5 ways to increase construction profit

If you’re running a construction business, the bottom line is that you want it to be as profitable as possible. Even if you love what you do and that’s what drove you to start your construction company, you’ve got to pay the bills and keep a roof over your head, and that means you need to be profitable.

Many smaller construction companies find that they hit the ceiling at some point during their growth, where they just can’t seem to increase their profits. The good news is that you can boost your construction profits in several easy ways without spending more money.

1. Get More Jobs

It may seem obvious, but getting more jobs (and getting them done) is actually a little more complicated than you think. You’ll need to quote more jobs, and you’ll also have to increase capacity and productivity so that you can get them done, but this is the simplest way to make more construction profit.

2. Get Better Deals from Suppliers

If you can’t increase capacity, either by improving efficiency or hiring more people, then one of the simplest ways to make more profit from construction projects is to negotiate better deals with your suppliers.

If you can get an extra 5% off your materials, even if you don’t increase your prices and change nothing else, you’ll make more profit on every job.

3. Get Better-Quality Jobs

When you start a construction business, you usually take on any job you can find. If someone is willing to hire you, you’re willing to get the job done.

However, as your business grows, you need to start focusing on better-quality jobs with bigger margins that increase profits and revenue without affecting overheads or productivity too much. This usually means targeting bigger clients or more complex projects, and this is usually the natural progression for any growing construction business.

4. Improve Productivity

Time is money, and in construction, that’s really true! It also means that if you can get things done faster, you will make more profit on every project. So invest in labor-saving tools and equipment, find software that helps you improve efficiency, and tighten up your project management. Even if you only save a day or two on every job, that’s still more money in the bank.

5. Raise Your Prices

Yes, this one is last for a reason. You can do other things to increase your profits, and you should explore all of them to maximize the amount of money you make on every job.

It’s also a good idea to build your reputation and customer loyalty before you increase your prices too much, but if you’re already doing everything else, there’s nothing wrong with increasing the prices you charge your customers.

Increasing your prices in any industry can be nerve-wracking, and you want to do it in smaller increments, more frequently, and based on what the market will bear. Often, finding the sweet spot with any kind of pricing and construction estimating takes time, so monitor your sales, profits, and other metrics and use that information to make informed decisions.