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.
