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Where does your gross margin target percentage fall? This is anonymous

  • 0-10 percent

    Votes: 2 3.7%
  • 11-20 percent

    Votes: 10 18.5%
  • 21-30 percent

    Votes: 11 20.4%
  • 31-40 percent

    Votes: 17 31.5%
  • 41-50 percent

    Votes: 2 3.7%
  • 51-60 percent

    Votes: 3 5.6%
  • 61-70 percent

    Votes: 2 3.7%
  • 71-80 percent

    Votes: 1 1.9%
  • 81-90 percent

    Votes: 1 1.9%
  • 91-100 percent

    Votes: 0 0.0%
  • more than 100 percent

    Votes: 5 9.3%
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Discussion Starter · #1 · (Edited)
Hi Everyone,
We have been methodically calculating and updating our margins over the past couple of years, with much success. I know that this site frowns upon direct pricing questions, but I think an anonymous poll showing where various folks are at with regard to margin might be helpful for all.

Just to be clear, we are talking about margin here, not mark-up. if you do not know the difference then please familiarize yourself with the two before participating.

Please respond with which range your gross margin target percentage is in.
 

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Margin

10% gross means that your net profit will be low and depending on how you are set up could be negative. I learned early on that you need to look at the future of what you need to grow. I have noticed over the years that most contractors do not do any sort of budget. A budget is the most important thing in any business. Once you have a budget then you can know where you gross profit needs to be.
 

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10% gross means that your net profit will be low and depending on how you are set up could be negative. I learned early on that you need to look at the future of what you need to grow. I have noticed over the years that most contractors do not do any sort of budget. A budget is the most important thing in any business. Once you have a budget then you can know where you gross profit needs to be.
Yeah Im one of those guys. But there is also the feel for what the market will bear and how much work there is to be had. I generally watch my labor and material expenses job to job and have a weekly goal Im trying to make.
 

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Yeah Im one of those guys. But there is also the feel for what the market will bear and how much work there is to be had. I generally watch my labor and material expenses job to job and have a weekly goal Im trying to make.
That's how I do it. Business is too up and down these days to really plan ahead. If I need a tool or equipment, I buy it when I need it, because next month there may not be any money left.
 

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Discussion Starter · #5 ·
Again, we are talking about gross margin percentage of your sales (to cover overhead AND profit) and voting is anonymous.

Here is a link to a nice little multiplier chart that is very helpful. It shows all the multipliers needed to achieve the desired margin percentage.

http://www.genesisfour.com/support/...s/Gross_Profit_Multiplier_Reference_Chart.pdf

This whole margin/mark-up/profit/overhead thing has been beaten to death on just about every forum there is, so please do not jump into yet another round of it. Let's keep it simple...If you have a target gross margin percentage (or range) that you use to arrive at a selling price that ensures profitablity and covers ALL of your overhead, please vote.
:thumbsup:

If you do not, and have no idea what the meaning of all of this is and how it realtes to running a successful contracting business, please sit quietly on the sidelines and watch while the rest of us eat your lunch.
:whistling
 

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Again, we are talking about gross margin percentage of your sales (to cover overhead AND profit) and voting is anonymous.

Here is a link to a nice little multiplier chart that is very helpful. It shows all the multipliers needed to achieve the desired margin percentage.

http://www.genesisfour.com/support/...s/Gross_Profit_Multiplier_Reference_Chart.pdf

This whole margin/mark-up/profit/overhead thing has been beaten to death on just about every forum there is, so please do not jump into yet another round of it. Let's keep it simple...If you have a target gross margin percentage (or range) that you use to arrive at a selling price that ensures profitablity and covers ALL of your overhead, please vote.
:thumbsup:

If you do not, and have no idea what the meaning of all of this is and how it realtes to running a successful contracting business, please sit quietly on the sidelines and watch while the rest of us eat your lunch.
:whistling

You do not get to decide where the conversation goes.
 

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Discussion Starter · #11 ·
You do not get to decide where the conversation goes.
You're right! This is a public forum and anyone can say pretty much whatever they want.

Hey everyone, lets turn this thread into another Obamacare/Festool/Should-I-Charge-For-Estimates/Unlicensed-Hacks/RRP/Undocumented-Worker/Best-Brand-Of-Truck type of discussion.

That would be awesome. :no:

(just a suggestion by the way, since I do not get to actually decide where the conversation goes)
 

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Metro M & L said:
Yeah Im one of those guys. But there is also the feel for what the market will bear and how much work there is to be had. I generally watch my labor and material expenses job to job and have a weekly goal Im trying to make.
Same here
 

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I'm certainly not going to bad mouth planning/budgeting/understanding your numbers....

but I honestly question the value of trying to determine some average gross or net margin....

Our trades are significantly different
Our markets are significantly different
Our business models are significantly different....

And ultimately (in the short run) pricing is a function of market variables.
 

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You're right! This is a public forum and anyone can say pretty much whatever they want.

Hey everyone, lets turn this thread into another Obamacare/Festool/Should-I-Charge-For-Estimates/Unlicensed-Hacks/RRP/Undocumented-Worker/Best-Brand-Of-Truck type of discussion.

That would be awesome. :no:

(just a suggestion by the way, since I do not get to actually decide where the conversation goes)
You forgot Mac vs PC
 

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I'm certainly not going to bad mouth planning/budgeting/understanding your numbers....

but I honestly question the value of trying to determine some average gross or net margin....

Our trades are significantly different
Our markets are significantly different
Our business models are significantly different....

And ultimately (in the short run) pricing is a function of market variables.
MTN Remodel,, agree with you


I don't think this poll will be of any value, IMO it's completely flawed because everybody will view their cost of goods differently in this industry.

I was in retail years back, that was easy. You purchase a pair of socks from the factory and pay for shipping, that was the direct cost of the product. Figuring out my total sales revenue that my company retained after incurring the direct cost was easy.

But in construction I not only consider material but also labor as my product since labor is a major factor in construction. Actually I consider everything involved to install that one sheet of drywall a direct cost because it's a package deal, I sell service along with material. So my direct costs are basically everything except my fixed overhead costs.
 

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Every business is different. Required margins are based on specialty, volume, and effeciency.

A 5% margin in a large trucking company might mean a pretty good year.

A 5% margin in drywall might mean a slow agonizing death.
 

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Not sure what your looking for, my understanding of approaching Margin vs Markup...eg

need to sell (x # of units) by (x # time) and generate (X $ cap) = margin as one example (retail)

Have X, Y, Z, costs, need X % for my time = mark up as one example (management costing)

or are you looking for a true % of final cost thru margin? eg as we know 20 % of 100 is 20 BUT 20% ON 100 is 25...

I'm currently putting into practice 25% markup on sub/other trade, markup labor 18% (comp) THEN margin my labor st, rented, materials at 10%...ST the whole mishmash, margin 10 as overhead ST margin 5 as profit EG

labor 1000.00
comp 180.00
st labor 1180.00

pp 3 mo 500.00
materials 750.00

st 2700.00

subs 500.00
MU 125.00
st 625.00

job st 3325.00
over 369.44
st 3694.44
prof 194.44

JT 3888.88

round it up...3890.00 or down 3885.00 - whatever I feel is gonna lasso the client (based on nothing but gut)

cost 2930.00
sell 3885.00
margin 24.58

does this help your quandary,

good - start cutting something
 
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