Why Your 40% Margin Becomes 33% (And How to Fix It) | CFC 263

Audit your job costs to identify any variable expenses (e.g., fuel, general materials, small tools) that are not being directly attributed to individual projects but collectively impact profitability.

Calculate a percentage for these 'missed' or 'general variable expenses' based on historical data across multiple jobs, rather than attempting to meticulously track every small item per job.

Incorporate this calculated percentage into your bids as an additional cost factor (e.g., if it's 7%, add 7% to your known costs) to ensure your quoted margin is truly achieved.

Avoid 'burdening' by arbitrarily allocating fixed overhead costs (like insurance or salaries) to individual jobs, as this distorts actual job profitability and makes financial planning inaccurate.

Understand that a seemingly small percentage difference in your margin (e.g., 7%) can have a much larger impact on your net profit when grossed out over all your sales.

Regularly review your actual gross profit margins against your target margins. If there's a discrepancy, investigate to find the underlying unallocated costs or inefficiencies.

Prioritize working ON your business (e.g., refining pricing and cost tracking) over constantly chasing new sales, as fixing margin issues can effectively increase the profitability of every future sale.