Fiscal 2024 to date through August versus October 2024 through May 2025.
September 2024 versus July 2025, as overhead and gross profit both changed.
Two readings of the same close from Stuart, taken a few weeks apart, on just under $2M in revenue; the prior year lost money.
The general manager's own adjustment after a 35% target proved too low.
Break-even revenue equals monthly overhead divided by gross profit margin (the share of revenue left after job costs). At a 32% margin, one foundation division needed about $156,000 a month to break even; at a 47% margin, about $127,000.
Warren (not his real name), the division's general manager, made several changes, and the 32% (fiscal 2024 through August) and 47% (October 2024 through May 2025) cover different periods, so you can't credit the climb to any single one.
In June 2024, Warren told Stuart the division hadn't made a profit the year before and that its gross profit margin had slid to about 25% after being above 30% the year before that. Three months later, they read the division's income statement together.
Fiscal year to date through August 2024, cost of goods sold was 67% of revenue, which left 32% gross profit. The contractor break-even revenue formula is monthly overhead divided by that percentage, so the division needed about $156,000 in monthly revenue (roughly $1.8 million a year) to cover its costs, which implies about $50,000 a month in overhead. But Stuart's working assumption for the division's revenue was $120,000 a month, or $1.4 million a year, and Warren agreed he was on pace for that, which left revenue about $36,000 a month short of break-even. He summed up the result himself: "We're basically at the bottom line. We're negative for most of the months."
What gross profit margin would the division have needed to break even at $120,000 a month? It would have needed about 42%, which you can check by multiplying the $156,000 break-even by the 32% gross profit margin to get roughly $50,000 a month of overhead, then dividing that overhead by $120,000.
Stuart told Warren that growth alone wouldn't help: "If you jack the revenue up and still have 67% cost of goods, it's just not a very efficient business." Reaching $1.8 million would also have meant adding people, and he warned against chasing profit that way: "You should be able to be profitable where you are. You're north of a million dollar business." Even so, he left one question open. "Your COGS are a little high," he said, "and some of that may just be your accounting." Yet neither of them could say how much of the 67% was real job cost and how much came from the way expenses were recorded.
Warren's price book had been built on a 35% margin target, a figure many owners would call comfortable. Yet during a call in early 2025, Stuart showed him the cost of that comfort with an example: $56,000 a month in overhead costs and 50% gross profit; the break-even point is $112,000 in revenue. At 35% gross profit and the same overhead, Warren would need $160,000 in revenue to break even; at 32% gross profit, he would need $175,000.
So how much extra revenue does a division with $56,000 in monthly overhead need to break even at 35% gross profit, compared with 50%? It needs about $48,000 more every month ($160,000 minus $112,000), or about 8 more jobs at the $6,000 average ticket Warren was seeing in fall 2024. A 35% target covers overhead only if the division sells that much more work.
Dollar-weighted gross profit is the gross profit margin you get from adding up the dollars across a set of jobs before dividing: total gross profit divided by total contract dollars. Averaging each job's percentage gives a different answer. Suppose a $900 job has a 64% margin and a $30,000 job has a 45% margin (the second job is an illustration). If you average the two percentages, you get about 55%. The jobs earned $576 and $13,500, for $14,076 in gross profit on $30,900 in contracts, or about 46%. To avoid the error, total the dollars and divide once at the bottom of the sheet.
In early November 2024, the office team built the first version of a job costing sheet, with one row per job and the contract price, direct costs, and resulting gross profit. Soon afterward, Stuart reviewed it with Warren and summed up its value in a single image.
"It's shining a light on something that was in the dark. You're driving along without a fuel gauge."
— Stuart Trier, Founder & CEO, Clear Results
By May 2025, Warren's team had entered enough homeowner jobs to average. Direct labor came to about 22% of contract dollars, against 10% and 11% on the first two jobs entered. Stuart set a review line at 19% of contract dollars and pointed to individual jobs with direct labor at 22%, 23%, 27% and 44%, then explained what the exercise was for: "This is the information that starts to tell you which jobs you're mispricing."
But the percentages were only as good as the entries, and in March Warren admitted the crews weren't filling out their material sheets completely: "I know what these jobs cost, so they're clearly not putting everything on them." When materials are missing from the sheet, the margin is overstated, which is why Warren and Stuart had to check the sheet against the books every month. (The job costing playbook lays out the full setup, and Clear Results' earlier post on job-level costing covers a different client's version.)
While a typical home service coaching program gives owners a framework and checks in once a month, Warren's sessions with Clear Results were weekly. Stuart directed the formulas while Warren typed them in on the shared screen, so each correction was in the sheet before the next week's jobs went in.
On a February call, Warren reported that November's average gross profit percent on the sheet was 51%, while the weighted figure was 48%. Stuart named the cause: "When you take the average of the averages, it's not weighing them according to dollars." One $900 job with a 64% margin had been counting as much as the large jobs around it.
Which of the three November readings could the division trust? The accounting system's 49% (about $128,000 of revenue against $65,000 of direct expenses) was closest to the weighted 48%. Within the sheet, Stuart traced the 3 points between 51% and 48% to the averaging. Yet Stuart and Warren couldn't account for the remaining point between 48% and 49%.
The comparison itself had started a week earlier, when the accounting system's gross profit came in lower than the tracking sheet's figure. Owners can take four checks from that episode (the P&L playbook covers the wider reasons a statement can mislead):
In May, Warren described how his thinking had changed. His price book aimed for a 35% margin, which, after they talked, "was like, this is way too low."
For many homeowner jobs, he had been raising his prices by 10% to 15%, or in his words "cranking it up 10, 15%." Two weeks later he put homeowner work at "50% plus" gross profit and contractor estimates at 40%, and by the end of the month the accounting system showed 45% gross profit for October through April on about $945,000 of revenue.
Still, Stuart said the higher prices weren't free. Homeowner work was showing about 65% gross profit, he said, which "sounds great." But charging that much "may impact your close rate." In the same exchange, he added: "So you may be the reason it's so high."
Stuart was looking only at won jobs, and neither he nor Warren measured the close rate before and after the increase on those calls, so the cost of any lost bids is unknown.
Yet the average job size changed with the prices too. In September 2024, the average job size was $6,000, and by October 2025 Warren had it at about $14,000, more than double. Because the job mix changed along with prices, you can't split the gross profit climb from 32% to 47% into a pricing share and a mix share. For the method itself, follow our pricing for real margin playbook: you divide your monthly overhead by your billable field hours, then add that hourly cost to the direct costs on every estimate, so that no job goes out below the price that covers its true cost.
In November 2024, Stuart looked at the sheet's labor lines and told Warren the crew was "definitely overstaffed by two guys," an excess he put at roughly $80,000 to $100,000, depending on pay. The crew's two most recent additions were the logical people to let go. But Warren didn't enjoy the decision. "I really don't even want to let these two go," he said a few weeks later. He let them go in December.
By April 2025, the division had 6 field staff, and Stuart used that count to show a check any owner can run. A $200,000 monthly production target comes to about $46,000 a week, and divided across 6 people, that is about $7,700 per person per week, or roughly $1,500 per person per day (a target for the crews).
Any crew that can't reach that figure on its own jobs is either overstaffed or underpriced, and Warren can tell which by checking the sheet's labor percentages.
Stuart and Warren never measured the December cut's effect by itself, so the $80,000 to $100,000 remains an estimate. In January, Stuart told Warren, "You've right-sized the ship by letting go of the guys in December." Yet by July, Stuart was saying, "I know you pulled a couple of them back," and by September Warren counted 8 production staff. But revenue had grown meanwhile (October through May ran 17% ahead of the prior year, about $1.1 million against $940,000, on Stuart's June comparison), so a larger crew doesn't automatically mean the original cut was wrong.
Each reading of the division's contractor gross profit margin is listed below next to its window, because the windows differ and each caveat belongs beside its number.
The net row needs the most care because the accounting system's income statement for October through May showed net income of about $7,000, and Warren reacted, "Which is bad." Yet the year closed at just under $2 million in revenue (about $1.97 million after removing over-billed deposits).
Stuart read the division's profit twice. In November, he said it "cleared 225" (that is, $225,000) before "the 4% and all that" (a 4% charge from the larger company), and two weeks later he put it at $182,000 after the division covered $108,000 of corporate overhead. The two reads came from different views of the same year, so this piece quotes the range.
How does an eight-month net of about $7,000 turn into a six-figure year? A rough check, using only the figures above, accounts for most of it. Revenue for June through September was about $870,000 (the $1.97 million year minus the $1.1 million booked through May), or roughly $215,000 a month against the $127,000 break-even.
At 47% gross profit, the division keeps about 47 cents of each dollar above break-even, so it earned roughly $165,000 over those four months (4 months × $88,000 × 47%). Together with the $7,000, that comes to about $172,000, within $10,000 of the lower reading.
Still, Stuart wasn't ready to call the break-even math finished, so in September 2025 he restated it per billable hour. Once he spread overhead across billable hours and added it to crew wages, break-even came to $78 an hour, and a 15% net margin meant charging $92. At 75% billable time, he put the target charge at $110 to $120 an hour. ("$75 is just paying your bills," he told Warren.) Warren answered by describing the pull between those figures and his own instincts:
"I'm already setting the job up, not for failure, but not to make nearly as much money as it should be making. And part of it is, I don't think I can get away with charging this much."
— Warren (not his real name), general manager
A week later, Warren decided to taper back on heavy concrete and excavation work for other contractors. However, as of late October, the backlog of those jobs was still being worked off, so nobody has measured the result of that decision yet.
Owners in any trade that sells small service calls next to large installations get the same false comfort from a percentage column, and the figures below are illustrative gross profit margins.
An HVAC shop that sold two tune-ups ($150 at a 70% margin and $185 at 68%) and one $12,000 install at 38% would see about 59% on a simple average. But weighted by dollars, it comes to about 39%, because the install is nearly all of the revenue.
A plumber who sells a $220 service call at a 66% margin beside a $10,000 repipe at 34% gets a simple average of 50% but a weighted 35%. A roofer with a $650 repair at a 62% margin and a $15,000 re-roof at 33% would see about 48% on a simple average against 34% weighted, and an electrician with a $400 outlet job at a 60% margin and an $18,000 service upgrade at 30% would see 45% against 31%.
Still, an owner in any of these shops who trusts the percentage column will think the business is doing better than it is, and anyone who compares the sheet with the books each month will see the difference at once.
Divide what you spend on overhead each month by your gross profit margin (gross profit as a share of revenue). With $40,000 in overhead and 40% gross profit, a contractor breaks even at $100,000 in monthly revenue; at 50% gross profit, the figure drops to $80,000 (these figures are illustrative). Reverse the formula to find the margin a given volume requires: overhead divided by expected revenue. With $90,000 in expected revenue and $36,000 in overhead, a shop needs 40% gross profit to reach zero.
Averaged percentages are the usual cause, and missing costs are the second. Billing ahead of the work is a third cause because deposits count as revenue in the books before the crew earns them. This division's closed-year revenue was nearly $1.97 million only after stripping out over-billed deposits. Compare closed jobs only, since a job in progress includes billed revenue but only part of its costs, and check first for any job where the crew hasn't recorded materials. Reconcile the sheet to the books each month.
The right line depends on the trade and the job type, so set yours from your own history. Stuart used 19% as the review line for this division's homeowner jobs; once enough jobs were entered, the average was about 22%, and by September 2025 some labor budgets were set near 12% of contract dollars. To find your own, total labor dollars and contract dollars for your last 20 jobs, divide once, and review everything above that line.
No, markup is a percentage added to cost, and margin is the share of the price that is profit. Price a job that costs $1,000 at a 50% markup: $1,500, which is a 33% margin. To earn a 50% margin on the same cost, you need a price of $2,000, a 100% markup. Contractors who price with one term and measure with the other end up well short on every job (the example is illustrative).
Divide the price increase by the sum of your old gross profit margin and the increase. At 45% gross profit, a 10% price increase keeps gross profit dollars level until about 18% of the closed jobs disappear (10 divided by 55). Shops with richer margins can absorb less lost volume: at 55% gross profit the same increase breaks even near 15%, and at 35% near 22% (all three are illustrations). Stuart warned that the higher homeowner prices might cost the division bids, so compare the win rate for the 60 days before and after any increase.
While a typical home service coaching program leaves an owner with a framework and one call a month, Warren met with Stuart weekly and worked from his own statements. Together, they built the break-even math and costing sheet, then compared each new income statement against them. Warren and Stuart caught the 51% versus 48% mismatch in one of those weekly sessions.
Overhead is subtracted from gross profit, so a high margin can still leave little at the bottom. At a 47% margin, the division earned about $520,000 of gross profit on $1.1 million of October-through-May revenue. It paid roughly $60,000 a month in overhead, or about $480,000 over 8 months, leaving about $40,000 before other items, and net income was even lower. Contractors make net profit only once monthly revenue is past break-even, and this division kept roughly 47 cents of every dollar of revenue above break-even.
Stuart Trier is the Founder and CEO of Clear Results. Over the past 20 years, Stuart has built, bought, and sold 11 companies across the home service, healthcare, and marketing industries. He built his first company from startup to $8M in revenue in 3 years before a successful exit, then built a chain of 28 healthcare clinics and sold the business to a publicly traded company. Following that acquisition, Stuart spent 3 years working alongside the CEO, helping lead the organization through a take-private transaction before participating in a nine-figure exit to a Fortune 10 company. Today, he's the lead investor behind an electrical services platform operating across 3 U.S. states, and has worked directly with owners through 1,800+ strategic advisory sessions.
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