Building an Emergency Fund

Let's assume for a moment that your Year One revenue number is $2,500,000, your pre-tax net profit is $250,000 (10%) and the gross profit ends up at $1,100,0000 (44%). To establish the correct price formula for your overhead structure and desired $250,000 net profit, every project's total cost (including materials, labor, subcontract costs and use tax, if applicable) must be divided by 56% (which represents the same Cost of Goods Sold % of Total Revenue in your company's annual budget).