Most contractors watch revenue. The smart ones watch cost percentage and profit margin on every j...Most contractors watch revenue. The smart ones watch cost percentage and profit margin on every j...
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Murugeshwari's avatar
Murugeshwari S.
• 2d
Most contractors watch revenue. The smart ones watch cost percentage and profit margin on every job.
Here is a simple example:
Contract amount: $100,000
Total job cost (labor, materials, subs, equipment, site costs): $85,000
Profit: $15,000
That means:
Cost percentage = $85,000 ÷ $100,000 = 85%
Profit margin = $15,000 ÷ $100,000 = 15%
On paper, 15% looks okay. But in construction, small mistakes can easily eat that margin:
Extra labor hours not booked to the job
Material wastage and rework
Subcontractor change orders not billed correctly
Site overheads missing in the budget
If margin drops from 15% to 5%, profit becomes only $5,000 on a $100,000 job.
Same revenue. Very different result.
That’s why clean job costing and regular review of cost percentage and profit margin are more important than just looking at total sales.
constructionprofitmargincostpercenatgeAccountingBookkeepingFinancial AnalysisQuickbooks
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Murugeshwari's avatar
Murugeshwari S.
• 2d
How often do you check the margin on each job, not just the revenue?
Murugeshwari's avatar
Murugeshwari S.
• 2d
How often do you check the margin on each job, not just the revenue?
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