EP284: Bad Pricing, Scope Creep, and More: 7 Profit Leaks Hurting Contractors

Prioritize profit over revenue; high revenue does not guarantee financial success without understanding your net profit.

Accurately calculate your fully burdened labor rate to ensure you're not undercharging for your team's time, including all hidden costs like meetings and benefits.

Implement a strict policy for handling scope creep by consistently quoting and documenting all extra work with change orders, avoiding 'free' additions.

Avoid cutting corners or rushing jobs, as the hidden costs of callbacks and rework (e.g., lost opportunity, reputation damage) far outweigh the initial time saved.

Regularly review your overhead expenses; eliminate unnecessary purchases, subscriptions, and vanity expenses that drain cash flow, especially if revenue is unstable.

Improve project planning and scheduling by setting realistic timelines, minimizing supply runs, and providing clear labor hour budgets to your project managers and foremen.

As an owner, delegate low-value tasks, hold employees accountable, and avoid emotional purchases and discounts; your financial stability allows you to be more generous later.