Want to know if you’re underpriced? Your P&L already told you. If your gross margin isn’t 50% or better, you probably are. Your cost of goods should sit around 50% in HVAC, plumbing, or electrical. When it climbs higher, overhead starts eating your profit line and you feel it in the bank account, not the top line. The numbers aren’t hiding it. You’re just not looking.
@officialchadpetermanTranscript
How do you know if you're underpriced? Your KPIs should tell you. So if you look at a P&L and your gross margin is not 50% or better, more than likely, you're underpriced already. The reason being is because your cost of goods sold should be around 50% in an HVAC plumbing electrical company. If you're seeing that dive where you're going to see it as on the profit line because your overhead is going to start eating away at that. The goal is to how do I raise gross profit margin and lower or stabilize overhead so that I can get a healthy profit. So you should be able to tell right off the bat if you're underpriced. And there's a bunch of exercises you can go through to make sure that you are priced correctly. The biggest mistake I see people make is when they are time and material. Time and material is only charging that customer for your cogs. Well, if you only charge for your cogs, there's no charging for the overhead. And if you don't charge for overhead, you're essentially eating it. So again, you got to know your numbers.
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