The Cash Flow Contractor 263 - Why Your 40% Margin Becomes 33% (And How to Fix It)
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Jul 10, 2025 Think your 40% profit margin is secure? Think again! Discover the hidden costs that chip away at your profits and learn how to plug those leaks. Explore the impact of employee compensation, tariffs, and bulk purchases on your bottom line. Unravel the complexities of variable expenses and challenge your current bidding strategies. Find out how better cost management and accurate job pricing can improve your margins and safeguard your financial future. It's time to make your pricing work for you!
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Client's Margin Mystery
- A client bid his jobs with a targeted 40% margin but ended up with only 20% after actual costs were entered in QuickBooks.
- Hidden and difficult-to-allocate variable expenses caused a huge difference between estimated and actual margins.
Misallocated Office Salary
- The client mistakenly allocated an office employee's salary as a variable cost instead of overhead.
- Correcting this cost allocation helped explain profit margin differences and refine bid accuracy.
Fix Pricing to Gain Margin
- Realizing your actual costs differ from bids allows you to fix pricing to improve margins.
- This management insight turns lost profits into future gains without needing more sales.
