How to set your project minimum

There’s a basic equation to determine your baseline project minimum:

Fixed costs per job / gross margin percentage = project minimum

So why do you need this number? Isn’t that what markup is for?

For any project that you do, there are a set of tasks that have to happen every time. The exact list depends on your business, but might include:

  • Drive time to and from the sales meeting(s)
  • Creating a proposal or estimate
  • Following up with the prospect to close the deal
  • Creating a contract
  • Setting up the job in your system
  • Making sure you have the right people, materials and tools, in the right place, at the right time
  • The crew’s drive time to and from the job
  • Invoicing

Depending on who does these tasks and how dialed your systems are, this could be a few hours to a full day or more. That’s for any job, whether you’re getting paid $100 or $100K for the job. If you’re trying to cover all of this under a percentage-based markup, you’ll lose your shorts on small jobs and won’t know it.

By identifying your break-even project minimum and saying “no” to jobs that don’t meet the threshold, you will save time AND boost your profits simultaneously.

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