The authors 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 Gcs 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, they replace Gcs with a nonlinear dynamic conductance Gcd, 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 Gcs. Knowing the values of losses given by the manufacturer of the sheets, and the measured values of iron losses of a transformer, one can then analytically express the building factor as a function of the maximum flux density. The authors have applied the method to a three-leg 10-kVA transformer. It allows one 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.