An EV charger quote that made 'Cents'! 141

Two things hit me last week. A $14,600 BAS bill landed in my lap. And I got beaten on an EV charger quote by someone doing it for $1,500.

One of those things I planned for. The other one I did the maths out loud on the mic and realised the guy who "won" the job didn't actually win anything.

In this one I pull back the curtain on where your money actually goes as an electrician. The GST that isn't yours. The profit that gets taxed. The wage that gets taxed again. And the reason my quotes are consistently 30–40% higher than the next sparky... on purpose.

Have you ever looked at your tax bill and felt sick? Listen to this. 

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Transcript

Search between the couch pillows — see if you can find a few coppers to pay the tax, man.

Welcome to Simplified Sparky Marketing. This podcast is going to be revolving around money. I think this is badly needed and badly wanted, because a rising tide raises all the ships, or something along those lines as the saying goes.

So, what's happened in the last two weeks is — I have received a BAS bill for over $14,500. I think it's $14,600 that I have to pay for my BAS. And that's fine, that's cool, that's there. And not only that, I'm paying IAS as well. So that's an Instalment Activity Statement every month on my wages. So that BAS for 14 grand isn't including the IAS for two months as well.

So how that works is: usually every quarter, people pay a BAS. Electricians pay a BAS. What happens with that is — it is your GST and PAYG tax put aside that you have to pay back to the government. And what happens with IAS — I don't know why I had to do this, but my accountant said I did, so I just believed them. What happens is every month I have got to pay the PAYG tax collected from my wages, I pay that the following month. I think it eradicates people pulling a sneaky and not having the money to pay the BAS at the end of the quarter — hence this podcast as well.

And that's fine. The money is there. It's put aside. And that's kind of the point of this podcast. When I quote, when I invoice, I want to make sure that I'm running profitably. I think that's one of the biggest things where people have a misconception of where the money goes, versus what they actually take home.

Everything that you earn on a job, or if you make profit on a job — unless that money is gone somewhere or spent — that profit gets taxed. And that's where people kind of forget about these things. And that 10% you're collecting all along, that's not a buffer in your bank account. That's GST, to be paid back to the government. So that GST should be set aside, ready and waiting to pay back when the time comes — usually the end of the quarter, maybe the end of financial year, depending.

What happened last week was, in the same week, I was also beaten on an EV charger install, pretty local to me. It was a back-to-back-ish kind of Tesla wall connector install, and I went in at about $2,500, maybe $2,700 — something like that. Which is relatively cheap compared to what I used to charge, until everybody watered down the market. Unfortunately, it just happens, and it's happening. And that's not even the worst of the watering down.

What happened was, somebody came in and quoted it, and I got a response back from my quote. The guy said, "Somebody is doing it for $1,500. Can you match that?" So I looked at it and I was like — well, hang on.

The charger is about $800, the Tesla charger. Three-phase RCBO is going to be, if you use a Hager, about $160-$170 at cost with zero markup. You're going to be using a couple of metres of cable — let's say 10 metres at $6 a metre, call it $60. So we're up to — the charger is about $800, we'll say $1,000 for the charger and the breaker. We're up to $60 for the cable. We're not marking up anything yet. We've got an isolator — that's going to be whatever, $40. We're up to like $1,100. There's going to be other little sundries in there as well. Let's just say we're at $1,100 at cost, $1,150, $1,200.

And I don't even know if that $1,500 was inclusive of GST or excluding GST — which means it may well have been about $1,300 plus GST, or $1,350 or whatnot. And I'm like — this is fucked.

This needs to get out there. I'm not a numbers guy, I'm not a fucking numbers guru. I am just smart enough to know you need to charge more than it costs you to run a business, to make a profit.

And what I mean by that as well is — when you pay yourself a wage, there's tax on that. You've got to put that aside. When you make profit on the money you've got left over, there's going to be tax on that. You need to put that aside. There's all these little things that creep up on you, and this is why you need to really speak to your accountant and have a good long chat with them, and understand your business. If I do this, will I get taxed on that?

A very, very common thing is my quotation, for example, versus another electrician. Take that person that drastically underquoted that job — take my quote versus theirs. Mine might be 30 or 40% more expensive than theirs. And the reason is, I know that if I go in super tight on a job and I make profit, that profit is going to get taxed. Therefore, I charge a little bit more. So when it comes around, I can scrape my profit out, keep my profit, and at the same time I can push that money I've got for tax and put that aside as well. So that money is ready for that tax bill to come around.

When they go, "You've got $14,500 to pay," I'm like — sweet. Pay it on my credit card, get the points, transfer my business account back into the credit card account. Costs me a little bit of money, but it's worth it for the points in my opinion.

But it's absolutely shocking out there — how uneducated guys are around what they need to charge for business. You actually need to charge quite a bit, or a very, very high hourly rate, to cover the cost of business. It's not really until you break it all down and you go, "Okay, shit — in that $1,000, $100 of that is GST. The material in that is $500." Now, if you hypothetically had to pay staff and they were there for two hours or three hours, depending on what you pay them, the break-even on those staff members might be $60, $70, $80 an hour. It could be $40 an hour, just depending on what stage they're at. Just because you're paying them $40 an hour, what it actually costs to run them is more like $60, $65 — because they work about 10 months a year and you've got to pay them for 12 months.

All these little things come into play. But if you are not making money in business, and you are just battling and struggling, and you're wondering what's going wrong — and you can't pay your tax bill — that's something very, very wrong.

Where this all kind of circles back, and this is why it's all tied into marketing, is — usually this happens when either A, you market to the wrong clients, or B, you put zero effort into your attempts to look anyway professional, and that leads to cheaper clients. Or else you just go hunting in the wrong areas, as per the YouTube video a week or two ago.

This came into my thoughts last week and I was like, "I need to say something about this." What I'm hoping for is at least one of you electricians listening will learn from this and go, "Fuck, that's me. I need to put my hourly rate up. I need to put money aside for tax."

What you need to charge is crazy compared to what people think. There's the whole construction thing of, "If you're doing eight hours it's $120." Okay. $120 is nowhere near okay. If you're doing service work — in my honest opinion, for service work in Sydney — you need to be at least $200, $300, even $400 an hour, depending on how you feel, depending on your overheads. But I would be saying as a service electrician in Sydney, you need to be at least $200. $200 is probably the cheapest side of service work. You need to easily be between $200 and $400. I know there's companies out there charging $500, and people think that's a rip, but it's all down to their business model — their size, their staff, their equipment, their overheads. If they've got many vans, if they've got warehouses and stuff like that — it all has to get covered somehow. And that's usually in the hourly rate.

Remember that doing service work, you're only doing maybe four, could be three, four, five hours a day of actual work. The rest might be bobbing in between jobs, nipping to suppliers to get stuff — you're not actually billable for the eight hours usually.

But it just opened my eyes in regards to that quote coming in — that somebody was willing to do that job, and I don't think they were even going to make money. I feel like they were going to break even. I don't know what was going on, or why they were doing it so cheap. Undoubtedly it would have been a cheap, nasty breaker installed, just butchered in there and slapped in. I actually think it could have been an Airtasker job. I feel like it might have been.

But yeah — I just wanted to put this out there in just a random podcast about money, because you need to have a good sit-down with your accountant. I have got a tool inside the mentorship which I get guys to use in the very first foundations level, and it just sets their sight straight — the hourly rate they want to earn, what the overheads are going to be in their business. And that means your van, your rego, your uniforms, paying yourself a proper wage — including a decent market wage, more of a wage than you would get as an employee, because you're a business owner now. You run a business. You need to charge yourself out at a decent wage.

And that is why my iCare, which is for your workers' comp bill, was nearly six grand — because it reflects off your wage. I've put it out there to a few electricians and they're like, "Man, you need to lower down your wage." And I'm like, I don't know about you, but I'm in business to make money as an electrician. I want to go to work and I want to know that I've made good money, that I can then be satisfied with — satisfied with running a business. Because if I'm not taking a decent wage there and paying the tax — I don't mind that, as long as it's all being covered. I am happy and content. And if I've got to pay a high workers' comp because of that, that's just going to have to be factored into my pricing as well.

These are the things — as you add things on, you're going to get hit with taxes here, there, and everywhere. That's what you have to then bump into your hourly rate, work it into that, and go from there.

You need to speak to someone that's decent with numbers. If you're struggling with this, I can get you set on a basic level, to at least set you off on a proper hourly rate that you need to charge. But if you're looking for a numbers whiz or a guru like that, unfortunately numbers aren't my thing. As I said, I'm just smart enough to charge more money than it costs to run a business and pay tax. It's simple maths. And that's what you need to do.

Hopefully this helps someone. Hopefully this helps one person raise their hourly rate, so the industry raises one person per day.

That's it for me. I'll catch you next week.