The Contractor Fight with Tom Reber

Find out what's costing your contracting business jobs and profit: https://bit.ly/ContractorFightScorecard_mvm1

Are you adding 50% markup to your jobs and assuming you're making 50% gross profit?

You might be making a lot less than you think.

Most contractors know they need to charge more than a job costs to produce. They calculate their labor, add materials, apply a markup, and assume the difference is their profit.

But there's a problem.

Markup and gross profit margin are NOT the same thing.

If a job costs $1,000 and you add a 50% markup, your selling price is $1,500. That doesn't give you a 50% gross profit margin. It gives you approximately 33%.

And when you're making that mistake on every job, you can stay busy, grow your revenue, and still wonder where all your money went.

In this episode, Tom Reber breaks down the difference between markup and margin, why confusing the two can seriously underprice your contracting jobs, and how to build a pricing system that produces the gross profit your business actually needs.

Tom walks through real pricing examples to show why achieving a 50% gross profit margin requires a 100% markup on your direct job costs.

He also explains how your gross profit margin directly affects how much revenue you need to generate, how many jobs you need to sell, and how many leads your business needs just to break even.

And even when your pricing formula is correct, inaccurate labor, material, and subcontractor costs can destroy the margin you thought you were protecting.

You'll learn how to calculate your actual gross profit, build target margins into your estimating process, stop negotiating against your own numbers, and identify where your pricing might be costing your business money.

In this episode:

• Why a 50% markup only produces approximately 33% gross profit margin
• The difference between markup and margin when pricing contracting jobs
• How incorrect markup calculations can leave contractors busy but unprofitable
• Why achieving 50% gross profit requires a 100% markup on direct job costs
• How gross profit margin affects your break-even revenue
• Why lower margins mean you need more jobs and leads to cover the same overhead
• How inaccurate job costing can turn an expected 50% margin into 35%
• Why your estimating system should use actual costs and target margins instead of guesswork
• How discounting your price can destroy the margin your business needs
• How to audit your last five completed jobs to identify pricing and profitability problems

Chapters:

00:00 — Why 50% markup doesn't mean 50% gross profit

01:01 — The difference between markup and margin

02:06 — What else is costing your contracting business money?

02:35 — Why markup and gross profit margin aren't interchangeable

03:06 — How bad pricing math keeps contractors busy and broke

04:12 — How to price jobs at 50% gross profit

05:02 — How gross profit affects your break-even revenue

06:46 — Why inaccurate job costs destroy your margins

07:57 — Building your target margin into your estimating system

08:47 — Why you need to hold your price

09:36 — Your fight: Audit your last five completed jobs

11:10 — Find out what's holding your contracting business back

Your challenge:

Pull your last five completed jobs and find out how much gross profit you actually made.

For each job:

1. Find your selling price: What did you actually charge the customer?
2. Calculate your actual job costs: Include the real labor, materials, subcontractors, and every other direct cost required to produce the job.
3. Calculate your gross profit margin: Subtract your actual job costs from your selling price, then divide that difference by your selling price.
4. Compare your results: Did you produce the margin you originally intended, or did the job finish at a much lower percentage?
5. Identify the problem: Were your estimated costs inaccurate? Did production take longer than expected? Was your markup formula wrong? Did you discount the price without adjusting your costs?

If you're pricing jobs expecting a 50% gross profit margin but your completed jobs are consistently producing 23%, 31%, or 37%, something needs to change.

The goal isn't just to find out that your numbers are wrong.

It's to understand WHY they're wrong so you can fix the actual problem.

Remember: If a job costs $1,000 to produce and you want a 50% gross profit margin, you need to sell it for $2,000.

That's a 100% markup, not 50%.

And if your job actually costs more than you estimated, your gross profit margin drops even further.

But getting your pricing right is only part of building a profitable contracting business.

Your gross profit still needs to cover company overhead before your business produces net profit. And pricing might not even be the biggest problem holding your business back.

If you're working harder, selling more jobs, and growing revenue without seeing the profit you expected, it's time to stop guessing about what's going wrong.

Take the free Contractor Fight Scorecard to identify your biggest business leak, get a clearer picture of what's holding your contracting business back, and find out what deserves your attention first.

It takes about three minutes.

https://bit.ly/ContractorFightScorecard_mvm1

Staying busy isn't the goal. Building a business that actually keeps enough of what it earns is. Know your costs, protect your margins, and stop letting bad pricing math determine your profitability.

#ContractorPricing #GrossProfit #ContractorBusiness

Find out what's costing your contracting business jobs and profit: https://bit.ly/ContractorFightScorecard_fgp1

Are you bidding jobs at 50% gross profit but still wondering where all your money goes?

Most contractors think they know what a job costs. They estimate labor, add materials, calculate their price, and assume there's enough margin left to make money.

But what about the drive time, material runs, unexpected delays, cleanup, and all the work that happens before and after the actual production?

Those costs don't disappear just because you forgot to include them in your estimate.

In this episode, Tom Reber breaks down how to bid jobs at 50% gross profit using a simple three-phase system he's relied on for over 20 years: Prep, Build, and Finish.

Tom explains why accurate estimating starts with understanding your actual production costs, not guessing how long a job should take or copying what other contractors charge.

He also shares how a $50 million contracting company was losing $12,000 every week simply because it wasn't accounting for crew drive time.

You'll learn how to track production rates, account for overlooked job costs, and use real numbers to build estimates that protect your margins.

And if you've ever thought customers won't pay what you actually need to charge, Tom explains why the problem might not be your price. It could be your production efficiency, your sales process, or the customers your business is attracting.

In this episode:

• Why contractors lose money before a job even begins
• The three-phase estimating system: Prep, Build, and Finish
• How one $50 million company was losing $12,000 a week in unaccounted drive time
• Why tracking actual production rates leads to more accurate estimates
• The difference between the art and science of estimating
• How overlooked cleanup and finishing costs eat into your margins
• How to calculate a selling price at 50% gross profit
• Why a 50% markup is NOT the same as a 50% gross profit margin
• What to do when customers won't pay the price your business needs
• How comparing estimated and actual job costs improves future bids

Chapters:

00:00 — Why contractors struggle to hit 50% gross profit

00:44 — Phase 1: Prep and the hidden costs before production

01:58 — Phase 2: Build and tracking actual production rates

04:25 — The art and science of estimating

05:36 — Phase 3: Finish and the hidden cost of cleanup

06:43 — How to calculate a 50% gross profit selling price

08:22 — Why 50% markup isn't 50% gross profit

09:26 — Why customers might not pay your price

11:40 — How to improve estimates using actual job costs

12:42 — Your fight: Find out what you're giving away

Your challenge:

Take one recently completed job and break it into three phases:

1. Prep: What did it cost to get the job ready? Include material runs, drive time, setup, and everything that happened before production.
2. Build: How long did the actual work take compared to your estimate? Account for your real labor, materials, and equipment costs.
3. Finish: How much time and money went into cleanup, walkthroughs, punch lists, and completing the job?

Compare what you estimated against what actually happened.

Where were you accurate? Where did you underestimate? What costs did you completely overlook?

Use what you learn to improve your next estimate.

Remember: If a job costs $5,000 to produce, you need to sell it for $10,000 to achieve a 50% gross profit margin.

And don't confuse that with a 50% markup. They're not the same thing, and mixing them up can seriously underprice your work.

But even the right gross profit margin doesn't automatically guarantee your business is profitable. Your jobs still need to generate enough revenue to cover company overhead and produce a net profit.

If you're doing plenty of work but still struggling to make money, inaccurate job estimates might be just one part of a bigger problem.

Take the free Contractor Fight Scorecard to identify what's holding your contracting business back, uncover where your biggest opportunities are, and figure out what deserves your attention first.

It takes about three minutes.

https://bit.ly/ContractorFightScorecard_fgp1

The math behind 50% gross profit is simple. The hard part is knowing what your jobs actually cost. Stop guessing, start tracking, and build your prices around the numbers your business needs.

#ContractorPricing #GrossProfit #ContractorBusiness

See if you've built a business worth having: https://bit.ly/BuildABusinessWorthHaving_itf1

Craig and Naomi spent years running an electrical contracting business that kept them busy but left them with little profit and almost no freedom.

Craig was doing everything in the field. Naomi was handling the office. They were bringing in revenue, but the money was disappearing as quickly as it came in.

Then a serious car accident exposed just how dependent the business was on Craig.

They were faced with a decision. Change how they ran their business or potentially walk away from everything they'd built.

In this episode of Inside The Fight, Tim and Derek sit down with Craig and Naomi, owners of Titan Electric LLC in Northeast Ohio.

They share how they went from struggling to make a profit and questioning the future of their business to building a growing electrical company that's giving them more financial stability and freedom with their family.

After generating $300,000 in revenue last year, they're now projecting approximately $750,000 for 2026.

But the biggest change isn't how much money they're bringing in.

It's that they're finally building a business that doesn't require them to sacrifice their family to keep it running.

Check out Craig and Naomi's electrical contracting business, Titan Electric Services: https://www.titanelectricservices.com/

They break down:

• How a serious car accident exposed the danger of building a contracting business that depends entirely on its owner

• Why working nonstop and generating revenue wasn't translating into actual profit

• How changing their pricing and implementing 50% gross profit principles helped them build a more financially stable business

• Why pre-qualifying customers stopped Craig from wasting time chasing estimates and underpriced jobs

• How they went from running everything themselves to hiring employees, adding service vans, and moving into a shop

• Why raising their prices felt like a huge risk and what actually happened when they did it

• How knowing their daily operating costs and tracking their numbers gave them financial peace of mind

• Why learning to delegate responsibilities is essential to building a business that can grow without consuming its owners

• How they started reclaiming time with their three daughters and measuring success by more than revenue

Chapters

00:00 From Owner-Operator to Building a Real Business

02:31 Changing the Mindset That Keeps Contractors Stuck

05:29 Why Being Busy Doesn't Mean You're Profitable

06:51 Stop Chasing Customers Who Aren't Right for Your Business

14:34 When Your Contracting Business Puts Your Family at Risk

18:27 From $300K to a Projected $750K in Revenue

23:17 How Knowing Your Numbers Creates Financial Security

30:27 Why You Can't Keep Doing Everything Yourself

37:24 What Actually Happened When They Raised Their Prices

40:11 Measuring Success by the Freedom Your Business Gives You

Craig and Naomi's story isn't just about growing revenue.

It's about learning to charge what their work is worth, building a team they can depend on, and creating a business that no longer requires them to do everything themselves.

Because a successful contracting business shouldn't leave you exhausted, financially stressed, and missing the moments that matter most.

The goal isn't just to build a bigger business.

It's to build a business worth having.

Tom Reber is the founder of The Contractor Fight. He is the host of Contractor Fight TV, an entrepreneur, speaker, podcaster, and former HGTV host.

For over 20 years, Tom has helped hundreds of thousands of contractors build businesses worth having by helping them become the kind of people capable of building them.

On this channel, you'll find straight-talk training on sales, pricing, profit, leadership, and mindset for contractors who want to build a Strong You, a Strong Home, and a Strong Business.

The first fight is always with yourself.

Join The Fight. 👊

See what needs your attention in your contracting business: https://bit.ly/BuildABusinessWorthHaving_cto

Do you know what it actually costs to operate your contracting business for one hour?

Most contractors know what they charge customers. They know what they pay their employees. But they don't know what one billable hour actually costs their business.

And that difference could be costing them thousands of dollars in profit.

In this episode, Tom Reber breaks down how to calculate your true hourly operating cost so you can stop guessing and start understanding what your contracting business needs to produce.

Using an example with four field employees, Tom walks through how to calculate realistic billable hours, allocate company overhead, and account for the true cost of field labor.

The result? A business paying an employee $30 an hour could actually be spending $92 per billable hour before making a single dollar in profit.

Understanding this number doesn't tell you what to charge. It tells you what your business actually costs to operate so you can make better decisions about your jobs, your crews, and your profitability.

In this episode:

• Why paid hours and billable hours aren't the same thing
• How to calculate your team's realistic annual billable capacity
• How overhead and labor burden determine your true hourly operating cost
• Why a $30-per-hour employee could cost your business $92 per billable hour
• The difference between operating cost and what you should charge customers
• How wasted time and inaccurate estimates affect your profitability

Chapters:

00:00 — What does one billable hour actually cost your business?

00:31 — The difference between paid hours and billable hours

01:32 — Calculating your team's realistic billable capacity

02:44 — Calculating overhead cost per billable hour

03:59 — Calculating your true field labor cost

04:45 — The $92-per-hour operating cost example

05:58 — The difference between operating cost and selling price

06:42 — Your fight this week: Calculate your number

Your challenge:

Pull your numbers from the last 12 months and figure out three things:

1. What does it actually cost to keep your contracting business running?
2. How many billable hours can your team realistically produce?
3. What does your field labor actually cost after accounting for labor burden?

Take your annual operating costs and divide them by your realistic annual billable hours. Then add your burdened field labor cost.

That's your estimated cost per billable hour before profit.

If you've been setting prices based on what competitors charge or what you pay your employees, it's time to understand what your own business actually costs.

And if this exercise revealed that you're guessing at important numbers, there may be other areas of your business that need attention.

Take the free Build a Business Worth Having Scorecard to uncover what's holding your contracting business back and identify where to focus first.

It takes about three minutes.

https://bit.ly/BuildABusinessWorthHaving_cto

Knowing what an hour costs your business isn't the same as knowing what to charge for it. But you can't make smart pricing decisions until you understand your costs.

#ContractorPricing #ContractorProfit #ContractorBusiness

See what needs your attention in your contracting business:

https://bit.ly/BuildABusinessWorthHaving_cf1

Contractor finances are about more than revenue.

You can run a $2 million, $5 million, or even $10 million contracting business and still not know if you’re actually making money.

Revenue tells you how big your business is. It doesn’t tell you how healthy it is.

In this episode, Tom Reber breaks down the 6 numbers every contractor needs to know to understand the financial health of their business: revenue, gross profit, overhead, net profit, cash flow, and owner’s compensation.

These numbers show you what your work is actually producing, what it costs to run the company, how much profit is left, whether you have enough cash to cover what’s due, and what the business is ultimately producing for you.

If you want to get control of your contractor finances, you don’t need to become an accountant. You need to understand your numbers well enough to make better decisions.

In this episode:

• The 6 financial numbers every contractor should know
• Why revenue alone doesn’t tell you whether your contracting business is healthy
• How gross profit shows what your jobs are actually producing
• Why Tom pushes contractors to bid at a minimum 50% gross profit
• How overhead affects what your business needs to produce every day
• Why more revenue doesn’t automatically mean more profit
• The difference between net profit and cash flow
• How accounts receivable can leave a profitable contracting business short on cash
• Why owner’s compensation matters when measuring what the business actually produces for you

Chapters:

00:00 — Contractor finances: Is your business healthy?

00:43 — #1: Revenue

01:36 — #2: Gross profit

02:44 — Build a Business Worth Having Scorecard

03:09 — #3: Overhead

04:00 — #4: Net profit

05:18 — #5: Cash flow

06:04 — #6: Owner’s compensation

06:56 — How the 6 financial numbers work together

07:44 — Find the number you don’t know

Your challenge:

Pull your P&L and your receivables and find all six numbers:

Revenue. Gross profit. Overhead. Net profit. Cash flow. Owner’s compensation.

If there’s one you can’t answer, start there.

You can’t make good decisions with numbers you don’t know. Getting control of your contractor finances doesn’t mean becoming an accountant. It means understanding your company well enough to know what the business is actually producing for you.

Take the free Build a Business Worth Having Scorecard to see where your business needs your attention right now:

https://bit.ly/BuildABusinessWorthHaving_cf1

The goal isn’t just to build a bigger contracting business. It’s to build one that’s actually worth having.

#ContractorFinances #ContractorFinance #ContractorProfit