# Addition vs Kitchen Profit Margins?



## tyler durden (Jan 12, 2008)

Just wandering what kind of "gross" margins you guys in CA are going for.

I assume small jobs like a 25k kit remodel have higher margins than a 1000sf addition would.

Also what would be the low end base sf for single story additions.

*Sorry for asking* but we want to be competitive.


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## go do it (Nov 19, 2006)

hey you were that kid behind me in high school

that wanted me to do your homework for you!!

how have you been?

you haven't changed a bit!!

nice to see you again

take care


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## tyler durden (Jan 12, 2008)

Whats the deal?

is profit some forbidden subject?

I thought we are on the same team? Are you my competition? 
Would you rather me under bid you on everything?


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## DavidC (Feb 16, 2008)

tyler durden said:


> *Sorry for asking* but we want to be competitive.


That would be accomplished by tracking your costs and managing your expenses. 

For me, I have no desire to be competetive. We do what we do, it cost what it cost and that's what I sell. I've had my share of getting work by being the lowest bidder and don't want anymore of it. Feel free to underbid me.

Calculate your overhead and job costs, add your profit goals and there you go. 

"The going rate" is really an abbreviation. The full sentence is "The going out of business rate".

Good Luck
Dave


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## go dart (Dec 6, 2005)

his question's legit. i do both addns and kitchens and i would always take 2 35000,00 kitchen remodels over a 70000,00 addn. weather doesn't cost my kitchens profit, no homes assn to deal with, foot traffic on neighbors yard etc. as far as a base price for an addn in calif...... i would not know.


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## DavidC (Feb 16, 2008)

A legitimate question would be more like "How do I arrive at the proper margin/markup/pricing for my business?". 

Asking what others use so that he can be competitive is not. As Go Do It said, he wants the homework done for him.

Good Luck
Dave


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## Bob Kovacs (May 4, 2005)

tyler durden said:


> Whats the deal?
> 
> *is profit some forbidden subject?*
> 
> ...


First off, in your original post you asked about "gross margin"- now you're talking about "profit"- those are two entirely different things, and neither of them is something that you can guage from what some other contractor is charging.

Do you have in-house employees or do you sub 100%? Are you swinging a hammer yourself, or do you just manage? Do you include the costs for your employees' labor burden, insurance, etc., in your hourly rates, or do you intend to recover it through your margin? What are your costs for insurance? Do you have a shop? How many vehicles do you have, and what do they cost/month? 

See where I'm going with all of this? The answers to the questions above (and dozens more) will determine the required overhead that you need to recoup, and it'll be vastly different than anyone else's numbers. Now if you're truly after "net profit" numbers, the typical industry range shown in several studies is somewhere between 8-15%, which is a wide range in and of itself.


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## tyler durden (Jan 12, 2008)

Gross margins? Net margins?

I love the uptight contractors?:thumbup:

We can charge whatever we want sure.
I am just asking about margins, not how much you profit on each job. 

Hey maybe a 10K bath you try to net 30%. 3K
Ok now a 60K kitchen maybe you go for 20%. 12k
maybe a 500k remodel you go for 15%. = 75k 


see how I cut the % in half and the net is still reasonable. 
Do you want the kitchen or the bath?

please help me fellow industry buddys, we dont know how to price.:w00t:

I guess you guys just charge a flat 50% mark-up on every project and dont want anyone to know.

How come you cant talk about money on this board? You uptight fellows are so funny.:shutup:


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## silvertree (Jul 22, 2007)

tyler durden said:


> Gross margins? Net margins?
> 
> I love the uptight contractors?:thumbup:
> 
> ...


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## Bob Kovacs (May 4, 2005)

Who's uptight? I was just pointing out that you're talking about one thing in one sentence, and something entirely different in another. We can talk money all you want, but my figures are absolutely useless to you. If I told you that I shoot for a 3% net profit on all of the project I estimate, will you run out and start charging that?


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## Jason Whipple (Dec 22, 2007)

tyler durden said:


> Hey maybe a 10K bath you try to net 30%. 3K
> Ok now a 60K kitchen maybe you go for 20%. 12k
> maybe a 500k remodel you go for 15%. = 75k


Sooooo............

The more I spend, the lower your profit margin goes?:blink:

How much do I have to spend to get your profit margin down to 0%?:w00t:

(I think I may have stolen that from Bob Kovacs, not sure)


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## go do it (Nov 19, 2006)

i don't know maybe i did it wrong but for about a year to a year and a half

BEFOR i went into buisness i keep notes on how long it took for the crew i 

was working with to get things done. so i would know what the labor was to be.

the rest was easy. materials, taxes, workers comp etc.

how can you be in buisness and not know what you are worth?

i bet warran buffet and bill gates know EXACTLY what their products and 

services are worth


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## woodmagman (Feb 17, 2007)

I am perplexed by the question. When does your gross margin change based on the product you supply. If you are supplying niblets to elves or building an addition your gross margin is your gross margin.....what your gross margin is deterimined by you and not what you are selling.


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## nadonailer (Nov 15, 2005)

Tyler - After looking at your website(s), It looks as if you already should have this info. How can you build custom homes without knowing these basics?


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## tyler durden (Jan 12, 2008)

Its easy for me to figure sure, im an excel wiz. 
We are very competitive.
Just checking in on you guys to stay current. sorry to stir the pot.:thumbsup:


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