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Maybe thats my problem, I can't explain it so I cannot calculate it.

One does'nt necessarily know the selling price, you know the costs and your margin is 25%, i.e. you want to make a 25% margin not 25% mark up.

A. 75 x .25 = 18.87 + 75 = 93.75 (.25 represents 25% mark up)
B. 75 + 25% = 100.00


I guess this is one reason why tradesmen struggle with the complicated numbers. Doesn't seem that complicated now.

Aside form making additional $6.25 per $100...

How do you actually get the margin number of 25% or whatever it may be? Speculation guesstimate?
Roof.... As Barry said, and with only addressing the mathmatics of your question, and ignoring any advice with regard to a business perspective,

I believe your question was:

If I know my cost of a project, and I know the margin that I want to make, how do I calculate the selling price.

The equation is as Barry indicated:

Selling price = cost/ (1- margin)

Let's say you figure your costs to do a job is $1500. And as you said you want to make a 25% margin.

So your Selling price= $1500 (your cost)/ (divided by) 1-.25 (your margin)

Remember when you say your margin is 25%, that is mathmateically .25

So Selling Price = 1500/.75=$2000

NOW... Pleae do not get lost/mixed-up in the math as it concern business principals... it is important to understand the math and the terminolgy, but only in so far as it helps understand underlying principals... which others are addressing above.

Relative to what Barry is speaking about above, apparently his 7% cost of delivery,... that is meerly to say that you may not have figured your cost correctly... and your cost in the above calculation should have been 1500 + (.07*1500)= $1605 (which would have given you a $2140 selling price.

But again, that does not address business principals, it is just about the math and terminology we use in business.

More about that later.....

Later
 

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So I have been doing remodeling for about 15 years and finally started my own small business. I do flooring installation of vinyl and hard surfaces(wood, tile , laminates and vinyl planking). Me and a friend started a partnership everything is 50 50 there but now we are left wondering what to save for all expences. We basically just split all earnings 3 ways. Me, him and the company. We are just wondering is that to much or to little?? And what should we be paying ourselves? And what to save to keep the company successful?
Here is my take on it, margins overhead what difference does it make what you call it. bottom line is you need more in than out. So you and your friend are in business, that's great. splitting the profits 3 ways, that's great too. you are now no farther along in my opinion than you ever were, your still playing the feast or famine game most people in construction always have. make 10k this week, that's 3.3k each nothing next week what no check?
I have been where you are, (not exactly, I would never have a partner) but decisions still have to be made. I recommend that you let the company hold the money. The 2 of you need to write a check every week that you can live on, same amount each. Let the money build, same amount every Friday. Save 10-20k in account and either buy needed equipment or give yourselves a bonus. Let the company absorb the waves between paid invoices. Let the company pay for cell phones, and "uniforms" even if they are blue jeans and wife beaters. LOL Let the company make those truck payments and whatnot. Let the company pay for your helpers, and you will soon learn that the money they make you is the best kind. Its hard to work all day, and network for the next 5 jobs at the same time. The best of friends or family have a hard time in business together, one will inevitably feel like they are doing more. Its the nature of the beast. I wish you luck. In my opinion you are already bleeding the company with the thought of what should we get out, instead of what can I put in. Take the very least you both can, it work out better in the end. UNLESS you don't trust your friend so much with an ability to wipe it out. if that's the case its still better to find out LOL, if he snags you for 100k it was cheap if its early enough. devastating yes, but cheap compared to what you may have years from now. If you don't trust your partner with all of it, your already done.
Everyone has an opinion, this one is just mine.
 

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Here is my take on it, margins overhead what difference does it make what you call it. bottom line is you need more in than out. So you and your friend are in business, that's great. splitting the profits 3 ways, that's great too. you are now no farther along in my opinion than you ever were, your still playing the feast or famine game most people in construction always have. make 10k this week, that's 3.3k each nothing next week what no check?
I have been where you are, (not exactly, I would never have a partner) but decisions still have to be made. I recommend that you let the company hold the money. The 2 of you need to write a check every week that you can live on, same amount each. Let the money build, same amount every Friday. Save 10-20k in account and either buy needed equipment or give yourselves a bonus. Let the company absorb the waves between paid invoices. Let the company pay for cell phones, and "uniforms" even if they are blue jeans and wife beaters. LOL Let the company make those truck payments and whatnot. Let the company pay for your helpers, and you will soon learn that the money they make you is the best kind. Its hard to work all day, and network for the next 5 jobs at the same time. The best of friends or family have a hard time in business together, one will inevitably feel like they are doing more. Its the nature of the beast. I wish you luck. In my opinion you are already bleeding the company with the thought of what should we get out, instead of what can I put in. Take the very least you both can, it work out better in the end. UNLESS you don't trust your friend so much with an ability to wipe it out. if that's the case its still better to find out LOL, if he snags you for 100k it was cheap if its early enough. devastating yes, but cheap compared to what you may have years from now. If you don't trust your partner with all of it, your already done.
Everyone has an opinion, this one is just mine.
Roof..... What Otislilly is saying is exactly my point.... don't get lost in the math and terminology... it may be important in understanding what is being discussed..... but a grasp of business principals and considerations is formost the most important.

Now Otis may not of been eloquent in his presentation.... but he brought up alot of important busness issues that need your first consideration and understanding.

Best
 

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I just take it all put it in the bank and use what I need. There's always plenty in the bank. I don't need all that complicated crap. My bookkeeper figures all the tax chit out. I download my bank right into Quickbooks, log all my expenses screw the books up royally, send an accountants copy of quickbooks to my bookkeeper she cleans up my huge mess, chews my ass again, and we do it all over again the next quarter. It's that simple. She's been keeping my books for 12 years. Sometimes when I phuck things up real bad, I throw her a bonus and she is happy once again. It's not rocket surgery.
 

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I would pay myself the least amount i could. Keep the $ in the bank for when you may not have work or need supplies. You can always pay yourselves a bonus. Go to an accountant and set up your taxes 1\4ly so you don't have to pay a penlty.
Remember a partnership is like a marriage. Good thing about a partnership is startup cost are lower; bad thing is its like a marriage.
 

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We do a little different.

Addition:

Subs costs
Materials
Survey
permit
Environmental Control
Ect
PM or coordination time
Inhouse Labor with markup on the guys or ourselves
Overhead (% of the job)
Warranty (not much there but its a cost) (% of the job)
Profit(% of the job)

But we take a salary every month, the same salary every month (unless its 2010 and the check is light to cover overhead)

We only take shareholder distribution at the end of the year. That way if there is a slow period the overhead gets paid and we collect a check.

We spent 4 years not getting a bonus to build reserves. Reserves are key if you plan to grow. Nothing wrong with staying small, and there isnt a need for as large a reserve. For us, the reserve stays in to begin the new year. We hopefully add a bit every year as well.

Every type of job gets a different mark up.
 

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The mark up on inhouse labor covers labor burden, vacation, trucks, tools, WC, and a small profit. If I hired a sub to frame an addition they would make a profit, so do we.
 

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The mark up on inhouse labor covers labor burden, vacation, trucks, tools, WC, and a small profit. If I hired a sub to frame an addition they would make a profit, so do we.
John, if you guys (you & partner) framed the house do you pay yourself to frame + monthly salary, or let the "company" keep framing money. I was in partnership couple different times. Personally, I'll try Not to do it again.
 
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