In Part 2 (Florida Roofing, August 2020), we covered how to gather your costs, properly mark up your estimate and develop a consistent and dependable review process.
In this last section, we will learn how to apply gross profit margins to our estimates properly and develop a sales strategy.
Stage 5 – Calculating Gross Profit
Understanding that Gross Profit or Gross Margin is not a markup is key to properly calculating it on your estimates. The gross profit margin is present on the income statement every company prepares as a part of its accounting process. Gross margin is the amount left over after a business subtracts the cost of goods sold from the net sales revenue for products or services sold. As such, the gross margin of your estimates to determine your selling price must be greater than your companies operating expenses or you will not achieve the goal of a successful business: profit. Read more.