Most companies underprice their services and cap growth. Aim for 50-63% gross profit margins after labor and materials, then spend 15% of revenue on marketing. Customers should fund your growth, not limit it.
People tell me I'm closing at 35%, 40%, but then I look at their price and they're giving stuff away. They're not really charging the right price. They're not getting at least 50% gross profit margin with labor, material, and commission being in the cost of goods sold. I mean, I was used to running my business at over 60% gross profit margin with, again, with labor, material, and commission in the cost of goods sold. So after you pay for all the direct costs of the job, You got 60, 63% of that leftover to pay all your overhead, including about 15% for marketing. And a lot of people also are spending 6, 7, 8%. They don't have enough leads. They don't realize it, but they're kind of creating a limit on their business. They're putting a constraint on their business, not charging the right price and not getting their customers to pay for their marketing. So it's kind of a vicious cycle.
