting themselves at a major disadvantage.

Understandably, moving away from a business model that’s familiar, and which has seemed to function reasonably well for years, can be intimidating. And until recently, pricebooks often had drawbacks of their own. 

Using a pricebook used to require service techs to lug around heavy binders to every sales call, flipping through laminated pages that would inevitably become grimy, and which often contained outdated information. Just putting together such a pricing guide could take hundreds of hours. Furthermore, most of the software-based, ready-made pricebooks now on the market can be cumbersome, requiring contractors to wrangle multiple spreadsheets, import and export data, and make constant manual updates. 

But all of that has changed. 

» Want to grow your electrical business? Click here to get a demo.

In this article, we’ll explain how using a tool like ServiceTitan can help electrical contractors shift easily from a time and materials model to a pricebook-enabled flat-rate model, avoiding the pitfalls of other software pricebook solutions while increasing their efficiency, improving their customer service, and growing their revenue. 

Specifically, we’ll detail:

  • The drawbacks of sticking with time and materials

  • How standard pricebook software misses the mark

  • How to use ServiceTitan to optimize pricebook-based flat rate pricing

Want to see ServiceTitan in action? Schedule a call with us to learn more about how our software can streamline your pricing and help you grow your business. 

The Drawbacks of Time and Materials Pricing

Electrical contractors who use time and materials pricing simply charge their customers for parts — plus markup — and a rate for labor, typically about $90 to $140 an hour. 

For the most part, contractors who charge for time and materials don’t use what would generally be considered a pricebook at all.     

In terms of basic financials, time and materials pricing has a number of shortcomings. Shops that use this pricing model generally have smaller markup margins, lower hourly rates, and lower average ticket prices than service companies that use flat-rate pricing. 

(Contractors that use a flat-rate model typically factor hourly rates of $200-$250 into their estimates.) 

All of these factors can chisel away at the revenue an electrical contractor is able to generate. But time and materials pricing also has some less obvious drawbacks, which can reduce the efficiency and competitiveness of an electrical business, and ultimately hurt its bottom line.

With time and materials pricing, an electrical contractor’s interests and those of their customers are misaligned: the longer a job takes, the more the contractor makes — and the more the customer pays. Therefore, technicians often have little incentive to work fast — particularly if they’ve got nothing scheduled for the next couple days.  

This dynamic might have something to do with the fact that estimators at time-and-materials shops seem to underestimate how many hours jobs are going to take, often driving up invoice totals well beyond quoted prices and making homeowners angry in the process.   

Most of the time, without a pricebook, technicians draw up proposals by hand, using pen and paper to write down the specifics of every job — fixtures, wiring, switches, screws, etc. — and adding markup and labor rates to arrive at a final estimate. 

The process introduces numerous opportunities for error: 

  • Math mistakes 

  • Forgotten elements of a job

  • Unnoticed changes in material costs       

An especially common error is misapplying labor rates, which can frequently result in underbidding a job. To avoid situations like this, some contractors end up requiring their techs to get approval from their office for estimates before delivering them to customers. But that workaround creates yet more inefficiency, reducing the amount of time techs are spending on selling and performing electrical work. 

Customers tend to prefer flat-rate pricing. It tells them up front exactly what they’ll pay for a job, and once they’ve signed off on an estimate they can put it out of their mind — rather than timing their service technician every time they make a run to the warehouse or take a lunch break. And with a dynamic, well-designed pricebook in their toolkit, electrical contractors can eliminate the guesswork and mistakes that result in error-filled estimates.

But perfecting their pricebook is essential to a contractor’s success, and without just the right tools to help, that can be a challenge. 

In the next section, we’ll examine some difficulties associated with traditional pricebook software products. 

The Challenges of Standard Pricebook Software

Above, we mentioned some of the drawbacks of using an actual physical pricebook, not least of which is that they’re practically impossible to keep up to date. If Home Depot changes the cost of switches today, for example, an existing analogue pricebook isn’t going to be up to speed. 

Prebuilt, third-party software pricebooks are less cumbersome. They don’t get dirty and they save contractors from spending innumerable hours building a pricebook from scratch. 

Software pricebooks don’t require service techs to write up the details of every job by hand, placing the health of their employer’s business at the mercy of their memory and handwriting.

But third-party software pricebooks nonetheless suffer from the same tendency as physical ones to fall behind on current equipment costs. Materials like wiring and hardware are even harder to keep up with, and for that reason, many electrical contractors who use a pricebook software don’t even bother to attach materials to their job estimates. If they do, it’s generally so that their office knows what code to use when they’re ordering supplies, rather than how to factor materials into the price of a job.         

Similarly, many pricebooks don’t make distinctions between varieties of equipment — between different types of light fixtures, for example. They’ll simply have a standardized price. 

Some software pricebooks will allow contractors to get more specific, but that’s not very common. Many find that they can get by this way, but it’s a far-from-perfect solution: Every time a tech creates an estimate with this method, they risk losing money on equipment that might turn out to be pricier than the ballpark figure in their quote.    

Finally, once a job is sold in this way, contractors are required to download the relevant data from their pricebook app, and upload it into both their dispatching software and their accounting software. These steps, too, replicate some of the issues that trouble contractors who use time and material prices and physical pricebooks. 

Each time contractors and their employees have to transfer data from one place to another is an opportunity for something to go wrong — for data to get lost, corrupted, mis-transcribed, or otherwise confused.   

In designing ServiceTitan’s pricebook features, we thought long and hard about how to address these and other challenges of third-party pricebook software. In the next section, we’ll explain our solutions. 

The #1 newsletter for the trades.

How ServiceTitan Helps Build Integrated Electrical Contractor Pricebooks That Maximize Efficiency and Profitability 

Like virtually all ServiceTitan features, our fully customizable, prebuilt pricebook is available to subscribers and their employees via office and mobile views. 

The image above shows a snapshot of a pricebook in the office view, complete with equipment images, model numbers, descriptions, and prices. These and other columns — like upgrades, warranty descriptions, and tech bonuses — can be added or customized according to contractor preference.

Unlike many third-party pricebooks, ServiceTitan gives users seamless access to catalogues from a range of major industry suppliers, so that the items in their pricebook reflect the actual equipment and materials that will be used in each job, rather than one generic placeholder or another. To help ensure accurate estimates, automated price updates are performed regularly.   

As shown above, editing any element of an individual service in ServiceTitan is easy.

By getting things like detailed item descriptions squared away on the back end, contractors can avoid the kinds of costly errors that tend to arise when service techs have to write up invoices by hand while they’re in the field.

Of course, editing individual services isn’t always the most practical route. Adjusting prices one by one can be incredibly time consuming; indeed, the necessity of making such manual updates is one of the biggest drawbacks of many traditional pricebook software products. 

With ServiceTitan, however, contractors can make targeted adjustments to services across their entire pricebook — tweaking installation rates or membership discounts, or applying changes only to certain kinds of jobs. 

As shown in the office-view screenshot above, ServiceTitan allows users to fine-tune their pricing according to highly specific needs, making sure that changes are applied only to labor rate, for example, rather than to the final price of a job type.  

Similarly, ServiceTitan gives contractors access to accurately priced materials catalogues, making it easy to attach the cost of materials to associated jobs for more accurate job costing and electrical estimating

For example, for thermostat installation jobs, contractors can use ServiceTitan to attach costs associated with screws, wiring, and beauty plates.

To facilitate ease of use for field service technicians, the pricebook features in our mobile view are accessible via a user-friendly categorized interface, as shown above. 

(To make things easier and more efficient, business owners can limit what sections of their pricebook are visible to techs in the field, allowing them to focus only on those sections that are most relevant to their line of work; the feature is especially useful for multidisciplinary shops, that perform services like HVAC and plumbing in addition to electrical.) 

Our pricebook is fully searchable, allowing techs to call up parts and materials with keyword searches for things like voltage, amps, circuit breakers, or model number. 

As shown above, detailed specs for items appear on screen instantaneously, often accompanied by full-color photographs, providing service techs with a plethora of valuable info. 

This functionality both ensures that the parts techs add to an order or estimate are suited for the equipment they’re working on, and cuts down on the amount of time they spend calling the office to make verifications and get approvals.

ServiceTitan also provides more robust customer-facing features than other pricebook software products, offering sleek photo and video presentations that techs can use to help close sales. 

Unlike most pricebook software competitors, ServiceTitan allows contractors to create service packages and templates, making it easy to quickly and accurately create proposals for common job types. 

Employees can also use ServiceTitan templates to profitable effect in Good, Better, Best sales presentations. (Although many service contractors technically require techs on service calls to give homeowners low, mid, and upper-tier choices when they’re making a sale, it’s not unusual for employees to skip that step in favor of the path of least resistance, i.e., simply showing the cheapest option.)  

At ServiceTitan, we take a holistic approach to field service management software. We aim to partner with electrical contractors to help them integrate the many moving elements of their business into a seamless whole, enabling them to make their processes more efficient, get the best from their employees, and grow their revenue and market share.  

As such, our pricebook features connect without a hitch to the dispatching, inventory management, equipment tracking, estimating software, and accounting portions of the product, eliminating the need to transfer data between platforms. 

When a job order goes in via ServiceTitan, automation takes over to guarantee that the correct parts and equipment are ordered from the supply house for the job — and that they end up in the right truck on the day the electrical service is scheduled. On the back end, contractors can use ServiceTitan’s Quickbooks integration to ensure that all of the relevant accounting information is properly collected and compiled. 

That way, electrical contractors can maximize the benefits of combining flat rate pricing with a dynamic, well-designed pricebook.    

Want to see ServiceTitan in action? Schedule a call with us to learn more about how our software can streamline your pricing and help you grow your business. 

ServiceTitan Electrical Software

ServiceTitan is a comprehensive electrical business software solution built specifically to help service companies streamline their operations, boost revenue, and achieve growth. Our award-winning, cloud-based platform is trusted by more than 100,000+ contractors across the country.

Learn More

Related post