Problems › We Do Not Know Which Products Make Money › Construction & Trades
Every business has a line that everyone assumes is profitable, and it is usually the one being subsidised. This page works through it for construction and trade contractors specifically — including an unedited excerpt from a real analysis of a contractor.
Every business has a line that everyone assumes is profitable, and it is usually the one being subsidised. The version of this question that applies to construction and trade contractors is not the generic one. Service work earns double the margin of projects and loses every staffing argument to liquidated-damages clauses — so an answer that ignores job gross margin will be confidently wrong. The analysis has to start from backlog cover and change-order capture rather than from revenue.
Product-level profit is genuinely hard because most costs are shared, and the usual allocation — by revenue — quietly guarantees the answer. Allocating overhead in proportion to revenue makes high-revenue lines look expensive and low-revenue lines look efficient, which is precisely backwards when the low-revenue line consumes disproportionate attention.
A workable approach allocates only what is genuinely traceable and leaves the rest unallocated. You end up with contribution by line and one honest pool of shared cost, which is far more useful than a fully-absorbed number that nobody trusts.
The result is usually uncomfortable. In most portfolios a minority of lines carries the whole thing, and at least one long-standing line has been losing money for years with everyone assuming otherwise.
These three together are the signature. One on its own usually points somewhere else.
✓ Product profitability is quoted as a company-wide gross margin
✓ Nobody has discontinued anything in years
✓ Two people give different answers about the same product line
The move that usually makes it worse. Fully absorbing overhead into product lines, which produces a precise number built on an arbitrary rule and gets defended because it looks rigorous.
It is for you if you run or finance a contractor and product profitability is quoted as a company-wide gross margin. It is the situation where the numbers are available but nobody has put them in an order that produces a decision.
It is not for you if Percision is the wrong tool if you already know the answer and only need execution capacity, or if the business is pre-revenue — then the constraint is evidence about the market, not analysis of your own figures. Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library. Also wrong if you need facilitation, politics, or someone to sit with a lender or buyer. Those are human jobs.
Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library.
Below is an excerpt from a real run of this analysis on a contractor. It is a sample profile rather than a customer, and it is unedited engine output — this is the format you get, on your own numbers.
The subject is Halloway Mechanical, a sample company profile used for testing rather than a customer — $180M revenue, mechanical contracting.
Excerpt from a real Percision run · Cost Reduction & Efficiency · sample company profile
The move. Deploy 12 existing journeymen to lock in 40 new hospital service contracts, converting construction relationships into recurring 32% GM revenue.
The leak it closes. Reduces $4.2M overtime drag by re-allocating 12 journeymen from construction backlog to service fleet.
The assumption it rests on. Hospital procurement will accept 12–18% premium pricing for single-source mechanical partner — the engine put the probability at 0.75.
| Investment required | $2M cash (Phase 1); funded by existing $6.4M cash balance. |
| Expected return | 128% gross-profit ROI on $2M investment in Year 1; payback <12 months. |
| Revenue, year 1 | $8M incremental service revenue |
| Revenue, year 2 | $12M cumulative incremental |
| Revenue, year 3 | $18M cumulative incremental |
| Exit criteria | Terminate move if fewer than 15 hospital SLAs signed by Month 9 OR construction backlog falls below 6 months. |
This is one move out of a full analysis. Read a complete report — every page, no email required.
This question routes to Matrix Strategy, one of 29 engagements the platform runs. For construction and trade contractors it works through job gross margin, backlog cover, change-order capture and service attach rate, then produces the sequence rather than a list of options — which move first, what it funds, and the observation that would say the sequence is wrong.
You watch the analysis get built before paying anything. Read a complete report here if you would rather see the depth first.
Almost never for the decision at hand. Traceable costs plus an unallocated pool gets you the ranking, and the ranking is what you act on. Full ABC is a project that frequently outlives the decision that prompted it.
Say so explicitly and price the support. A loss-making line that genuinely pulls profitable revenue is a marketing cost with a name, which is a fine thing to be — as long as somebody decided it.
Annually, and after any significant mix change. The ranking is more stable than the numbers, so the exercise gets cheaper each time.
Materially, yes. Service work earns double the margin of projects and loses every staffing argument to liquidated-damages clauses — which changes both the diagnosis and the order of the fixes. The metrics that decide it here are job gross margin, backlog cover, change-order capture, and an answer built on industry-general benchmarks will usually point at the wrong one first.
Less than most people expect. Your last twelve months of revenue and cost split the way you already split it, plus whatever you hold on job gross margin and backlog cover. The analysis is explicit about what it is assuming where your data stops, which is more useful than waiting for numbers you may never have.
Percision is the wrong tool if you already know the answer and only need execution capacity, or if the business is pre-revenue — then the constraint is evidence about the market, not analysis of your own figures. Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library. Also wrong if you need facilitation, politics, or someone to sit with a lender or buyer. Those are human jobs.
Percision is not a lawyer, tax advisor, auditor, licensed appraiser, clinical or regulatory filer, or an AI implementation shop. It does not do HR casework, creative-only brand work, or impersonate a named consulting firm. It is a strategy analysis engine — not a template library.
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