Your Easiest Work to Sell Might Be Your Worst-Paying
Someone at the supply house asks how the year went.
"Busy," you say. "Best one we've had."
On the drive back you check the business account at a red light. Then you put the phone face down on the seat and wonder which of those two answers was true.
Both were. Revenue was up. The schedule was full from spring on. And the account in November looks a lot like it did last November, give or take a truck payment. That gap is profit margin, and it's the first of the four margins we're walking through this month.
Busy and profitable are two different numbers.
Revenue is what you billed. Profit margin is what the business keeps after labor, materials, subs, overhead, and your own pay. A full schedule can sit right on top of a thin margin for years, and nothing on the calendar will tell you. I wrote about how that shows up on payroll week back in July. This week I want to go one level deeper, into the part almost nobody looks at.
The work that was easiest to sell.
I learned this one in my own firm.
I was asking myself "am I actually making money?" with a full schedule. When I finally sat down and looked at margin by type of work, my easiest work to sell turned out to be my worst-paying. For me, that was tax prep.
I couldn't see it until I finally looked at the margin. It's a big part of why we don't offer standalone tax prep to new clients anymore, and why we're moving our current tax clients to year-round planning.
Your business has a version of this. Most do. There's a kind of job that's easy to win and easy to schedule, and you're good at it, so you keep saying yes. It feels like your bread and butter. It might be. It might also be the work that fills the calendar and leaves the least behind.
Where profit margin goes in a trades business.
It rarely leaks in one big hole. It drips, job by job:
You quoted the bathroom remodel off a price sheet you built two years ago. Material costs moved. Your labor rate moved. The price sheet didn't.
The job was supposed to take eight days and took eleven. Three extra days of a four-person crew is real money, and it came straight out of your margin.
The homeowner asked for one more outlet and a different fixture on a Thursday afternoon. You said sure on the phone. Nobody wrote a change order.
The repeat customer gets your best rate because he's been with you since the beginning. He's also the one who calls every week.
You pay yourself whatever is left at the end of the month, so your pay is the number that absorbs every one of those drips.
Two jobs, same revenue.
Here's what it looks like on paper. Say you did two jobs this fall that each billed $40,000.
The first ran on schedule. Labor came in at $14,000, materials and subs at $15,000, and its share of overhead at $4,000. It left $7,000 behind.
The second ran three weeks long, picked up two unbilled add-ons, and was priced off the old sheet. Labor came in at $19,000, materials at $16,500, and overhead at $4,000. It left $500.
Same revenue. Same line on your sales report. One of them paid you, and one of them paid for itself and not much else. If most of your year looks like the second job, you can be booked solid and still be tight in November.
Three questions to ask your year.
Ten months are on paper now. That's enough to see the pattern, and it's still early enough to use it. Before you price a single spring job, I'd want answers to these:
Which type of work left the most behind? Sort margin by kind of job. Service calls, remodels, new construction, maintenance contracts. The ranking usually surprises people.
Which jobs ran long, and why? A long job eats margin every day it runs past the schedule. If they share a cause, like a certain customer, a certain kind of work, or a certain inspector, you can price it or plan around it.
What would you have to charge for the work you want more of? Price it from what it actually costs to put your crew on that job, including your own time, so the job pays you on purpose.
Why November is the month to look.
Spring bids go out in January and February. Whatever you learn now shows up in every number you quote for next year. Whatever you don't learn now, you'll be quoting off the old sheet again.
You don't have to study the whole year to start. Pick your two most common kinds of work. Pull the last five jobs of each and run the margin on every one. That's an afternoon, and it tells you more about next year's pricing than any amount of guessing.
You don't need a perfect year to find this. You need your real numbers in front of you, sorted the right way, with enough time left to act on them. That's what profit margin is: knowing which work pays, so the next yes is a choice.
Next Friday we're on time margin, where the Saturdays went. Profit is where it starts, because thin margins are what push you to take every job that calls.
If you want to see all four margins in one place before then, I put them in a free guide called Busy Isn't the Same as Profitable. It walks you through the questions to ask about your own business, starting with this one: simplybalancedaccountants.com/start-here
Read the full Four Margins framework: simplybalancedaccountants.com/news-notes/what-the-year-left-you
To find your stage, go to Start Here
Leslea Burnett-Little, EA, is the founder of Simply Balanced Accountants. She works exclusively with women who own and operate contractor businesses in Michigan — helping them get clear on their numbers, keep more of what they earn, and build a business that works for their family.
