# Does anyone figure out their profit margins?



## AARC Drywall (May 11, 2008)

Just curious if anyone knows their profit margin for the year?


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## EthanB (Sep 28, 2011)

I would hope everyone does that owns a business. What's the other option?


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## sparehair (Nov 21, 2008)

EthanB said:


> I would hope everyone does that owns a business. What's the other option?


Charge as much as you can and keep costs as low as possible?

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## AARC Drywall (May 11, 2008)

good in theory


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## TNTRenovate (Aug 19, 2010)

I don't figure them out, I figure them in. That is the way I figure out my pricing with profit margins, not markup.


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## PacificCanvas (Oct 29, 2016)

I'm sure most of you know this. But easy way is to simple take the selling price, times it by atleast .25 ( 25% Overhead). Use the overhead number + materials + labor ( estimates if you haven't completed the project then subtract that from selling price and divide that by selling price. It will give you your profit margin. If that isn't atleast 10% you are selling to low.

Example:

Selling Price 5,000.00 

5000 x .25 = $1250 Overhead
$1200 Materials
$950 Labor

Cost of Job : 1200 + 950 + 1250 = 3,400.00
Profit: 5000 - 3400.00 = 1,600.0
Profit Margin: Profit / Selling price = 32%

If I am doing a big bid I always run a job cost report with close estimates just to make sure I am coming up with atleast a 10% profit margin. The only jobs I can throw bids on quickly are square footage pricing. And most drywall you would think square footage and your profit margin should be tied in to your liking.


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## Golden view (Feb 16, 2012)

sparehair said:


> Charge as much as you can and keep costs as low as possible?
> 
> Sent from my SM-N910T using Tapatalk


I'll be honest, I pretty much do this. If it didn't work out, I'd look into going into another business.


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## sparehair (Nov 21, 2008)

I think the value of the information would be in comparing one type of work to another ie bathroom remodel vs. Kitchen, framing vs roofing etc...so that if youre trying to decide what kind of work youre going to do you can focus on the best money.

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## FrankSmith (Feb 21, 2013)

I pretty much am with the guys that charge as much as possible and keep spending down. 

It's key to have a very honest understanding of your personal spending as well as business expenses so you have a base where you know you need to be to be covered. Once you are comfortable you can smoke that number, the charge a lot spend a little method is fairly effective.


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