Forum Discussion

HUGEHandyman's avatar
HUGEHandyman
Jobber Ambassador
5 days ago

What types of expenses do you put in Gross Profit?

I'm hiring an operations manager and making a portion of their pay based off gross profit performance. This is a big move for me because I've been the ops manager and the sales person so now that someone else's compensation depends on this line item, I need to have it tight. Out of these things, which are appropriate to put in gross profit?

  • Worker compensation insurance
  • Sales commisisions
  • Mileage for technicians driving to jobs
  • Materials used to repair office
  • Labor for an in field "runner" to get supplies for everyone
  • A portion of the ops manager's salary if they work in the field

Curious to get ya'lls input on this. Thanks!

1 Reply

  • NJones's avatar
    NJones
    Contributor 3
    2 days ago

    Gross profit should only include what it takes to actually produce the work.

    Inlcuding:

    • Labor (guys in the field)
    • Materials
    • Subcontractors
    • Equipment directly used on the job

    We do not include:

    • Office staff (including your new ops manager)
    • Marketing
    • Sales costs
    • Rent, software, insurance (general)
    • Admin time

    If it doesn’t physically help build the job, it doesn’t belong in gross profit. Our goal is to have our ops manager focused on job performance and efficiency, not penalized by business overhead they can’t control.