Did you know that a builder should have AT LEAST a 20% margin which is equal to a 25% mark up? Yes, every business needs to make a profit to remain sustainable, but in the building industry margins represent much more than profitability. Let’s explain this further.
Margins vs. Net Profit - Is Your Project at Risk?
After all costs have been integrated into the project (materials, staff, management, compliance etc) builders with a 20% margin can expect only an 8% net profit. If a builders’ margin is under 20%, their business is deemed as high risk.
High Risk Volume Builders
- Quality is severely compromised to break even or make a minor profit
- The job may not be finished
- Mistakes are made and not rectified
- Tradesmen who build your house are not paid for their work
- Builders are not insured because their low profit margins put them in a high risk category
- Net profit is low
- Businesses are susceptible to bankruptcy leaving families stranded and deposits lost
Jackson Dwellings Business Model
At Jackson Dwellings, we ensure our profit margins accurately reflect what is required to build high quality, custom homes. Our margin of 20% means you can expect your home to be built on time, to the highest quality and as promised. Unlike large home builders, we do not experience risk in our projects (which means you don’t either). Having a per project net profit of around 8% means our business is sustainable and we can continue to invest in making our clients homes even better (through business and staff development).
In short, you can expect to pay more with Jackson Dwellings to achieve a better outcome. These better outcomes include:
- A higher quality home
- Structurally sound and safe
- Your build will be completed on time
- We only use experienced and qualified staff to complete your project
- Your home will be build following proven systems and processes so everything we promise will be delivered
- Finishes and inclusions will be as agreed
- Fully insured for every activity on site
As a business we are proud to take this position and offer our clients industry best building and construction practices. Many other businesses also have similar margins, but no one likes to talk about it. We value honesty and transparency at Jackson Dwellings, hence why we’re happy to expose our margins.
Contact us to speak with one of our experts to see how this information can benefit your project.