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HVAC and plumbing business owners: What is your “gross profit margin,” and how can knowing this help you run your business successfully? 📈 To think of it simply, this metric measures how profitable your business is in delivering the jobs you sell. 🧑‍🔧 In your HVAC or plumbing business, most expenses you incur typically fall into two buckets. The first are the direct expenses in delivering the actual service, and the second are the general overhead expenses. When delivering a job, the materials and equipment used in installing or servicing an existing unit, the contractors you may have to pay, the wages you pay for your crew, are all generally going to be considered direct expenses. Other overhead you may pay are for sales and administrative related, such as rent, office staff, etc. These expenses would be considered indirect expenses as they are not tied to a specific job. The gross profit margin helps us to calculate the direct expenses in relation to how much the jobs are selling for. For example, on a $10,000 job, let’s say $5000 of expenses were incurred in actually delivering the job. That would be a 50% gross profit margin, and the remaining dollars could be used for your general overhead. What should your gross profit margin be in your HVAC or plumbing business? Depending on the size of your business, this can vary. A useful tip in utilizing this metric is watching overall trends. You could track this monthly and yearly, and as your business...