TCF556: Contractor Q&A: “Why The 50% Gross Profit Rule is Right?”

Tom and Dan address the concern of a contractor about the 50% gross profit rule, who argues that 50% gross profit is ripping people off when it comes to home renovations. He claims while 50% gross profit may make sense on a smaller project — like a French door installation — it seems outrageous when doing renovations on a large scale.

In this episode, we talk about…  

  • Understanding how money works in a business
  • 50% gross profit is feasible, and that does not mean you are screwing your customers
  • Selling shouldn’t be based on your own budget or your own assumptions about the value.
  • When you make more profit, you can:
  1. Provide a better experience to your customers
  2. Honor your warranties 
  3. Make a callback and not argue with the customer
  4. Hire better people
  5. Take care of your team, provide them with training, and provide them with a career path


Submit your questions to with the subject “Podcast” and Tom and Dan will try to answer them on an upcoming show.


Are you stealing money from your family because you aren’t charging enough for your services? Discover what you SHOULD be charging. Download our 50% Gross Profit cheat sheet:


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