tradie business profitability

As a business coach, I often get asked about gross profit – what it actually means, how to calculate it, and why it matters. A client asked me about it just this week, so I thought it was worth breaking it down here for other tradie business owners.

Gross profit is simply the money left over after subtracting the direct costs of a job – things like materials and site labour — from the total sales. For example, if a job is billed at $100 and the costs of materials and labour are $60, the gross profit is $40. That’s the amount that tells you how much money your business has earned from the job before overheads like rent, insurance, or admin costs are factored in.

It’s also useful to look at gross profit on a monthly profit & loss statement. Let’s say sales for the month are $100K, and costs of sales (materials and site labour) are $60K. That leaves a gross profit of $40K. Once you subtract fixed expenses (say $20K), your net profit is $20K. By tracking gross profit percentage — gross profit expressed as a percentage of sales — you can see more clearly whether jobs are truly profitable and how efficiently your business is running.

This is why I always encourage clients to measure gross profit percentage on every job. If you know your overheads run at 20%, then a job with 50% gross profit is a winner, while a job at 30% gross profit is a red flag. Comparing gross profit percentages helps you benchmark jobs, identify underperformers, and even measure your business against others in the industry.

Understanding gross profit isn’t about getting bogged down in accounting jargon — it’s about giving yourself clarity, confidence, and control. When you know your numbers, you can make smarter decisions that improve both your jobs and your business overall.

If you’d like help making sense of your numbers and building a stronger business, I’d be happy to talk.

Thanks
Hugh
0409 402 474