Ensuring your margins are accurate is incredibly important and the way to get consistent accuracy is hrough technology. With contract management software, you can track, analyze, and optimize your contracts with the click of a button. This would be the first step in your preparation. 

Ensuring you are calculating the Markup of a job and the Profit Margin desired for a job accurately can be the difference in both how much money you leave on the table when quoting a job and how much money you lose when quoting a job.

Mastering the art of negotiating contracts for better margins and terms is a valuable skill that can contribute to the long-term success of your business. By implementing the strategies and discussing your best practices, you can enhance your negotiation abilities and secure agreements that are favorable to your organization. Effective contract negotiation is not just about securing a deal but about creating mutually beneficial partnerships that drive profitability and growth.

Understanding the keys of a contract, such as scope, terms, and conditions, is crucial as it forms the foundation for effective negotiation. By having a clear grasp of these elements, you can negotiate more strategically and ensure that the contract aligns with your business objectives.

When negotiating, it is important to showcase the value you bring to the table and highlighting your strengths as a partner. By building strong relationships with suppliers, emphasizing your unique selling points, and demonstrating your commitment to a mutually beneficial partnership, you can enhance your negotiating power and secure improved margins.

If you read the previous blog, we breakdown what a Markup and Profit Margin Percentage looks like on a job. What we want to focus on today is on the formula used when you know your target markup. If you know that your target mark up percentage is 30% for example, then calculating this will be different than the previous blog. If you your job cost is $1000 and your target mark up for the job is 30% than the following will be used to calculate your job cost: $1000 x (1 + 30%) = $1300. We understand this is an easy one that you construction owners know off the top of your head, but the importance is the calculation.