3 Ways to Price at 50% Gross Profit
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- Опубліковано 15 жов 2024
- Today Tom addresses the Fighters who tell us that there's NO WAY they can get 50% GP in their area/industry.
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Tom Reber is an entrepreneur, business coach, podcaster, leader of The Contractor Fight, creator of Contractor Fight TV and HGTV host. Tom's content has helped hundreds of thousands of home improvement contractors improve their lives and businesses.
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I have started to price my work at 50 percent and already are reaping the benefits!!! Thank you Tom for your advice and encouragement
How do you price at 50%? Are there any other services you add on top the actual work?
Made 80% on my last project, sell like you don’t need the work and people will do the job if they really need the work done.
No one will reject you for being a “little” more expensive, it’ll be usually because they thought it would cost 2-3 times less. Never your customer.
I'm happy you put this out, the last one you mentioned is how I do practicly all of my work, I'm much higher on the labor side then you competitors but I'm not upcharging the materials, so I still make what they are but look better in the customers eyes. Alot of people on the fight page, believed it was only possible to follow the guide and 50% each side of it. If you end up with the same profit, and do less work, why wouldn't you. Thanks man.
Even easier, do not, ever, and I mean ever, give the customer a broken down bill. I worked with my father and parts/equipment and labor all together for a grand total. They have zero need to know what we paid for equipment. If they asked for our hourly rate we would give them that but if we had to drive to get a part, it was on their dime. We never once advertised and had work coming in all the time, only had a few weeks of good fishing in the morning back in 2009, but the break was nice :)
Last one is how I go about it. I tell them how much an hour I am and about how long I think it will take to do the job. I’m a soloist. People that have been through this really appreciate the honesty and integrity. I figured my hourly rate after I heard what Shinfu master wanted to run his business, turned that into my hourly rate, suits me just fine.
Totally interested. Cleared 306k last year. My current overhead is 17k a month. My Budgeting sucks but on a positive note I started homeless and addicted to drugs. Telling you though. Staring at those expenses makes my butthole pucker.
Hi Tom,
Great video! How would I do the 50% gross profit starting a independent delivery driver business? I’m looking to hire employees
You mentioned once that the 50 % profit is needed for paying a company’s overhead etc.
My accountant explains that PROFIT is the amount of dollars left over after every single other expense of the business , every obligation has been satisfied, paid in full, including my overhead… everything left over is my “ PROFIT” .. is this your meaning of profit you speak of Sir? Thank you in advance
Gross Profit is the real income you have left to pay your overhead. Whatever is left after that is your pre-tax net profit.
Does COGS include the margin I put on materials and subbies?
Love the energy
I build bathrooms, from scratch by myself.
I always charge only labor, to create trust? Does this not make any sense?
Nope.
Isn’t this 100% margin?
total sales amount is 5000. 2500 cost and 2500 gross profit from which you have to pay tax and overheads.
@@Ciupanezu1923if that is correct then it's not 50% profit. profit is after all expenses and overhead are paid.
No. Its 50% margin. To calculate a 50% margin, you divide your labor and material by 50%. That’s the same as multiplying by two. If you want to make a 40% margin, you divide by 60%. If you want to make a 30% margin, you divide by 70% and so on. This is not profit. It’s profit margin.
I’m realizing I’m not making money because I’m not charging nearly enough. How do I raise my prices this much without losing my established builders that hire me on a regular basis? I’m fine with raising prices for new one off customers but I’m afraid to lose the builders… a response would be greatly appreciated
Home builders charging double.😂😂😂
What’s wrong with that?
I’m changing $125 hourly rate I’m still selling work my in house cost with my bills is 45 and hour lol 😂
Hi Tom,
That works, but it depends where your prices sit in the tear-drop shaped hierarchy of prices. If you're raising your prices from a low price to the middle of the pack (or a bit higher) it's easy. Mind over matter. But getting the real high prices takes selling skills.
The best thing contractors can do is price check other contractors.
I call bullshit. I hear all the time, I found someone 1/3 of your price. I still have work and 95% of the time I'm at a 50% gross profit
I think price comparison alongside others is just for fun reference to feel good about “knowing” where you stand.
We’re told all the time, you gotta know your numbers. Every shop’s monthly overhead is different. We owe it to ourselves and family to sell for maximum profit. 🇺🇸
it dependent on the market, you charge more if you busy and charge less if you have no job
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