We have improved a circuit model of transformers by defining a conductance whose losses will be close to the iron losses under any circumstance. Connecting a constant conductance cs in parallel with the main magnetizing inductance is very popular in the literature; however, it is acceptable only if the flux amplitude and frequency are reasonably constant during the time of operation, and if the value can be properly adjusted. Here, we replace cs with a nonlinear dynamic conductance cd , whose losses are a function of flux amplitude. This conductance is based on the concept of dynamical hysteresis. Its definition is such that it is determined by the same test results used for cs . Knowing the values of losses given by the manufacturer of the sheets, and the measured values of iron losses of a transformer, we can then analytically express the building factor as a function of the maximum flux density. We have applied the method to a three-leg 10-kVA transformer. It allows us to identify the cases when iron losses may be ignored, when they may be represented by a constant conductance, and when they must be represented by a nonlinear conductance.