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if you are adding a margin to the cost of materials and labor in order to calculate a contract price then stop right now your building company is in serious danger of losing money especially if you plan on growing the traditional method of pricing jobs is to apply a margin to the cost of sales the problem with this method is that you are hoping you will make enough profit to cover your overheads and wages building companies with revenues of less than six million dollars do not enjoy the same economies of scale as traditional businesses like manufacturing or retailing this results in builders making little or no net profit at the end of the year despite taking on more work and increasing their revenue when a building company grows their net profit margin decreases even when they dont reduce their margin they can still end up losing money how is that possible the problem lies in the method theyre using to price their jobs most builders add a nominal markup of say 20 to their cost of sa
