If your direct labor is running over 20-23%, you’re leaking profit without even realizing it. That number is companywide, across every trade line you run. Some trades will sit lower, some higher, but the blended total across the whole business is what matters. Get labor and materials right and you land around 50% gross margin, the number that actually tells you if you’re healthy.
@officialchadpetermanTranscript
Your direct labor is running at over 20 to 23%. You're probably bleeding out. You just don't know it yet. Now when I say 20, 23% if it's running over that, what I'm talking about is company wide. So that's across all trade lines. Some trade lines will run less, some will run more. But overall, we run three trades, and that's typically where we like to keep it under. We know that based on that plus our materials, that should give us a gross margin of around 50%. That's where we want to be. That's where you should be to run a healthy company when you consider your overhead and what you want to make at a net profit level.
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