[Olive Branch]

Chris, thanks for the feedback. I appreciate your thoughts. What do you mean by pure profit in regards to the 15%. We shoot for 12.5 to 15% on most jobs. 10k ='s $1,250 or $1,500?

Thanks

[Chris Heiler]

I was just trying to explain the difference between "Mark Up" and "Pure Profit" because they are two separate things. I probably didn't explain it very well.

Here are some actual numbers for you:

for 10% pure profit, mark up your subs 11.11% (1.111)
for 12% pure profit, mark up your subs 13.64% (1.136)
for 15% pure profit, mark up your subs 17.65% (1.176)
for 20% pure profit, mark up your subs 25.00% (1.250)

It sounds like you are doing it the right way.

[Inspired]

The reason it can get confusing I think is because “Mark-up” is a figure or tool you use to price a specific item or service and “Margin” is a figure that expresses your profit. Mark-up is a “Gross” figure and Margin is supposed to be more of a “Net” figure or a figure that helps you see your profit more clearly.

As Chris stated:
Sub A charges you 10,000. and you mark it up 12.5%. You charge the customer 11,250.00.
Your actual gross profit margin however is 11.11%.

I said “Gross” there because obviously you incurred expenses that will relate directly to Sub A that will need to be subtracted as well as a portion of your fixed overhead costs and of course, your taxes. After all of your expenses have been subtracted then you can figure your true net profit “Margin”.

You’ve probably heard old business guys say that if you can make 10% profit consistently, you are doing well. They are speaking in terms of a “Net” profit “Margin”.

[Olive Branch]

Thanks for your input, Chris and Inspired. I has been very helpful to have some other input into the way we operate. I think there are some changes we will make for next year.

Thanks for your help.

[PaverStone]

That is how we operate here in Columbus, OH. It's has been the best thing we could have done. Are work is second to none because the contractors have and invested interest in the growth of the company. I have contractors making over 6 figures a year and we fund all of the material. You just have to control quality and make your contractors understand that quality and customer service is the most important of all. “Be where you say and do what you say”. We went from one to 5 crews over night. We have revenues over $1,000,000 in only four short years. This is a business model from the paver companies in Florida. We going to buy a service van next season to keep with the minor touch up and repairs, for that we are going to hire hourly labor. If you have any question on how to make this model successful contact I will help you in any way.

[Olive Branch]

Paverstone that sounds great I will contact you sometime this fall if you don't mind. I would love to hear more about your operation.

Thanks