Electrical contractors often do both service work and new construction, sometimes in the same week with the same crew. On paper it is all just electrical work. In the books, these are two different businesses with different margins, different risks, and different warning signs. Blending them together makes it hard to tell which one is carrying the company and which one is quietly draining it.
Service and repair work, along with panel upgrades and small remodels, tends to involve smaller tickets, shorter jobs, and direct relationships with homeowners or property managers. You can usually charge a higher effective rate per hour because customers are paying for expertise, speed, and convenience. Payment often comes quickly, sometimes the same day.
The challenges are in efficiency. Drive time, supply runs, and scheduling gaps eat into the day, so the number to watch is billable hours as a share of paid hours. A technician who bills six good hours out of eight is far more profitable than one who bills four, even at the same wage. Service work also depends heavily on estimating well on the spot, since quotes happen in driveways and kitchens rather than at a desk.
New construction work is higher volume and lower margin per hour. You are often bidding against other electrical contractors, so the pricing pressure is tighter. Crews work in more predictable patterns, such as rough-in, trim, and service connections, and labor productivity is the main driver of profit. A few percent of efficiency over a large job makes a big difference.
The cash side is different too. Payment usually comes in stages and may be tied to builder draws, which pushes receivables out. Material orders are larger and earlier, which ties up money before it comes back.
Imagine your company shows a 22 percent gross margin overall. That sounds fine. But if service work runs at 40 percent and new construction at 12 percent, the company average masks the fact that the construction side is barely covering its costs. Without separating them, you might chase more construction volume to grow, not realizing it is pulling down the whole business. Or you might neglect the service side that is actually generating the profit.
The reverse can happen too. A busy service department with poor utilization might look healthy because of a few big ticket jobs, while most calls are breaking even. You cannot see any of that in a single combined number.
In Xero, you can use tracking categories or separate income and cost of goods sold accounts so that service and construction revenue and direct costs can be reported separately. Do the same with labor, by tagging time entries to either type. The goal is a profit and loss view that shows each line of work on its own.
From there, track a few numbers for each. For service work, look at average ticket, billable utilization, and callbacks. For construction, look at estimated versus actual labor hours per job, material cost variance, and days to collect. Reviewing these monthly will show you where the effort is paying off.
Once you can see each side clearly, you can make better choices. Maybe you raise service rates, since the margin has room. Maybe you get pickier about which construction bids you chase, or build in more contingency. Maybe you shift a technician from one side to the other based on where the return is highest. These are decisions you can only make confidently with the data separated.
Construction receivables deserve their own attention as well, especially when retainage is involved, which we cover in retainage and progress billing.
Service work and new construction are different animals that happen to share a trade. Track them separately, watch the metrics that matter for each, and use the split to decide where to put your people and your attention. A blended average feels comfortable, but it hides the information you most need.
911 Bookkeepers works with electrical and trades contractors across the Baton Rouge metro and surrounding parishes, building reports that separate service and construction profit.
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