Maintaining Profit Margins
Understanding your profit margins as a small business owner is vital. It allows you to operate, pay salaries and wages, upgrade equipment and services as well as make a profit at the end of the day!
In the climate of rising interest rates, and the increase in cost of living, wages and rates, how do you maintain your profit margins?
Michael shares his thoughts and advice in this 15 minute video. Watch it below.
Here’s a summary of what Michael covers:
Recent increases in wages – 4.6% for award staff and 5.2% for minimum award as announced by Fair Work recently
Increase in Superannuation Guarantee rate by 0.5% to 10.5% from 1/7/2022
A range of increases in other operating expenses such as insurance, rates, other costs
Fuel price rises in general
How to maintain your profit margin in this environment – start increasing your prices now; will need to be at least 5% price rise
Look for other ways to improve your profit margin eg minimum charges, job rates rather than hourly rates (but be careful for long jobs)
Wage to income multipliers of between 3 and 4 times pay rates;
Minimum gross profit of 40% for Builders and trades
How to calculate your gross profit; payroll on costs and productive time
Build a bridge for communicating customer price rises – no one likes surprises
