Profit Margins

Discussion in 'Hardscaping' started by bigviclbi, Aug 19, 2005.

  1. bigviclbi

    bigviclbi LawnSite Senior Member
    from nj
    Posts: 894

    Let's say you do a 1) $5000 job and 2)$10000 job how much are you netting? Dont include things like insurance, advertising just labor and materials, disposal, gas etc.
     
  2. mbella

    mbella LawnSite Bronze Member
    Posts: 1,284

    Vic, typically, my GPM is 40%. Sometimes it is a little more. However, sometimes it's a little less.
     
  3. bigviclbi

    bigviclbi LawnSite Senior Member
    from nj
    Posts: 894

    Do you usually make a higher percentage the bigger the job or less? I know everyjob is differeny in complexity but I am talking straightforward jobs like a driveway or patio. I hope Rex answers because I know his prices are similiar to mine in the 6-7 dollar a sq. foot range.
     
  4. DVS Hardscaper

    DVS Hardscaper LawnSite Fanatic
    Posts: 6,406

    I cant tell you our gross profit, as in reality that isnt relivant.

    But I do track our NET profit on each and every job as we do the job.

    Our job estimating and job tracking system is set up to account for labor burden and the indirect expenses such as "insurance".

    Our NET Profit is usually 18 -35%. And thats factoring in EVERY single penny affiliated with that job.

    We mostly do jobs that go from 15k - 50k. And yes, the bigger jobs are somewhat less profitable, but thats usually due to job costing flaws. Cause when you price a job, large or small you need to target the same dollar amount per hour per man after expenses.

    According to many surveys I have seen throughout the years, hardscaping has low profit margins.
     
  5. mbella

    mbella LawnSite Bronze Member
    Posts: 1,284

    Vic, this year, I haven't noticed much difference. Whether it was a $5000.00 or $40,000.00 job, we were fairly consistent. What is so much different from here to where you are. I average $5-6.00 on materials alone for flat work.
     
  6. mbella

    mbella LawnSite Bronze Member
    Posts: 1,284

    I would say gross profit is pretty relevant as it reveals the direct costs associated with completing a given job.

    What if a given crew is incredibly efficient, but as an orginazation you're not. How do you know?
     
  7. DVS Hardscaper

    DVS Hardscaper LawnSite Fanatic
    Posts: 6,406


    If you do a 20k job and gross 50% profit, it does you no good if you have payments out the backside to make and and so on.

    Ever hear the saying "its not how much you make, but how much you keep"?

    Grossing $4,000 is not any value, if after you pay all expenses affiliated with that job you only have $1200 left. Net is also known as "the bottom line". Talk to any established, successful contractor about their jobs, and you'll hear that term used frequently :)

    Also, as far as "efficiency", thats where your efficeincy sheets come into play. You are tracking every single minute for each task performed for each job, right? Cause then you should have the averages that are used when you cost out a job to develope an estimate.
     
  8. mbella

    mbella LawnSite Bronze Member
    Posts: 1,284

    What if you're running two hardscape crews and a softscape crew and spreading your overhead over those three crews?
     
  9. DVS Hardscaper

    DVS Hardscaper LawnSite Fanatic
    Posts: 6,406

    Again, that still brings you back to NET profit.

    If you're off setting fixed, indirect expenses by turning more production hours....then you're gonna have more money left over after all is said and done. Net profit = left over money.

    Naturally more production hours will decrease the amount of money that u need to generate per man per hour, to pay the bill in the night.

    Insurance rates and labor burden will not be affected, as those are usually based on payroll numbers.

    And usually with more crews, you're turning more production hrs. Which means instead of one crew having to generate money to cover the $500 / month yellow page ad, 3 crews will generate the $500 / month equally.

    Typically a company will use the lower operating costs as a way of competitively pricing work.
     
  10. mbella

    mbella LawnSite Bronze Member
    Posts: 1,284

    DVS, I'm replying to your original comment that Gross profit is irrelevant. I disagree. It may be irrelevant as to whether you go to Spain or New Jersey for vacation, but it's not irrelevant altogether.

    If I'm running two crews with the same amount of overhead that you're running four crews, wouldn't your gross profit matter to me? Your gross profit per crew may be the same, but you net profit will be more. If I didn't look at your Gross profit, how would I know?

    Gross Profit will speak more to how you run each job and not necessarily how you run your business as a whole.
     

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