profit margin

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nafis

Senior Member
Location
Palestine,tx
I was wondering ,what the electrical contractor profit margin around the country is. I am sure there is some statistic out there. In addition, do you add profit margin to your bid when you sell a job?

What the market you are working in will allow?

Thank you
 

satcom

Senior Member
I was wondering ,what the electrical contractor profit margin around the country is. I am sure there is some statistic out there. In addition, do you add profit margin to your bid when you sell a job?

What the market you are working in will allow?

Thank you
What area of the business are you looking at new construction, service work, and and is it residential, commercial or industrial, profit is usually a number you set to allow your business to grow
And increase in asset value, and since every business has different operating and overhead expenses, the profit margin will vary with every business, as earnings increase or decrease, in both good markets and bad

Only in Disneyland can a business grow and hire without profit.
Simple basic of any business profit is number one, then you can grow any business, and hire more employees to increase profits
 

satcom

Senior Member
The average EC profit is something like 3% and the average EC stays in business a year or two.
3% may be little on the high side for an average industry number, the northeast area had some really low actual reports from the department of labor, but the political spin always reports better
Numbers so you never know the real pain index unless you look at your own numbers and lack of work in your area.
As far as EC,s trying to make it in the business, those numbers can be really off set by the EC working full time and the part time I think I can group, some of the guys attempting a full time effort have had a lot of pain trying to stay in business over the past few years, and with all that pain and effort, have hung in there the longest, many of that group may last longer then the usual 2 or 3 years, the part time guys with other income, can last for years before the realize they are not making a profit, even a 1% profit can be good if you have a living income, and some growth in the business, now all tries at a business have the same outcome, good planning and solid business practices, will usually give the best results.
 

cdslotz

Senior Member
Yep, satcom is right.
But that is the average net.
How much profit you add to any given bid has nothing to do with that number.
Each bid is different based on, difficulty, risk, mat/labor ratios, competition, manpower, scheduling, etc
 

ptonsparky

Senior Member
Location
NE (9.06 miles @5.9 Degrees from Winged Horses)
Occupation
Electrical Contractor
Not to confuse things entirely...I just generated a report for Profit/loss on all the history I have in QB. My net income is about 2.4% of my total Sales income. IMO, and I am by no means an expert, my wages are not profit, they are an expense to my company.

2.4% of a $200 service call is not much, pretty danged pathetic. 2.4% of a $10,000,000 project sounds a lot better.

If successful means I have stayed in business longer that 2 years, I guess I am. Don't read any more into it than just years in business. Some of us are more stubborn than wise.
 

Strathead

Senior Member
You mind sharing your source for this data?
I am sure that if anything the number has gone down since, but one of the trade magazines, EC, ECM, or maybe CEE news (I go back a ways) published this information back in the 90's. The figure was something close to 3% for EC's in the 3 million dollar range, and 1.8% (if I remember) for large contractors. So that is one source. Remember, as one person stated, his wage is not profit. As an owner, many of the things that regular folks need to fund from wages are also not profit, such as cell phone bills, gas, vehicle costs. Many things can be hidden in the business, and often are. Like getting one bill for your lawn service at work, where they just happen to mow your yard as well. Lunch always, Dinner some time. So profit is more of a moving target.

Please don't get me wrong! Every penny you can make and keep. You deserve!
 
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