The 6 Financial Metrics Every Electrical Contractor Should Track Monthly
Running an electrical contracting business without tracking the right numbers is like doing a takeoff without looking at the drawings. You might finish the job, but you'll have no idea whether you made money until it's too late to do anything about it.
Most contractors track revenue. Some track profit. Very few track the numbers that actually explain why the profit looks the way it does.
Here are the six metrics worth pulling up every month — and what to do when they look wrong.
1. Overhead Recovery Rate
What it is: The percentage of your overhead costs that get recovered through billable work in a given month.
How to calculate it: Divide your total overhead costs (rent, insurance, vehicles, admin salaries, software — everything that isn't direct labor or materials) by your total revenue, then subtract from 100%.
If your overhead is $40,000/month and your revenue is $200,000, your overhead rate is 20%. That means every dollar of revenue needs to carry 20 cents of overhead before you see any profit.
Why it matters: When revenue dips — slow month, delayed projects — your overhead doesn't. Knowing your break-even revenue point tells you exactly how much work you need on the board just to keep the lights on.
Red flag: If your overhead rate is creeping above 25-30%, it's time to either grow revenue or cut costs. Neither is comfortable, but not knowing is worse.
2. Bid Margin vs. Actual Margin
What it is: The gap between the gross margin you estimated on a job and the gross margin you actually made.
Why it matters: This is the single most important feedback loop in your business. If you consistently bid 18% gross margin and land at 12%, something systematic is wrong — your labor hours are off, material costs have shifted, or you're letting scope creep eat your profit without charging for it.
Track this per job, then look for patterns. Is the gap bigger on certain job types? Certain project managers? Certain GCs?
Target: Variance under 3 percentage points is solid. More than 5 points consistently means your estimating assumptions need a serious audit.
3. Labor Burden Rate
What it is: The true cost of an employee-hour, including wages, payroll taxes, workers' comp, health insurance, and benefits — divided by the base wage.
How to calculate it: If an electrician earns $35/hour but costs you $52/hour all-in, your labor burden rate is 49%.
Why it matters: Most estimating errors start here. Contractors who use base wage instead of burdened wage in their estimates are systematically under-bidding. This is a quiet margin killer.
Check this: Pull one recent job and recalculate using fully-burdened labor. If the margin looks different than what you estimated, your burden rate assumptions are off.
4. Days Sales Outstanding (DSO)
What it is: The average number of days between completing work and getting paid.
How to calculate it: (Accounts Receivable ÷ Total Revenue) × Number of Days in the Period.
Why it matters: Cash flow is the lifeblood of a contracting business. A company doing $3M a year with 60-day DSO has $500K sitting in unpaid invoices at any given time. That's money you can't use to pay your crew, your suppliers, or yourself.
Target: Under 30 days is excellent. 45-60 days is common. Over 60 days is a problem that compounds — especially when material costs are rising.
5. Bid-to-Award Ratio
What it is: The percentage of bids you submit that you actually win.
Why it matters: A low win rate isn't necessarily bad — selective bidding is a strategy. But if you're winning fewer than 1 in 6 bids and each proposal takes your estimator two days to build, you're burning expensive time on long shots.
The more useful metric is revenue won per hour of estimating time. That tells you whether your estimating effort is actually generating business.
Questions to ask: Are you losing on price or on presentation? Are you losing to the same competitors repeatedly? Are certain job types winning at a higher rate than others?
6. Crew Utilization Rate
What it is: The percentage of your field hours that are billable versus hours paid but not generating revenue (travel, training, downtime between jobs).
How to calculate it: Billable hours ÷ Total hours paid.
Target: 80-85% is realistic for a well-run shop. Below 75% means you're paying for time that isn't moving work forward.
Why it matters: This is where labor efficiency lives. A crew that's 70% utilized versus 85% utilized on the same size team represents a significant difference in cost structure — and margin.
Putting It Together
You don't need sophisticated software to track these. A spreadsheet updated at the end of each month, reviewed with your project managers, will surface more insight than most contractors get from their accounting reports alone.
Start with the two or three that feel most uncertain. Build the habit of looking before problems become visible on the income statement — that's usually 60 to 90 days too late.
The contractors who grow consistently aren't the ones who work the hardest. They're the ones who know their numbers well enough to make better decisions faster.