3 Simple Strategies to Boost Your Gross Profit

In the complex landscape of your business, there’s one number that is most influential – your gross profit.

At PROTRADE United, we refer to it as your real income, and it holds the key to shaping your success. In this article, let us demystify the concept of gross profit and harness it to its full potential for your business.

Understanding Gross Profit Calculation.

Your business attracts clients to bring income for jobs or projects. Gross profit is derived from your sales income minus the costs involved in executing a project. These costs, known as Costs of Goods Sold, encompass everything from materials to labor. It includes components needed to deliver the job, such as contractors, internal labor, equipment and possibly some other incidentals like fees and charges.

What remains after subtracting these expenses is your gross profit – your true income from the project. Anything over and above isn’t truly yours. The key question to ask is: How can you amplify your take-home from every project?

Key Components of Profit Enhancement:

1. Effective Pricing: Are your pricing models calibrated to reach your target gross profit margin? Pricing is a multifaceted topic, but undervaluing your services can hinder your ability to achieve the desired gross profit. It’s crucial to assess whether your pricing aligns with your goals.
2. Charge-Out Rates: How accurate is your hourly charge-out rate for your labor? Ensuring it accurately reflects the costs of putting your team on site is essential. Many businesses unknowingly undercharge for labor. It is really challenging in reaching their gross profit goals. Review your labor rates regularly to maintain alignment with what you’re looking for.
3. Labor Productivity: Maximizing the productive hours charged to a project can significantly impact your gross profit. For example, when you are paying a staff for 38 hours a week, how much of those 38 hours being charged to a job or project? Make sure that not only you are charging as many of those hours to the project, but also maximize your team’s productivity. By focusing on enhancing labor efficiency and on-site productivity, you pave the way for increased profitability. Encouraging your team to recognize the direct link between their productivity and the company’s profitability.

Unlocking Your Gross Profit Potential.

To summarize, three key simple yet crucial aspects for maximizing your gross profit: effective pricing, accurate labor charge-out rates, and optimized labor productivity. Your journey towards a healthier gross profit hinges on fine-tuning these areas.
If you’re ready to implement these strategies and you’d like some support in putting these ideas in place, please be in touch. Your path to unlocking your true income potential starts today.

Would you like to gain greater clarity and consistency in your trades business?

Let’s hit the ground running with a PERSONALISED BUSINESS PERFORMANCE SESSION

Diagnostic Tool
Use a powerful diagnostic business tool, to understand the current reality
Identify the Obstacles
Uncover the obstacles that may be holding you back from more profits, time and freedom
Action Plan
Craft a realistic action plan to produce results in the next 6-12 months
Recommendations
Gain recommendations specifically designed for a trades and construction businesses operating in Australia & New Zealand.

HOW PROTRADE UNITED HELPS
BUSINESSES LIKE YOURS

WHAT ARE OUR CLIENTS SAYING?

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Salmon Plumbing
John Salmon

"The fact that I know my business is running smoothly and it doesn't need me at every particular juncture means that I can take some time off for myself"

What you’ll get in the complimentary 60 min session

Diagnostic Tool

Use a powerful diagnostic business tool, to understand the current reality

Identify the Obstacles

Uncover the obstacles that may be holding you back from more profits, time and freedom

Action Plan

Craft a realistic action plan to produce results in the next 6-12 months

Recommendations

Gain recommendations specifically designed for trades and construction businesses operating in Australia & New Zealand

Let’s Hit the Ground Running with a Business Performance Session

Would you like to gain greater clarity and consistency in your trades business? Book a complimentary ‘Business Performance Session´ with a trades business specialist and uncover what may be holding your business back.