Find out what's costing your contracting business jobs and profit: https://bit.ly/ContractorFightScorecard_fgp1
Are you bidding jobs at 50% gross profit but still wondering where all your money goes?
Most contractors think they know what a job costs. They estimate labor, add materials, calculate their price, and assume there's enough margin left to make money.
But what about the drive time, material runs, unexpected delays, cleanup, and all the work that happens before and after the actual production?
Those costs don't disappear just because you forgot to include them in your estimate.
In this episode, Tom Reber breaks down how to bid jobs at 50% gross profit using a simple three-phase system he's relied on for over 20 years: Prep, Build, and Finish.
Tom explains why accurate estimating starts with understanding your actual production costs, not guessing how long a job should take or copying what other contractors charge.
He also shares how a $50 million contracting company was losing $12,000 every week simply because it wasn't accounting for crew drive time.
You'll learn how to track production rates, account for overlooked job costs, and use real numbers to build estimates that protect your margins.
And if you've ever thought customers won't pay what you actually need to charge, Tom explains why the problem might not be your price. It could be your production efficiency, your sales process, or the customers your business is attracting.
In this episode:
- Why contractors lose money before a job even begins
- The three-phase estimating system: Prep, Build, and Finish
- How one $50 million company was losing $12,000 a week in unaccounted drive time
- Why tracking actual production rates leads to more accurate estimates
- The difference between the art and science of estimating
- How overlooked cleanup and finishing costs eat into your margins
- How to calculate a selling price at 50% gross profit
- Why a 50% markup is NOT the same as a 50% gross profit margin
- What to do when customers won't pay the price your business needs
- How comparing estimated and actual job costs improves future bids
Chapters:
00:00 — Why contractors struggle to hit 50% gross profit
00:44 — Phase 1: Prep and the hidden costs before production
01:58 — Phase 2: Build and tracking actual production rates
04:25 — The art and science of estimating
05:36 — Phase 3: Finish and the hidden cost of cleanup
06:43 — How to calculate a 50% gross profit selling price
08:22 — Why 50% markup isn't 50% gross profit
09:26 — Why customers might not pay your price
11:40 — How to improve estimates using actual job costs
12:42 — Your fight: Find out what you're giving away
Your challenge:
Take one recently completed job and break it into three phases:
- Prep: What did it cost to get the job ready? Include material runs, drive time, setup, and everything that happened before production.
- Build: How long did the actual work take compared to your estimate? Account for your real labor, materials, and equipment costs.
- Finish: How much time and money went into cleanup, walkthroughs, punch lists, and completing the job?
Compare what you estimated against what actually happened.
Where were you accurate? Where did you underestimate? What costs did you completely overlook?
Use what you learn to improve your next estimate.
Remember: If a job costs $5,000 to produce, you need to sell it for $10,000 to achieve a 50% gross profit margin.
And don't confuse that with a 50% markup. They're not the same thing, and mixing them up can seriously underprice your work.
But even the right gross profit margin doesn't automatically guarantee your business is profitable. Your jobs still need to generate enough revenue to cover company overhead and produce a net profit.
If you're doing plenty of work but still struggling to make money, inaccurate job estimates might be just one part of a bigger problem.
Take the free Contractor Fight Scorecard to identify what's holding your contracting business back, uncover where your biggest opportunities are, and figure out what deserves your attention first.
It takes about three minutes.
https://bit.ly/ContractorFightScorecard_fgp1
The math behind 50% gross profit is simple. The hard part is knowing what your jobs actually cost. Stop guessing, start tracking, and build your prices around the numbers your business needs.
#ContractorPricing #GrossProfit #ContractorBusiness
