Profit

[mstrlucky74]

I read that the average electrical contractor profit is about 3%?.can't be true

 

[kwired]

I read that the average electrical contractor profit is about 3%?.can't be true

You must have read that in some publication intended for general contractors:lol:

 

[K8MHZ]

An EC friend of mine took an estimating class and he mentioned to me that is what they were teaching them. Actually, he said 1 to 3 percent.

 

[petersonra]

That is fairly typical for most businesses. Profit is tough to come by these days.

But that is net after all expenses.

it is a little tougher to figure for small businesses that are basically sole proprietors, as they get what is left over anyway, but their salary is wrapped up in that.

 

[kwired]

That is fairly typical for most businesses. Profit is tough to come by these days.

But that is net after all expenses.

it is a little tougher to figure for small businesses that are basically sole proprietors, as they get what is left over anyway, but their salary is wrapped up in that.

Somebody has to be making money somewhere or no business would ever be able to afford to expand, New businesses would never be able to make it and so forth. If you were to start a new business and had to borrow money to do so, how much do you think investors will be willing to lend you if you are only going to have a net profit of 3%? First, thing they will see is they likely will never get a return on their investment, and will not be willing to invest in you.

 

[Rewire]

Last quarter we were at 8% but that was due in part to a sluggish January

 

[dduffee260]

We shoot for the 10% area or net profit. Our overhead is a little more than some contractors because of our building and the upkeep.

We have been working in the Midland/Odessa area of Texas lately and the net there, even after the per diem, motel and added expense of working there we have been netting 20%. They are literally running out of contractors to bid on projects.

I do hear of a lot of GC's having a net of 2% but they also have a general conditions percentage of about 6% to 8%. The large GC's make money, they do not grow and add staff by losing money.

Now on the other hand you have Apple Computers. Just think about that company for a minute. How would you like to produce a product that costs about $50 to make and sell it for $600. Then on top of that not have to pay any tax on the money you made. No wonder they have $130,000,000,000 in offshore accounts.

 

[kwired]

Now on the other hand you have Apple Computers. Just think about that company for a minute. How would you like to produce a product that costs about $50 to make and sell it for $600. Then on top of that not have to pay any tax on the money you made. No wonder they have $130,000,000,000 in offshore accounts.

After you figure in R&D, marketing, and other things they may cost more than $50 to make but I'm still pretty sure they are not making only 2 or 3 percent profit on them.

 

[Rewire]

Their is a difference between prodit and profit margin. If you buy an item for 100 bucks and sell it for 150 bucks you make a profit of 50 bucks which is %50 but your profiy margin is %33.33

 

[readydave8]

Last quarter we were at 8% but that was due in part to a sluggish January

Is that 8% of gross for 1 quarter, which would be 32% annual return? I don't know much about such things, so am asking what may be a dumb question.

 

[kwired]

Their is a difference between prodit and profit margin. If you buy an item for 100 bucks and sell it for 150 bucks you make a profit of 50 bucks which is P but your profiy margin is 3.33

You have a point there. This "profit margin" may be what the OP was reading about.

If you sold a $100 item and only marked it up 3% your profit is $3, but the profit margin would only be .029.

Where the actual mark up on your example is 50%.

 

[Rewire]

Is that 8% of gross for 1 quarter, which would be 32% annual return? I don't know much about such things, so am asking what may be a dumb question.

The 8% is just where we are at for that time . We actually produce our financials monthly so we can track how we are doing to see if we are on target. Our software can give me a daily number if I want to track that close. If we have a month where we are at 1-2% then I will track weekly. If we hit 8% for each quarter we should be at 8% for the year.

 

[readydave8]

The 8% is just where we are at for that time . We actually produce our financials monthly so we can track how we are doing to see if we are on target. Our software can give me a daily number if I want to track that close. If we have a month where we are at 1-2% then I will track weekly. If we hit 8% for each quarter we should be at 8% for the year.

8% of gross is profit, after all expenses, overhead, owner's salary, tool and equipment deprecation, etc?