Many Australian builders are busy but not profitable. This guide explains the difference between markup and margin, what target margins look like for each trade type, and how to improve your numbers without losing jobs.
Gross margin is revenue minus direct job costs (materials, labour, subcontractors) divided by revenue. Net margin also deducts overheads (insurance, vehicle, tools, software). Most builders track gross margin per job but need to understand net margin to know if the business is actually profitable.
Quoting from memory
Material prices change monthly. Builders who quote from past job memory are often underpricing without realising it.
No variation process
Scope changes that aren't formally quoted as variations absorb margin silently. Every uncosted change erodes your profitability.
Wrong overhead allocation
Vehicle costs, tools, insurance and your own wage need to be factored into job pricing. Many builders ignore these.
Buying materials on credit at full price
Trade accounts with suppliers and volume purchasing can reduce material costs by 10–20%, directly boosting margin.
Winning too many low-margin jobs
Being selective about which jobs you quote — and pricing accurately — produces better results than winning volume at thin margins.
Review your last 10 completed jobs — compare quoted vs actual costs on each
Set a minimum acceptable margin and decline or re-price jobs that fall below it
Use live supplier pricing to ensure material costs in your quotes are current
Create a variation clause in your contracts and use it consistently
Allocate overhead costs to each job using a weekly overhead rate
Skip the manual work
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