Energy-Miser
Senior Member
- Location
- Maryland
What do you think of this formula for a ball park profitability gauge (after the job is done):
A = 3 * straight labor cost + material @ 25% mark up
B = 4 * straight labor cost + material @ 40% mark up
Your contract entitles you to receive X dollars for this job. Now:
if X < A then you probably lost money
if A < X < B then you probably did ok
if X > B then you probably did very well
By straigh labor cost I mean just the hourly salary and non of the burden. I never really tested this against my overhead, etc. but applied it just blindly to a dozen jobs, and saw that I was all over the place. I must say that I came up with the paramaters just by gut feeling, they have no scientific basis! But I would like to know what everyone else thinks, based on your experience in your own business. Thanks, e/m
A = 3 * straight labor cost + material @ 25% mark up
B = 4 * straight labor cost + material @ 40% mark up
Your contract entitles you to receive X dollars for this job. Now:
if X < A then you probably lost money
if A < X < B then you probably did ok
if X > B then you probably did very well
By straigh labor cost I mean just the hourly salary and non of the burden. I never really tested this against my overhead, etc. but applied it just blindly to a dozen jobs, and saw that I was all over the place. I must say that I came up with the paramaters just by gut feeling, they have no scientific basis! But I would like to know what everyone else thinks, based on your experience in your own business. Thanks, e/m