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Discovering The Gross Profit Margin To Make Serious Money

By SEN Design Group on Jan 12, 2018 11:31:19 AM

Contrary to popular industry belief, a 40% gross profit margin may not be the magical number that leads to the best bottom line in the kitchen and bath business. The correct number for a particular business may be significantly higher or lower. It really turns on three things: (1) a “market-rate” owner’s salary, (2) the operation’s overhead including a “market rate” rent, and (3) the owner’s desired annual return on his investment.

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How To Be More Profitable In The New Year

By SEN Design Group on Dec 19, 2017 9:30:04 PM

The first reason why a bigger top revenue line only marginally affects one’s bottom line is that more errors are made with higher sales volumes; so gross margins typically decline by a few percentage points. Secondly, variable expenses - like sales commissions and payroll taxes - increase with higher sales volumes. And third, more staff people are usually needed to support the higher sales volumes, adding to the overhead.

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