Are You Missing The Improvement Gap?
In this week’s issue…
Don't Miss Out On What Could Be
262 words, total reading time <2 minutes
After thousands of coaching sessions, and hundreds of CI companies sharing the data that drives their businesses, we are astounded at the number of companies that don't seize the improvement gap.
That gap, being defined as, the difference between their current performance and what could be. Company after company in our space, fail to earn the profit they can by ignoring a few basic principles. Here are two of them:
#1 Stop discounting Labor in your bids. You say we don't give discounts on Labor. But, if you are not getting more than 30% of the total bid in Labor, you are. Check the last three proposals going out the door. If Labor is in the 20% range of the total bid ... you are discounting ... maybe unknowingly.
#2 Charge appropriately for Parts and Project MGMT beyond Equipment & Labor charges. If you are not getting 6% to 8% of the Total Bid for Misc. Parts and Misc Charges, you are discounting your work to the client. Rarely is this questioned by the client.
We find most CI companies simply do not charge enough for these seemingly soft services.
It is not uncommon for us to find 10% to 15% improvement gaps (yes points to the bottom line profit) by simply pricing the project correctly.
Some say the client will only spend "X" and we are filling the budget with equipment. But you are in effect discounting Labor and Misc Charges, that have real costs. Give the client less equipment and get the Labor and Misc Revenue you need to complete the work profitably.
And, if you do that's a $100K to $150K difference per million in Revenue. See the Gap? The best companies in the business do it. Don't cheat yourself.