"If you are going to achieve better margins you will need to do more than just increase your mark-up."

More on the “Rule of One Third” gross margin debate. This from Ben Kuypers.

“It’s a thin line we negotiate. If you are going to achieve better margins you will need to do more then just increase your mark-up. If you really want to do better you need to compare yourself with the contractors you want to be most like. You can’t compare yourself with the guys working out of the back of their pick-up for cash. And you can’t necessarily work with a client that would be willing to take the risk of working with them either. Lots of contractors start as a tradesman and that can be a benefit in some ways and it can also hold you back in others. Your mind set is the most important tool you have and if you don’t believe that you might consider staying on the tools. Whether you like it or not you are a salesperson when you are trying to win a contract. And if you don’t use sales techniques from the outset, you will be at a disadvantage. Presentation is everything. Presentation is everything. Presentation is everything. Play the part you want to be, and pretty soon you will be the part you want to play. To get to better margins you need to wow that client not just give them a better price. And if you’re falling short in the wow factor you are just another number to them. So you can get better margins if you are willing to learn what it takes to really win that client over.”